

Does a VC’s brand matter? - lrm242
http://cdixon.org/?p=2079

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pg
Well known VCs also matter in doing deals. Big companies will now return your
calls.

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cperciva
I've heard this phenomenon mentioned many times, but I've never seen any
convincing explanation for why this happens. When you phone a big company, do
they look you up on crunchbase to see who invested in you? Do they simply
respond more to startups which have had the large amount of media attention
which comes with being funded by a high profile VC? Do they have their arms
twisted behind the scenes by said high profile VCs? All of the above?

I'm sure this is something you've thought about, so I'd love to hear what
explanations you've come up with.

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Harj
\- the vc's themselves will have large person networks if they're working at a
top tier VC. more often than not, if you need a deal done with company X
they'll have a personal connection to someone there. this isn't a vc-specific
value-add

\- top tier vc's don't hold just young startup investments. they'll have
mature companies, who have likely done deals with some of the big companies
you're looking to do deals with. again leveraging their network.

\- if a top tier vc has invested in you, most big company execs will assume
you're not going out of business anytime soon (right or wrong that's their
mindset - it's amazing how corporate types grab for blue chip names/brands at
every opportunity) making them more comfortable doing business with you and
not big company Y

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flybrand
VCs are market makers; they facilitate their LPs investing into their
portfolio companies. Brand is applied in two directions; upstream to their LPs
(who are upstream of them in the capital supply chain) and to prospective
investment opportunities (who are downstream of them in the capital supply
chain).

From Upstream: Yes, brand matters. Having good returns is important. Many LPs
also have LPs themselves; being an investor in a good fund makes explaining
things that much easier. The "Nobody got fired for buying IBM," issue exists
everywhere in capital supply chains. Dozens of LPs enjoy casually dropping,
"We invested in Google."

For Downstream: VCs manufacture capital returns for their investors. They
source inputs, private companies, in which they invest, oversee operations,
and assist in the creation of exits. Having a lower cost of private company
acquisitions is similar to any manufacturer who has a lower COGs, or an IT
group who is able to design and build more efficiently. So, yes, brand matters
there too.

In a community that has experience with VCs, brand matters less, just as it
matters less in any community that is more focused on results rather than
karma. The role of brands in VC, regardless of the directionality in which it
is being evaluated, is similar to any other marketplace. The complexity comes
in realizing that brand flows in two directions.

I wrote a longer comment on upstream / downstream capital flows here:
[[http://web.mac.com/flybrand/fredlybrand/Blog/Entries/2008/9/...](http://web.mac.com/flybrand/fredlybrand/Blog/Entries/2008/9/30_Operational_Template_for_PE_Firms.html)]

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ziadbc
This question could be posed "Does a x's brand matter?" All else being equal,
yes. However, in the case of an example like Sequoia, their brand isn't some
magical thing achieved through advertising. The brand recognition is a result
of having kicked ass early on. If you end up investing in the next Apple,
Google, or Youtube, you will also end up having a good "brand."

I find this distinction important. If you're looking for investment, follow
the same strategy. Kick ass first, then find a good VC. If you're a musician,
play good music, then get a record deal (or skip them altogether).

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jasonlbaptiste
There's probably a good correlation between their brand and what they can do.
Sequoia, Kleiner, Accel, NEA, and Benchmark have a hell of a brand. That brand
correlates to their network and capabilities. The same can be said on the
angel + seed stage side: Ron Conway has a name brand and the connections to go
with it. Same with USV + First Round.

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obj-c-guy
Getting early adopting customers might be easier if you are funded by a big VC
and your target customer profile is quite SV centric.

