Poll Results: Celebrity Hires Don’t Produce Real ROI for VC or PE Firms

You’re just as skeptical as we are about the merits of a VC or PE firm adding a celebrity to its roster.

In this week’s poll, 27% of peHUB readers said celebrity hires produce real ROI for VC and/or PE firms, but 73% said such hires are little more than publicity stunts.

“I think this collision of pop culture and VC produces great PR and thus probably some great deal flow, but actual returns? Hard to see the direct connection,” wrote Lisa Suennen, founding partner of venture firm Psilos Group Managers and a peHUB contributor. “I did write about this very topic recently on VentureValkyrie when MC Hammer joined up with venture incubator NewME.”

Three others who wrote extended comments said the real benefit of bringing on a big name is that it helps with fundraising. “They don’t produce ROI, they bring in more capital,” wrote one reader.

Most who filled in the box for additional comments said they could see at least a potential benefit from hiring a celebrity.

“If a Bono [of Elevation Partners] or [Larry] Summers [of Andreessen Horowitz] can open a door or two, they provide marginal value,” wrote one reader.

Another wrote: “A celebrity hire can introduce VCs to a different ecosystem and hopefully that is an objective for the hire in addition to brand visibility for the firm. So ‘network’ ROI is a benefit. A venture firm that has more visibility in the press will have more entrepreneurs know about that firm; therefore, these entrepreneurs will be more conditioned to seek out this firm more than another firm who is not as visible. Seems like it is intangible ROI, but in fact it actually does produce ‘real’ ROI as it ultimately helps deal flow.”

Yet another reader wrote: “[It’s] unlikely that these celebrities see real deal flow that will matter, although they may help in competitive deals by lending cachet to the firm’s name.”

This topic remains of interest to us and we plan to dig more deeply into it. For those of you who subscribe to Venture Capital Journal, check out this story called “Pop VC.” Connie Loizos wrote the story in 2005, but it still feels fresh. Connie spoke to several high-profile tech executives who made the jump into VC, such as Ray Lane, who joined Kleiner Perkins after a long career at Oracle; James D. “Jim” Robinson III, who was CEO of American Express for 16 years before co-founding RRE Ventures; and Bob Davis, who founded and was CEO of early search engine company Lycos before becoming a GP at Highland Capital Partners.