Venture returns boil down to one thing...deal flow.
Sure, your firm can pick better, but if you're picking from a weak pool, then what?
Sure, your firm could differentiate itself by helping startups grow, but how much can you really help a second or third rate team?
The best founders and deal flow goes to the most visible, trusted, and differentiated venture capital firms - those with the strongest brands. So perhaps it’s no surprise that most industry estimates see the top 2% of firms generating about 95% of venture returns.
But how do you build visibility and trust in a world of several thousand active VC firms, with hundreds of new firms launching each year?
You could pound the pavement, and spend tens of thousands of dollars attending conferences and taking weeks out of your year with the hope of meeting the right people.
Or you could run a targeted content strategy, geared towards getting you in front of the best founders in line with your fund's mandate.
It's no big secret. In today's world, content captures attention, and attention gets monetized. But based on our review of randomly selected VC 100 firms, only about 10% of firms have a solid content marketing strategy, and most are either not doing any content or are doing it sporadically and poorly.
The world's biggest and most successful incubator, Y-Combinator, has incubated well over 3,000 companies.
But its 137 Top Companies (5%) account for most of its returns. And if YC missed out on just three companies, Airbnb, DoorDash, and Stripe, more than half of its Top Companies returns would be wiped out.
The high cost of missing out is also reflecte in the return profile of VC firms globally, with top quartile funds generating the 20% IRR that most LPs require to justify locking their money up in an illiquid asset. Everyone else either falls short, or dismally fails with bottom quartile funds failing to beat the S&P500 average return for the past 10 years according to Cambridge Associates.
Without quality deal flow, most venture funds are poised to under-perform or fail altogether. Missing out on a deal that could have returned your fund because you didn't invest in cultivating your online brand with content is borderline negligent.
The WorkFlow podcast is hosted by Steve Glaveski with a mission to help you unlock your potential to do more great work in far less time, whether you're working as part of a team or flying solo, and to set you up for a richer life.
To help you avoid stepping into these all too common pitfalls, we’ve reflected on our five years as an organization working on corporate innovation programs across the globe, and have prepared 100 DOs and DON’Ts.