Why Is Every VC Suddenly Obsessed With Content Marketing?
When you hear the term in the startup world, it’s met with a ton of very immediate, very opinionated reactions. These range from the good (“I wouldn’t be where I am today without my investors”) to, let’s just say, the less than good.
But in 2015, another phrase inevitably comes up when you talk startups: content. From big names to brand new firms, former CEOs to career investors, everyone in venture capital seems hot to publish.
How do I know this? Because this new reality is the only reason I have a job.
Growing trends in VC
In 2014, NextView Ventures, a VC firm investing in seed-stage web and mobile tech companies, decided to become the first venture firm in Boston to hire a VP of “platform”—the nebulous phrase investors use to describe content marketing and a slew of other supportive projects for entrepreneurs. (The M-word, as it turns out, isn’t highly regarded in an industry where marketing was never seen as all that necessary until now. More on that in a moment.)
In the end, NextView found, well, me. I was leading content at HubSpot at the time and had worked in digital media for both Google and a local startup. They liked my content-heavy background, but I saw that as an outlier case.
I was very, very wrong.
Seemingly overnight, peer firms started hiring for roles like “director of platform” or “head of content and community.” Without realizing it, I found myself in the middle of a hot new trend in VC.
All at once, every VC seemed to spot and respond to the same two trends: the success of their blog-happy peers, and the increased competition to invest in the best entrepreneurs—most of whom could now launch without needing as much capital for their Internet businesses.
Let’s take a look at each one separately.
Trend #1: The success of the earliest VC bloggers
It can take years to know whether a startup will succeed, so VCs are used to analyzing results across several years, not quarters. The same can be said of building an audience. It’s nearly impossible to expect results from blogging after just three months.
Given when most early VC bloggers began publishing, 2015 is roughly the year when you can determine their true success—both in their online reach and their investment returns.
Today, the VC world is littered with big names with audiences large enough to make even some big brands jealous. Paul Graham of startup incubator Y Combinator writes periodic essays that practically serve as gospel to tech entrepreneurs. Chris Sacca, an early investor in Twitter, among other notable companies, was an early power user of Twitter and built a following exceeding 1.59 million. Mark Suster, Jason Lemkin, and angel investor Jason Calacanis would all call themselves entrepreneurs and investors, but you might also call them brilliant content marketers. Some, like Lemkin and Calacanis, even sell sponsorships of their work—they’re that widely read.
Matrix Partners investor David Skok was among those early content adopters. He started way back in 2008, before content marketing was even a twinkle in marketers’ eyes. “The whole area of how to start and run a startup had not been well documented at the time that I started,” he told me.
On his blog, For Entrepreneurs, he writes some of the best analysis available for software-as-a-service (SaaS) startups. He’s also invested in companies like HubSpot, which went public in 2014 and has a market cap of $1.66 billion as of today, and Netezza, which sold to IBM for $1.7 billion.
“I blog because I am passionate about helping other entrepreneurs with their startups, and started to realize that there were topics that I knew about that could be of interest to founders that had not been through these areas,” explained Skok. “The main benefit for me is that people know who I am and are able to figure out from my blog whether I might be good fit for them as an investor.”
And as more and more firms adopt blogging and other tactics, he thinks there’s room for them to co-exist in the content ecosystem. But he also warned, “Figure out a way to offer something new and different that is of value to your audience.”
“[Content] allows you to foster a longterm relationship with people,” said Camille Ricketts, the firm’s head of marketing and content. “It’s not really transactional in venture capital. There’s nothing we want people to buy, but we want people to think of our companies when they need a job, or think of our firm when they’re starting a company. Those are all major choices, so there needs to be a lot of trust built up and a relationship with First Round as a brand.”
Did that last part sound familiar? If you’ve been paying attention to content marketing, it should. But if you’re in VC, these notions are only now hitting the industry. Which brings us to our next major trend.
Trend #2: Entrepreneurs require less capital than ever to launch a business and also have more options than ever to secure that capital
Yes, just like marketers trying to sell products and services have (hopefully) learned by now, the customer has all the power. And while it took a little while for entrepreneurs to reach this point with investors, the effects of this trend have led to more firms promoting themselves by trying to be more helpful than the competition. Content is one very popular vehicle for doing so.
