Branding for Venture Capital Firms
A venture capitalist is, by nature, averse to risk. There’s risk in every opportunity, but the VC or private equity firm is always looking for a good, smart bet, almost always undergirded by massive amounts of data that lead the way.
But the venture capital firm is a company just like any other. Which means that every venture capital firm is also a brand.
This presents a bit of a dilemma, and one we often see from young VC firms that are looking to get a foothold in a very crowded market. They feel like they’re doing everything in the VC game correctly. The returns are there, and isn’t that the game? It takes more to stand out. Very often, venture capital firms struggle with a lack of differentiation. In a crowded marketplace, the need for a strong brand at the core of the company is crucial.
Creating a brand is hard work, and it requires creativity, ingenuity, and, yes, a little bit of risk-taking. VC firms can’t stand out solely by leaning on the returns they generate for investors and partners. Every private equity company promises financial success—that’s not a point of differentiation. The one way a VC firm can truly make itself unique and cut through the clutter is through the story it tells. It’s through the brand.
Building a brand for a venture capital firm is similar to building a brand for any company. Some core brand tenets are evergreen across industries. But the VC business and marketplace also demand some unique considerations that young firms looking to stand out must take:
Understanding Your Two Distinct Audiences
Every strong brand understands its audience. It knows the language they speak, the values it holds. It knows what they will deem authentic and what they’ll cast aside as a cheap ploy.
But there is a key difference between building a consumer brand and building a brand for a private equity firm. For the most part, a consumer brand has one audience—the customer. This audience may be broken down into segments based on demographics or location, but for the most part, the audience is a singular entity that the brand needs to engender itself to. And most of the time, there is a single product or service that the company provides or hopes to provide to that audience.
The VC firm sells a service, but it’s pretty much the exact same service as everyone else in the marketplace. And the VC firm has two distinct, core audiences that it needs to speak to. One is the founders—the people they’re trying to attract as acquisition opportunities. And then there are the people that the firm is trying to obtain investment from, limited partners.
As a first step, it’s good to separate out these audiences and try to get a full viewpoint on what the brand might mean to them individually. Ultimately, of course, the brand will need to speak effectively and persuasively to both audiences, but zeroing in on each separate audience at a time will help you find what makes each tick. Then, when the common ground is found between the things that will resonate with both audiences, you have the beginnings of a brand foundation. Then, you can start to discover aspects of the brand that will work for the long term.
When we’re building brands for VC firms, we always make time to talk to actual people within each audience segment. We ask founders what they’re looking for in investors. Not every relationship is as simple as, “this person has money, and I need money.” Are there values that the founders and their companies hold that are important to them, where they’re looking to align with the sources of their funding? Who else does the VC firm invest in, and what does that say about the firm? And we sit down with the firm’s partners and their limited partners to try and get to the root of their business. Of course, they want to create the best possible returns. But what do they hope separates the firm from all the competition? What does the firm believe in more deeply?
Not all of these questions have easy, straightforward answers. That’s the messy, nitty-gritty of brand building. But the discussions are key to understanding what the core of the brand ultimately will be.
Positioning In the Marketplace
A key aspect of an effective brand is how it positions a company in the market. Very few companies can credibly claim to be the end-all, be-all of their segment or industry, so every company has to find a place that fits their abilities and ambitions. A key part of the brand-building process for private equity firms is proper positioning, one that sets the company up correctly for sustainable growth and success. This requires a deep understanding of the current marketplace—insights from which inform the strategy and, ultimately, the final form of the brand, its communications, and marketing collateral.
So in general, the private equity category is hugely cluttered. Finding a unique, niche position takes work. A firm with any bit of experience or history will want to lean on that as much as it can. Investment history, performance of the funds, multiples on invested capital, and how that comes back. As a firm matures, people have something to latch onto and become much more attached to the brand.
For a young firm, it goes back to risk. Private equity startups need to consider all the places in the market they could plausibly fit in. Where can the firm provide unique points of differentiation that make it stand out from the other companies in the industry? When a market positioning has been decided on, it helps the company be single-minded and consistent across all of its communications, which helps develop a repeatable and recognizable voice and brand for the audience.
A crucial aspect of brand building, which is especially true for building private equity brands, is to not shoehorn the company into one place without room to grow or adapt. That goes for the positioning process, too. It’s key to remember that nobody has all the right answers. Effective brand building requires all stakeholders to keep an open mind and be willing to work collaboratively.
Your Name is Important…But It’s Not Everything
First off, we have a handy guide to brand naming that we invite everyone to check out. Our main Dos and Don’ts are all there, and the majority of them apply to all brands across industries. But a few things on naming in the private equity space.
Naming is difficult in general, and is becoming even trickier now particularly as one-word URLs go by the wayside. The most important things about a brand name are that it’s unique, memorable, and resonates with your intended audience. Many young venture capital firms understandably try to position themselves to appeal to a young, entrepreneurial segment in the tech space. This lends itself to a name that carries a little bit of edge. Brainstorming names like this takes creativity, and settling on one takes, again, some measure of risk.
Playing it safe with a name can too often result in blandness, missing out on the potential to resonate with the tone and manner of the language that your audience communicates in. A name that’s abstract or undifferentiated or with little meaning or passion behind it is the worst possible option, often leaving the brand with no creative extension possibilities. And these types of safe, vanilla names generally lengthen the time it takes to build key brand equity.
Though social has seemingly dominated online content strategy, websites are still king. People still search on Google, and in turn, end up on websites. A website must be an accurate and authentic entry point to a brand, and that tracks for private equity firms as well. The core of any effective VC or private equity site is to attract investment opportunities, so you’ll want the language and elements on the home page to resonate with the limited partner audience and founders as well. Think of your website as an efficient place to show that you’ve done your due diligence and are attracting opportunities with a high potential for success.
In Summary: The Art And Science of Branding
- The sticky truth about branding is that it is both art and science. For venture capital and private equity firms, understanding this is crucial.
- The job of marketers is to help a company become the best possible version of itself. The process of getting there is a collaborative one—we listen to what you want to be, and then help you become that in the most advantageous way possible.
- Always aim high. The marketers’ job isn’t only to bring that to life with creative solutions but also to marry that ambition with the reality of the marketplace and where the opportunity for competitive differentiation lies.
- Encourage creative boldness and risk-taking. Great brands are built on it. But that creativity is not done just for creativity’s sake. A brand only survives and thrives if the creative is built on a deep understanding of the audience, the marketplace, the industry landscape, and the values the company holds close.
- For venture capital and private equity firms looking to find their foothold, the branding process is a crucial step to long-term success.
Thanks to Lysle Wickersham of BrandThink for contributing to this article.