More than ever before, venture capitalists are digging in. To stay competitive and top-of-mind, VC’s are no longer loaning their advice and their capital, but actual “core” services that portfolio companies need. This shift isn’t necessarily new. For example, top VC firms like Kleiner Perkins and Greylock play a hands-on role in helping recruit talent. Recently, we’ve seen firms roll up their sleeves for another core competency: public relations.
More often, I’ll be pitched on a story on a startup by the in-house PR rep for an investment firm that has invested in the said startup. Traditionally, either the startup or an outside PR agency tends to do the outreach when it comes to launches, trend pieces, financings or other news items. And the rise in pitches from the VC firms themselves (as opposed to the startups) got me thinking about the evolution of the role of the VC, specifically in the context of PR. But in the past year or so, we’ve seen a rise in the addition of top PR and communications talent to these firms, specifically to help work with portfolio companies on PR strategy.
One of the first major hires in the industry was the addition of PR honcho Margit Wennmachers, co-founder of one of the largest technology and media PR firms OutCast Communications, to Andreessen Horowitz as a partner. At the time, Marc Andreessen told AllThingsD’s Kara Swisher that Wennmachers’ brand building and PR experience would be a valuable asset to the firm and its portfolio. Mind you, Andreessen Horowitz wisely realized only a year after launching the firm that building a VC powerhouse would be more than just writing checks, but also a consultancy of sorts.
David Krane, Google’s former Director of Global Communications and Public Affairs, and one the company’s first PR reps back when it was just a startup, wears two hats at Google Ventures, where he is now a partner. He invests in startups but also helps Google Ventures portfolio companies with PR strategy as well.
in April 2010, Sand Hill VC Kleiner Perkins nabbed former head of communications for Hulu (and previous PR/marketing employee at Amazon and Microsoft) Christina Lee to head marketing and PR for the firm. Last fall, PR guru Kiersten Hollars (formerly of Outcast, Yahoo, Digg, and AOL) joined Wennmachers’ team at Andreessen Horowitz, focusing on scaling the marketing and PR efforts for the then 80 companies in the firm’s portfolio. And most recently we saw Google senior manager in PR Andrew Kovacs jump to Sequoia to help the firm’s marketing partner, Mark Dempster with PR and communications duties for the firm’s companies in the U.S. and Israel.
Clearly some of the brightest and most well-regarded talent in the technology PR industry are no longer just at agencies or in-house. As Emily Mendell, VP of communications for the National Venture Capital Association, tells me, the VC market is extremely competitive for deal flow. “There are a lot of firms chasing for deals in the hottest, early stage startups, and PR representation and communications strategy is just another service these firms can offer while at the negotiating table,” she says.
And technology PR is not an easy task—to do the job well, it requires a technical understanding of the product and the ability to digest and relay this information in a communicable way. Startups realize that having this on-hand at their investment firm is an asset to them, Mendell explains.
And many of the pr execs mentioned above are solely focused on helping portfolio companies as opposed to doing in-house communications for the firms themselves. Lee tells me that part of the trend of more VC firms bringing on PR talent is a reflection of how the role of communications is changing in the tech industry in general.
“Now smart entrepreneurs understand the value in being transparent with consumers, and the role of communications has risen to a strategic level,” she says. “PR is expected to play a big part in building brands and more and more startups are thinking about PR and branding at an earlier stage.”
Kleiner, specifically, is taking a holistic approach to company building, and part of this is providing communications and PR help to startups and companies, she explains.
Of course, there are a range of different ways which VC PR reps can help entrepreneurs and companies from simple tasks such as introductions to technology journalists to actually spearheading PR efforts for a product launch, to coaching companies on branding and messaging strategy to drafting press releases.
Another industry source tells me that while some firms are bringing on PR talent for the use of portfolio companies, others are trying to use PR to boost their own images, and promote their VCs to the press.
One factor that I believe is pushing the trend of building reps and even mini-agencies in-house is the rise in seed stage investing by these VC firms and the competitive market at this level. There are no shortage of VCs and angels that are willing to write checks at the seed level nowadays. Many firms can’t just get deal flow based on reputation alone. But the VC firms ability to be a ‘full-service’ agency can be a factor entrepreneurs consider when sitting down at the table. This is especially important for early-stage companies, who may not have the kind of money to hire a top-tier PR firm to handle PR, says one industry insider.
As mentioned above, part of this full-service package also includes recruiting, which is a trend that has been happening for some time now. Kleiner Perkins partner Juliet de Baubigny has been helping portfolio companies with human capital and recruiting for the past ten years. Greylock recently created a dedicated talent team to help its portfolio companies recruit effectively. Firms like Andreessen Horowitz, and Sequoia are also aggressively working to help startups network and recruit talent.
Interestingly, this ‘full service’ model has been offered by incubators like Y Combinator, TechStars and 500 Startups though both in-house talent as well as through mentorship. While it’s a stretch to call the VC firms mentioned above incubators, it’s certainly interesting to see the overall functionality of these large firms evolve with the current state of investing.
As firms like Andreessen Horowitz, Kleiner Perkins, and others create these full-service VC funds that not only dole out cash but come with in-house PR agencies, marketing resource and talent recruiter, there’s no doubt that this trend will filter down to smaller firms and funds.