Entrepreneurs gained that power thanks to two intertwined factors: the low barrier to entry for starting a company today—thanks in large part to modern digital tech—and the rise of many more, smaller VC firms.
If founders need less capital, then you no longer need to raise nine figures to set up shop as a VC. At an extreme level, even just a few million can suffice. Much digital ink is being spilled about the boom in “micro-VC funds”—suffice to say, it’s getting noisier and harder to rely on organic, inbound deal flow. And platforms like AngelList and Kickstarter gives founders easy access to investors or the power of crowdfunding.
In short, differentiation and adding tangible value are now borderline requirements for VCs, especially for those without a legacy brand to tout.
Among the most active content marketers in VC is OpenView Venture Partners. (Note that they have no relation to my firm NextView.)
“OpenView has a particular focus—we invest in the expansion stage—and so while the portfolio varies in types of companies, they’re all going through the same pain points in terms of growth,” said Jonathan Crowe, who manages the firm’s blog, which is part of a larger value-add team known as OpenView Labs. “The main things we publish are articles. About half are produced internally and about half are coming from guests, either people in the portfolio or industry experts.”
They also put together larger, e-book-style guides and have dabbled in both video and audio. Joe Pulizzi, the founder of the Content Marketing Institute, even serves as an advisor for the firm, while OpenView is listed as a CMI “benefactor.”
“We’re primarily doing this to build brand awareness and get on the minds of entrepreneurs,” he said. “We look at the typical things like traffic, and the big metric for us is subscribers. We do have a goal around a particular type of job title as a subscriber, and we’re starting to get more targeted where your goals are around people at certain companies as well.”
Is there a breaking point?
With this arms race comes the inevitable loss of signal among the noise. One marketer tasked with making sense of all that noise is Nick Frost, who curates a daily newsletter for the software startup Mattermark. Because their audience is comprised mainly of investors, Frost has the formidable job of hand-selecting a dozen or so blog posts each day from the VC world.
One thing is certain: There’s no shortage of material for his newsletter.
“I’ve definitely seen an increase in the number of VCs writing,” he said. “And since there are tons of tech blogs out there spewing tons of stuff every day, from TechCrunch to VentureBeat to Pando and more, it’s harder to get the mindshare of the tech startup world. So [VCs] need to constantly put themselves out there.”
But VCs are also stereotypically fast-followers. If there’s a new trend in the market and/or new tactic touted by a peer, it’s inevitable that others will follow. “I can immediately notice a groupthink starting to happen,” said Frost. Investors like Fred Wilson and Brad Feld—two notable VCs and among the most popular bloggers in the industry—have the power to spark a discussion that permeates the entire field.
Frost goes on to cite new ways of communicating, like the “tweetstorm” (a series of successive tweets about one topic, as Marc Andreessen is prone to doing), or Meerkat and Periscope for live video streaming and Q&A.
Like in the rest of the content world, podcasts are also incredibly popular among VCs.
But in a refreshing twist, even VCs—those titans of the tech industry—are still beholden to certain content marketing best practices.
“Yes, established VCs can start a conversation around a specific topic,” said Frost. “But as for these newer VCs that are trying to initially build their brand, I see them erring on the side of more traditional, evergreen content like how to build a pitch deck or how to raise funding. And then once they establish their voice and their audience, they start doing more experimental content to spark different conversations around their interests.”
At NextView, for instance, we certainly fall into that camp. At first, we did a lot of evergreen content—and still do. This ranges from creating board deck templates to analyzing whether startups should blog, and how. The reach of those things 10x’ed our more thoughtful, navel-gazing prior posts.
But as our audience has grown, we’ve started to tell emotion-driven stories that appeal to a specific niche—seed stage startups and all the gritty, clever, or unusual things founders take pride in doing when they’re launching a new venture.
So does this work?
Each and every VC with whom I speak argues vehemently for the benefits of content. They see better or more deals and have elevated their brands. As for hard data and ROI, that’s the big next hurdle—just like it is throughout the content marketing world.
“There’s no revenue really attached to what we’re doing,” said Ricketts. “If I hear that deals have been sourced or important relationships have been made, then I really feel like that’s certainly ROI. It’s just not as concrete in terms of hard and fast numbers, but I think it’s really, really, really important for brands not to make things so cut and dry when it comes to content. There’s so much halo effect, and when you really get to what causes an action whether customer or user, it’s that trust and relationship.”Image by Jwblinn