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Why VCs are using Snapchat to attract the best tech startups

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Christian Miele, vice president at E.Ventures, explains why he thinks it’s time for VCs to reach a wider audience and how they can do it.

If entrepreneurs are the new rock stars then venture capital firms are the new record labels. As media and public interest in the role of the VC has increased, partners of prominent funds can be as well-known as the founders they back.

Increasingly, it’s not just ex-entrepreneurs aspiring to become VCs. Real-life rock stars and international athletes are setting up their own funds. Bono’s Elevation Partners is a much-publicised example, with an impressively profitable exit from his 2.3% early stake in Facebook. Kobe Bryant, one of the world’s best known NBA superstars, last month partnered with Jeff Stibel to announce a new $100m fund.

An industry previously known for being quiet and secretive, venture capital is increasingly sprinkled with stardust. Most VCs struggle, however, to attract the kind of media exposure lavished on Thiel, Bono or Bryant.

VCs have turned to marketing professionals to help them stay front of mind for tomorrow’s unicorns. The problem is that as more and more VCs shout about their fundS, it’s increasingly difficult to cut through the noise and communicate a USP or point of difference. I suspect most founders are in fact turned off by VC marketing efforts.

As an industry, we need to be better at finding new and creative ways of reaching both founders and young people interested in entrepreneurship. I want to have the most exciting companies looking for investment from my firm and, having recently experimented with social media (to the bafflement of my colleagues), I think I may have found an answer. But more on that later, first let’s look at two diametrically opposed approaches.

The rock star fund

Andreessen Horowitz is perhaps the globe’s most vocal VC. Its website looks more like a tech magazine than a fund and everything about its online presence pushes you to consume its (admittedly excellent) content. It offers everything from advice on board composition to in-depth analysis of company deals.

Its podcast ‘A16Z’ is almost mandatory listening – each episode, which has some incredibly high-profile guest contributors, gets anywhere between 40,000 and 70,000 listens. As a lesson in marketing, it’s a good one – if you build quality, independent content, you will find an audience.

The silent fund

Conversely, the website of Benchmark, a major West Coast VC firm, is nothing more than a holding page pointing to a list of its portfolio companies’ Twitter profiles. Compared to A16Z it looks incredibly spartan.

Despite this, Benchmark has one of the best names in the business, with well-publicised early investments in companies like Uber and Docker, along with four big-name exits of over $1bn. Benchmark lets its deals speak for themselves.

Both approaches have their merits.

A different approach

It has recently occurred to me that VC content and marketing tactics may only appeal to a very narrow strata of our world. The blogs, podcasts and articles are clearly read by other VCs, limited partners and entrepreneurs, which is great when that’s the only audience you are aiming for.

For VC firms to really make a mark, we need to appeal to those who might be at the very beginning of their entrepreneurial journey. We need to appeal to those who might not fully understand what venture capital is, but may be desperate to learn and to set up their own business.

What I’m saying is, we need to be a bit more creative.

A journey into Snapchat

I’m painfully aware that I’m somewhat late to the Snapchat party. Like many, I dismissed it as a fad that, like its photos and videos, would eventually disappear from view. Then, in May this year, it raised a monster round of funding: $1.81bn.

Its performance figures are astonishing. According to AppAnnie, Snapchat was the fifth most downloaded app worldwide across both App Store and Google Play, the top four apps all belonging to Facebook’s social media stable. Only Facebook and Instagram currently surpass Snapchat’s retention rates.

Perhaps most telling is its age demographics. Over 70% of Snapchat’s users are under 35. It’s clear that this is where the young people are.

I would argue that Snapchat offers the perfect platform to market directly to the founders of tomorrow. Best of all, it’s a million miles away from the highly competitive marketing platforms usually inhabited by VCs, which are, in any case, closed feedback loops.

For VCs looking to build relationships with future CEOs long before they enter the business world, it’s hard to find a better platform than Snapchat.

Making a directional debut

So I tried it out: snapchatting conversations and mini-interviews with entrepreneurs and my fellow VCs. At first, I didn’t get much traction, but then the number of viewers began to increase, eventually growing by 20% chat-on-chat.

Through trial and error I think I’ve found the perfect length – around two minutes – and I’m focused on creating interesting content. Followers don’t just want to see me talking to camera, they want to hear from dynamic exciting young entrepreneurs.

Unsurprisingly, the audience for my first videos consisted mostly of friends and family, but the level of engagement was high. Of the 50 people who started watching my first snapstorm, 49 watched the video in its entirety.

Perhaps most importantly is the ease of creating content – the time to produce a snap is, naturally, the same as the time it takes to actually watch it. Snapchat has an incredible return on investment on production, far outstripping the likes of Twitter with its character limits or Facebook’s need for high-quality, expensive production values.

From a marketing point of view, it is difficult to conceive of a better platform for VCs than Snapchat – it is a direct line to the young, tech-savvy ambitious entrepreneurs of the future and it is for this reason that I will be advising my partners to sign up.

Rather than just talking to each other, and the relatively small tech community, VCs need to be talking directly to young people about why entrepreneurship is important, debunking myths and ensuring that it’s seen as a smart career choice. Most of all, we need to make sure that young entrepreneurs know we are there to support and help them.

This article first appeared in edition 12 of Tech City News popular tech magazine – the PropTech issue. 

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