What They Say: New Research Reveals Importance of Closing Brand Gaps
As brand strategists, we’ve always been interested in the ways in which a brand can help organizations navigate inflections points – those moments of transformation and transition that change companies in very real and meaningful ways. What people often forget is that those inflection points can be as much a result of internal changes – a new CEO, expansion into new markets – as external, market-driven ones.
Venture capital is one such industry going through a major market-driven transformation. Deal flow is the lifeblood of every VC firm. But today, as the industry has grown more consolidated and competitive, simply identifying promising companies to invest in isn’t enough. With high-potential entrepreneurs receiving funding offers from multiple firms, VCs now have to aggressively market themselves in ways that were unthinkable just a few years ago.
Given these shifting dynamics, the role of brand is even more critical then ever to the success of a VC firm. This was confirmed in our recently launched research initiative, the Brand Influence Guide: Venture Capital (BIG:VC), which surveyed venture capitalists, startup CEOs and limited partners on the effectiveness of perceptions and behaviors of VC firms. From this survey, we found that a whopping 88% of startup CEOs believe that a strong brand can help a VC firm increase deal flow by attracting entrepreneurs.
Interestingly, the research uncovered a disconnect between what entrepreneurs deem as important when evaluating a VC firm and what VC firms believe is important to this audience. Perhaps the widest gap lay between perceptions of what an entrepreneur-friendly firm looks like. Entrepreneurs are seeking a “collaborative” firm – in fact, they value this attribute significantly more than VCs think they do. But “hands-on?” Not so much. While VC firms view “hands-on” as an important attribute when messaging to entrepreneurs, the attribute barely registered among entrepreneurs. Apparently, collaborative suggests supportive. Hands-on suggests strangulation.
Even the issue of gender revealed a gap. Only one in ten VC executives thought the gender of a firm’s partners was a significant factor in how entrepreneurs evaluate a VC firm. Yet fully one in four entrepreneurs thought gender was important. And among women entrepreneurs, two-thirds thought gender is a very important criterion in evaluating a VC firm. As more and more women “lean in” to found IT and life sciences companies, VC firms will have to adjust their communications, not to mention their recruiting practices (but that’s a thought for another post), to ensure that they’re not missing out on a significant source of deal flow.
This brand disconnect we uncovered between VC firms and CEOs is not entirely surprising. In fact, it’s something we’ve seen in many industries we’ve worked in, especially those going through major moments of transformation: absent reliable research, people inside an industry – or a company – have no dependable way of knowing if what they’re saying is what their audience wants to hear. In virtually every case, there’s a misalignment between the message and the recipient, the brand and the audience.
No matter what industry you’re in, closing this brand gap is key to connecting with target audiences. After all, your brand is not what you say about yourself. It’s what your most important audiences say and think and feel about you. Understanding what these key audiences say about you – and what they want from you – is the first step to proactively influencing these perceptions.
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