“Hop on twitter, perpetrate we doing big sh*t”
Kendrick Lamar, “The Heart: Part 2“
Entrepreneurs go online to research potential investors, especially before a pitch, and social networks have become a fundamental part of the online ecosystem. Most VC firms have the requisite website and maybe a blog, but these aren’t sufficient channels for conveying the people behind the firm. Social networks, on the other hand, provide a personalized picture of VCs as individuals — from their personalities, values, leadership styles, to their business focus. Business is personal, and social networks are primed for personal expression. By having a major presence on LinkedIn, Twitter, a personal blog, Facebook, etc., VCs can more effectively connect with entrepreneurs. Failing to do this means compromising your credibility, as evidenced by this well-known entrepreneur’s tweet:
The investor and founder relationship is about trust and today, that trust can be established through social media. I regularly engage with thought leaders and entrepreneurs through social networks, and I increasingly receive pitches through Twitter, some of which have led to in-person meetings. These entrepreneurs regularly say, “I’ve read your tweets and blog, and I’d like you (and IDG Ventures) to be involved with my company.” In turn, I have better access to entrepreneurs who are in a position to choose which VC(s) they’d like to work with.
Remember, it only takes one very successful company to make a successful fund, so why not increase your opportunities to discover high-potential investments through the most popular channels of today?
VCs with a strong social footprint also improve the chances of attracting LPs (Limited Partners). According to Drew Smith of Advantus, “From an LP perspective, we see VCs with well-established social footprints as those who are staying on top of technology trends.” Smith believes social media is an ideal way for LPs to become better acquainted with VCs. “These days, VC blogs and tweets can be more informative than quarterly reports; they give the most current picture of what GPs are focused on.”
While I’m guessing that the vast majority of VC don’t even have a Twitter account, there are some high-profile VCs who have been active on social networks for years now, including: Brad Feld, Fred Wilson, David Hornik, Jeff Clavier, and Josh Kopelman. VC Dave McClure, who has over 200,000 Twitter followers, frequently supports his target and portfolio companies: “I regularly share and tweet articles about companies both pre- and post investment to get their attention and to provide awareness and marketing support.”
So can you trust a VC who doesn’t tweet? My opinion is no. Like with all industries, venture capital has evolved. In the year 2014, VCs have to participate in social networking or get left behind.