“Hop on twitter, perpetrate we doing big sh*t”
Kendrick Lamar, “The Heart: Part 2“
VCs who want better access to competitive investment opportunities must have a social media footprint. I’m guessing this isn’t a comfortable message for many VCs out there, but that’s the reality.
Here’s why:
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.
Good info, I agree that Twitter is one valuable yardstick and can be used to indicate what sort of character a person is. But if a person doesn’t have an active Twitter account, they may still be a valuable, trustworthy person.
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Reblogged this on MARSocial Author Business Enhancement – Jaro Berce.
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For sure you can trust a VC who doesn’t tweet. They are relationship builders and can build relationships in lots of ways. It helps for them to be on twitter and know what’s trending, and read the news on twitter, but i don’t think they HAVE to tweet. But they do have to be connected and network with lots of people including entrepreneurs.
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I generally agree. What about VCs who don’t blog? I’ve resisted thus far for a number of reasons.
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how about an entrepreneur who doesn’t tweet?
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Nonsense. Having a social media footprint shouldn’t mean squat when it comes down to doing your job as a VC. Some VC’s like Paul Lee of Lightbank recently cut back on Twitter because it was a drain on his personal life and I did the same. I use to follow a ton of well known VC’s on Twitter but was forced to unfollow them because I realized that Twitter was little more than a tool for narcissism and a complete mental drain. How do I know this? Go through the Twitter feed of a popular VC that you follow and count how many tweets actually have value in them beyond entertainment.
Twitter is not some kind of magic tool for VC’s to get exclusive deal flow either. The best deals are still in the form of prior relationships and warm intros.
At the end of the day, I won’t allow how many followers I have define me as a good or bad VC. I want entrepreneurs to judge me by how much real world value I add to their startup through mentorship and support.
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Reblogged this on Marcelo Sobreiro Weblog and commented:
É a rede.
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I totally agree, Phil! Twitter is one the most important social networks for VCs to utilize because it is a great way to connect with Entrepreneurs. Having a voice on Twitter is essential to building trust and demonstrating business style. Also, a strong network of followers on Twitter shows credibility in 2014.
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