Sure, your firm can pick better, but if you're picking from a weak pool, then what?
Sure, your firm could differentiate itself by helping startups grow, but how much can you really help a second or third rate team?
The best founders and deal flow goes to the most visible, trusted, and differentiated venture capital firms - those with the strongest brands. So perhaps it’s no surprise that most industry estimates see the top 2% of firms generating about 95% of venture returns .
Where the fund stalls
But how do you build visibility and trust in a world of several thousand active VC firms, with hundreds of new firms launching each year?
You could pound the pavement, and spend tens of thousands of dollars attending conferences and taking weeks out of your year with the hope of meeting the right people.
Or you could run a targeted content strategy, geared towards getting you in front of the best founders in line with your fund's mandate.
What to settle before you invest
It's no big secret. In today's world, content captures attention, and attention gets monetized. But based on our review of randomly selected VC 100 firms, only about 10% of firms have a solid content marketing strategy, and most are either not doing any content or are doing it sporadically and poorly.
The world's biggest and most successful incubator, Y-Combinator, has incubated well over 3,000 companies.
But its 137 Top Companies (5%) account for most of its returns. And if YC missed out on just three companies, Airbnb, DoorDash, and Stripe, more than half of its Top Companies returns would be wiped out.
How a startup reads the offer
The high cost of missing out is also reflecte in the return profile of VC firms globally, with top quartile funds generating the 20% IRR that most LPs require to justify locking their money up in an illiquid asset. Everyone else either falls short, or dismally fails with bottom quartile funds failing to beat the S&P500 average return for the past 10 years according to Cambridge Associates .
Without quality deal flow, most venture funds are poised to under-perform or fail altogether. Missing out on a deal that could have returned your fund because you didn't invest in cultivating your online brand with content is borderline negligent.
Keep readng this article at VC content marketing agency, SonicBoom.vc's blog
Test the bet in a lean startup product sprint before the fund writes the cheque. The plain definition is what corporate venture capital is. Why so many funds stall is in why most corporate venture capital funds fail.
Harvard Business Review's hard truth about innovative cultures is the essay I send when a fund wants posters instead of a kill line.
We run workshops on exactly this, tailored to your people and a real challenge you bring.
Many of these ideas started as podcast conversations.
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