There seems to be a great deal of discourse these days about the “institutionalization” of the venture capital asset class, driven in part by the hiring of more full-time, non-investing professionals at venture firms.
These positions, which include chief financial officers, in-house counsels, recruiting partners and marketing and communications professionals were previously handled ad hoc and part time. In some cases, this emerging model of professionalization does suggest a move towards uniformity. However, in other instances, it is a clear sign that universal institutionalization in venture capital is a long way off.
One of the areas where venture firms are continuing to professionalize is marketing and communications. Venture capital emerged from behind the scenes in 1999 and 2000 at which time there was a great deal of hype and subsequent public interest in the asset class. Now in 2005, the hype has evaporated but the interest remains. Firms are spending more time thinking about their brand position and how to distinguish themselves from other firms in the market. Given the multitude of audiences and channels, for a growing number of firms marketing and communications is a full time job.
In January, the National Venture Capital Association conducted a member study to better understand this phenomenon. We identified firms that employ a dedicated marketing professional and surveyed them as to how the function operates. Based on our results, we estimate that approximately 16% of NVCA firms employ a full-time marketing professional. Those that do represent a broad range of funds-both small and large; regional, national and international; and across all investing sectors.
The primary responsibility of the marketing position is to build and fortify the brand of the venture capital firm and, in many cases, the firm’s underlying portfolio companies by providing expert counsel across a variety of areas, including messaging, media, communications, hiring, networking and investor relations. These professionals not only ensure that the firm or the company has a distinct message-but that it brings that message to life through all of its activities.
Those firms that employ a marketing professional are, for the most part, well established, with 89% of firm respondents in existence for more than 10 years. Yet, for 57% of the firms, the marketing position is relatively new, having been created within the last four years. Anecdotally, we hear that the number of firms that employed a full-time marketing professional before 1999 are perhaps in the single digits. Prior to the position being established, marketing was handled by general partners, administrative assistants, part time agencies or not at all.
The marketing position and its responsibilities still vary widely across the industry. Most marketing professionals handle media relations (91%), brand strategy (88%) and presentations (85%). Other functions include LP communications (68%), print and electronic marketing (79%), event planning (79%) and portfolio company support (62%). Half of the marketing professionals are involved in fund-raising.
The title for marketing pros and whom they report to varies by firm, consistent with the position’s newness and breadth. One of the common aspects of the marketing position is the level of sophistication of those employed. More than half of these professionals have been working more than 15 years, many in the field of communications and/or financial services.
The key driver as to whether a firm embraces the marketing and other professional positions is cultural rather than demographic. The industry remains largely split on whether there is a need to “be out there” telling the story of the firm and its partners. Many firms continue to shun any external attention; others actively seek opportunities for exposure. And often the philosophy around the importance of branding varies with the firm itself.
The increase in marketing professionals does not suggest a move towards institutionalization, but away from it. For a growing number of firms, demonstrating and communicating their distinctiveness has become a job that warrants full time attention. By centralizing the marketing function, investing partners can focus on what they do best-finding and building great companies.
If the marketing job is done correctly it will support higher quality deal flow and leverage strategic knowledge across the partnership. The market professional may also serve as the firm’s champion for “walking the walk” at all times. Professionalizing the function is a step toward ensuring that the uniqueness of general partnerships remains a key driver for the ongoing success of the asset class.
Emily Mendell is the Director of Public Affairs for the National Venture Capital Association. She may be reached at