I recently attended Columbia Business School’s Private Equity and Venture Capital Conference, Driving Entrepreneurial Thinking In the World of Investing, and heard some interesting perspectives on what PE and VC firms look for in prospective investments. I particularly enjoyed comments made during the Tech Venture and Deal Flow session which had partners from Scale Venture Partners, Insight Venture Partners, Kleiner Perkins Caufield & Byers, Greycroft and RRE Ventures. Why? Because their main theme was “if you’re bad with storytelling, you’re on the outs with this market.” Here’s a recap of what high growth companies need to be thinking about when they are looking for their next round of funding.
My favorite quote from the panel came from Mood Rowghani, Partner at Kleiner Perkins (@moodrowghani):
“A business without a story has no soul.”
That statement sums up the value of marketing and communication in the most insightful sound byte I’ve heard in a while. If you (usually the CEO or company founder) can’t explain to potential investors why people should care about your business, then they won’t. They need to understand what you do, who will buy it, why you are doing it, what makes you different and why they should care.
Effective storytelling can not only make the difference in whether you will get funding, it can also directly impact your company’s multiple – which means the more compelling the narrative, the higher potential value of your firm. Apparently the West Coast start-ups understand this inherently and have a better PR machine and more charismatic leaders, but that doesn’t mean that the rest of us can’t emulate what works.
Many of the panelists referred to Bre Pettis, CEO of MakerBot – a major Silicon Alley success story – who almost single-handedly convinced the markets that everyone needed a home-assembled 3D printer. After all 3D printers had actually been around for years, but Bre was able to persuade investors that the product and its potential was “awesome” and as a result he became a spokesperson for the category itself. And that’s exactly where you want to be: YOUR COMPANY = YOUR MARKET’S ADVOCATE. When you become the de facto source for the media around what’s happening in your industry on subjects that you care about, then you are in a very good place.
Makerbot clearly gets the importance of storytelling – their press page advocates, “Help us tell the story of MakerBot.” Their website homepage is filled with Markerbot stories, with videos, Tweets and blog posts about how their customers are using their technology to create transformation. Which creates another opportunity: YOUR CUSTOMERS = YOUR BRAND ADVOCATES.
So if there’s one thing that you take away from this post, it is the importance of your company’s story and how you tell it. Having a compelling, authentic message that people can understand and relate to can really make the difference between merely having a decent product and potentially becoming a category killer that owns the market because everyone knows what you do and talks about it. That’s right, when you get the story right, your customers and the market begin doing the talking for you. If you are looking to maximize your budget, free publicity and endorsements are the most effective marketing that money can’t buy, and what could be better than that?
Launch Warrior specializes in helping high growth companies craft effective stories through thoughtful and strategic marketing and communications. We help you connect effectively with all you key stakeholders – customers, employees, media, analysts and potential investors. If you want to learn more about our services, please contact us – we would be happy to discuss your business and how you can tell your story more effectively.