PR Helps Raise Venture Capital

IStock_000005857420XSmallWanna talk (yet again) about the ROI of Social Media & PR?

Let’s ask the startup companies who rely on the VC community’s support.  Did PR help them net funding?

A survey sponsored by BIGfrontier Communications Group asked 300 U.S. startups that had received funding within the past 3 years about the role of PR in their fund-raising efforts.

According to a PRWeek story that ran today, the new study showed that:

  • Startup companies that engage in PR campaigns are 30% more successful in getting funding within one to three months than those that don’t.
  • Forty-four percent of the respondents who used PR outreach received funding in the one-to-three-month time period versus 14% of those that did not.
  • Seventy-eight percent of respondents who said PR helped in their funding efforts are planning to use some of their VC dollars for additional PR.
  • Ironically, the survey also found that only 18% of the 300 startups surveyed had a PR program in place during the funding process.

Of the 82% of startups who did not avail themselves of PR assistance, BIGFrontier’s Steve Lundin noted, “They don’t understand that had they spent money on PR services, they would shorten the funding cycle … When you’re able to walk into a room and someone has heard of your company, (there is a much greater) sense of validation … than walking into a room cold.”

IStock_000006944069XSmallI’ve often made a similar claim to clients, citing anecodtal evidence that PR helps raise valuations, whether in fund-raising or for exit strategies … And on the latter front, I’ve even seen clients’ competitors snap them up just to get the PR engine turned off!

And in these recessionary times, as many smart business people consistently note, “getting the word out” is expecially critical for startups.  As VC Fred Wilson tweeted today: There’s no blanket wisdom for entrepreneurs raising money right now. It’s a mixed bag VC market. Strong deals getting done.”  

One measure of “a strong deal?”  A strong reputation.  Just as the BIGFrontier study implies.

It’s nice to see some evidence and ackowledgement for that fact, directly from startup executives themselves.



Posted on: November 20, 2008 at 6:02 pm By Todd Defren
4 Responses to “PR Helps Raise Venture Capital”

 

Comments
  • Great that we have some stats to prove how important PR is. Proof that they are more likely to get VC when they use PR effectively is a great little stat.

    I still think that PR, especially digital PR, is having a bit of a reputation crisis at the moment. Sort of like SEO services, where you never know what you are getting, and whether the company is reputable. A website (£50 template?) can be a great cloak for inexperienced practitioners.

  • Lally says:

    Shel:

    That’s why I put it in the form of question. I am as guilty as anyone.

    I still read stories about an institution I once represented.

    Still using math I made up on the fly.

    Still wrong.

    10+ years later.

  • Shel Holtz says:

    Lally, there’s one fatal flaw in your assumption: That communicators can do math.

  • Lally says:

    “*Startup companies that engage in PR campaigns are 30% more successful in getting funding within one to three months than those that don’t.
    *Forty-four percent of the respondents who used PR outreach received funding in the one-to-three-month time period versus 14% of those that did not. ”

    That sounds more like three times as likely, rather than 30 percent more likely. Am I missing part of the equation?






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