In our last blog, we discussed the need for VCs to change their approach to PR and communication in order to adapt to the complex landscape of European tech in 2025. However, while VCs build their theses and establish themselves as thought leaders, it is important to remember that the leading factor in an investor’s reputation will always be their portfolio.
Communication plays a vital role in the building of every successful business, and VCs should not underestimate the power of PR and marketing when it comes to building the reputation of their portfolio.
Why startup communications matters
There is a surviving myth that some startups are ‘too early for comms’. It’s certainly true that different levels of support are appropriate for different business life stages, and not all early-stage startups would benefit from a full-service, omnichannel PR campaign. But even pre-product or pre-sales businesses should understand how their brand will impact their growth.
Startup leadership teams are often wholly focused on building a product-market fit, looking at sales funnel performance and customer retention metrics. While this makes sense, it is the job of their support networks, such as their investors, to remind them of the importance of building a brand-market fit as well. Values-based decision-making is not a new phenomenon, but with roughly 80% of consumers actively choosing brands that align with their personal values, B2C and D2C startups especially cannot afford to neglect their brand positioning.
On top of this need to quickly establish a brand-market fit, startups are constantly locked in competition for the best talent. Building an attractive employer brand can make all the difference for crucial early-stage hires and can transform stagnation into turbo-charged growth.
Why you might want to consider PR now
In tough market conditions, PR and communications are often considered optional spending that can be cut to help the bottom line look better. But this is the kind of short-term thinking that VCs should steer their founders away from. Communications is a key part of building long-term sustainable growth and shouldn’t be sacrificed for a short-term boost to the balance sheet. The tougher the market gets, the more imperative it is that startups stand out from their competitors and articulate why their product or service is the best.
In the past couple of years, we have seen a rise in flat, extension or down funding rounds that would have been unthinkable even five years ago. There is still a slight taboo feeling around it, but raising capital at a lower valuation is just a reflection of where the market is at currently. However, if startups are raising an extension round, or a flat or down round, it’s crucial that they own the narrative around it and ensure that the reasons are properly communicated.
How can VCs help?
Investors provide an invaluable service to their founders that arguably stretches far beyond the capital they invest. While founders have their heads down building their product or platform, VCs are able to provide the bigger picture and offer advice from a fresh perspective. This can, and should, include looking at external perspectives of the business, from the points of view of both talent and potential customers.
The best VCs are also direct supporters of their founders through their own communications set-ups. VC marketing has a unique advantage over startup marketing in that the spokesperson is not directly tied to the sales function. This affords them an editorial role through which they can advocate for their portfolio companies with thought-leadership that takes a long-term view.
In today’s ever-evolving and endlessly complex environment, VCs need to change their approach to PR and communications in order to stand out and compete [see the last blog for more info]. The best investors should also apply the same approach to their portfolio companies, ensuring that their startups are effectively communicating their brand narratives with the market.