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January 05, 2010

Why Do VCs Blog (and Tweet)?

For decades, the venture capital industry was like a Yale Secret Society - very clubby, discrete and opaque.  VCs had all the power in the VC-entrepreneur equation, and entrepreneurs had to work hard to decode the mysterious VC process to obtain funding.

My how the world has changed in a few short years.

Pundits will tell you that in terms of trends, 2009 was the year of the real-time Web/Twitter, smart phones/iPhone and the mainstream emergence of digital advertising.  But 2009 was also the year VCs blogging and tweeting really became mainstream. 

Today, over 100 VCs blog regularly (including all five of the Flybridge general partners!). One blogroll puts the number at 129 VC bloggers. That's 10-15% of the active VC population of 1000.  Here's how I get that number:  the NVCA says there are 882 firms in existence in 2008, but with many firms no longer investing new money, I would estimate that approximately 400-500 firms are truly active.  With an average of 2-3 senior investors per firm, there are therefore probably 1,000 VCs that are actively seeking deals and sitting on boards.  The two gut checks on that are:  (1) 1500 new deals get done each year and 1.5 deals per senior VC is the right average and (2) On a bottoms up, geographic basis, there are maybe 500-600 in CA, 100 each in Boston and NY (maybe a bit more in Boston and a bit less in NY), 200-300 elsewhere in the US.

So 10-15% of our entire industry blogs.  And nearly all of the VC bloggers tweet as well.  Think about how extraordinary that is.  Imagine if 50 of the members of congress blogged and tweeted regularly.  Or if 50-75 of the Fortune 500 CEOs.  Or 40-60 of the 400 NBA players.

The amount of transparency and richness of information available to entrepreneurs about the VC world is unprecendented.  This is surely leading to more efficient markets in what many call the most inefficient market of all - the dance of small businesses seeking capital.

When I first started blogging five years ago (inspired by David Hornik, who started VentureBlog in 2003!), I got some funny looks from my peers.  At the time, the thought of VCs revealing our inside secrets and investment strategies was ridiculed. Further, VCs were supposed to be too busy to blog, so the best VCs wouldn't do it as it would take away from their work looking for great deals and managing their portfolio.  Tell that to VC bloggers like David Cowan, Brad Feld, Fred Wilson and other VCs who have 15 year plus great track records.

So why do VCs blog (and tweet) with such frequency?  I can't speak for all 129, but here's why I do it:

1) I love to write.  Simply put, I enjoy words, language and the challenge of expression and composition.

2) Creative expression.  As a VC, I can't exert my creativity in the same way that I did when I was an entrepreneur.  My blog is one productive yet harmless outlet to express my creativity.

3) Educational.  There's an old adage that if you truly want to learn something, teach it to someone else. Forcing myself to explain the VC business to entrepreneurs through my blog has pushed my own thinking and required me to study issues more deeply than I might otherwise have done.

4) Transparent.  The VC business can be an intimidating business to many.  I am an iconoclast at heart.  As a former entrepreneur, I particularly enjoy breaking down barriers and making the VC business more accessible and transparent for others.

Will more than half our industry blog and tweet five years from now?  Stay tuned.

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Jeff Bussgang, whose blog has been a source of inspiration for me over the years, has a post on VCs blogging. There seems to be a bit of controversy over the issue, as you can see in the comments of... [Read More]

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Great post. I'd say point 5 is "Marketing". Just from reading the blogs of VC's, I've gotten a better "feel" for what each of you stands for and how each of you thinks. It's a great way to sell yourselves, your value-add, and your firm in general.

So while you and I have met in person, and your blog is great, it's also wonderful to read blogs of VC's like Fred Wilson and Mark Suster. They have a big advantage over VC's that don't blog, because many entrepreneurs like me already "get to know" VC's that we haven't met in person yet.

I launched a company in 1999 and 2009 and not only have the physical tools to launch a company come down, but as you note, the informational tools have come down tremendously due to VCs like yourself, Fred Wilson, a well as others.

I would also note having former and current entrepreneurs, such as Steve Blank (he also has his wonderful book), Eric Ries, Sean Ellis, Chris Dixon, etc. blogging as well only adds to the rich and free information out there for entrepreneurs. Now there's no excuse for not taking a deck slide to successful exit or IPO ; ) If an entrepreneur read all the links here - http://bit.ly/6L0Rho - there really would be no excuse.

Good point, Rafael. I can't tell you whether the "marketing" has impacted my investing (eg, I haven't yet invested in an entrepreneur I met blindly through the blog) but the best entrepreneurs have choices and if my transparency and accessibility helps the best entrepreneurs get to know me, all the better. There's nothing that can replace face to face relationship-building though.

Thanks for adding this, David. Tom Eisenmann's link is teriffic.

Your comment about other VCs reactions to you when you started blogging rings very true. You were treated nicely (or you were just being nice) - I would have said something like "when I first started blogging, I was mocked by a bunch of other VCs - both to my face and behind my back (the harshest of which got to me.) I was amused by this, and even more amused when some of these folks subsequently started blogging several years later. And then I got another chance to be amused when they stopped after a few posts.

Your four reasons for blogging are dynamite. I love your writing and am excited about both your short form work (e.g. the blog) and longer form work (your upcoming book). It's a great overall contribution to entrepreneurship in general and - well - keep it up!


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Thanks for the kind words, Brad, you’re
definitely one of the industry’s inspirations on this front and, yes, I was
probably being gentle in terms of describing the nature of the VC feedback/ridicule!

 

Your words about creative expression, and pushing your own thinking by forcing yourself to articulate thoughts ring very true to me, but I think this post does not address a primary motivation of most vc bloggers which is it's use as an enterprise tool...blogging, when done correctly is an extremely scalable tool to 1) establish credibility/intelligence relative to competition, 2) build proprietary deal flow, 3)establish a voice/presence in geographic markets where you do not physically exist (i.e. nyc for flybridge), and 4) recruit and maintain a pool of talent within your online community that establishes your firm as a center of entrepreneurial activity (brand advertising). I wrote a blog post a few weeks ago about venture capitalist's implementing this strategy in the New York market that you might find interesting: http://bit.ly/sgii3

Thanks, Jordan. I did read your post and enjoyed it (and appreciate the shout out for both Flybridge and our NYC efforts, such as First Growth Venture Network, 10gen, etc.)

It is so important for entrepreneurs to get to know their prospective investors (and the other way around, of course) and doing the research on them is now soooo much easier if we can read the investors' blog. Many of them will post "this is what I'm looking for these days and why" or " dont show me anything like this, and why".

VCs tell us to do our research, but it's not always evident from looking into portfolios or even talking to those CEOs. Reading investors' blogs is much more enlightening, accurate and even entertaining.

So I agree with RafaelCorrales, put this down in Marketing. And thanks Jeff and all of you investors that blog!

Like you, many VCs are successful entrepreneurs who have built great companies. So, it is great to hear their perspective on a broad range of topics - including lessons learned, what to do, and what not to do. It definitely helpful.

At last count, there are about 17 +/- VCs blogging in the Boston area.


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Thanks, Kevin!  Appreciate all your
support.

 

I have to say your blog and Christ Dixon's blog are very helpful and insightful. One thing in common are both of you are true entrepreneurs. I like to say I truely enjoy reading your creative expression.

You have highlighted why you blog. Can you answer as to why do VC have Open Office?


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Thanks for the comment, Sam.  VCs enjoy
doing office hours to get rapid fire exposure to younger, less experienced entrepreneurs
who might not otherwise have a connection to them.  It allows us to “open the
aperture” a bit more than usual.  I do it as part of my work as an EIR at HBS
and have really enjoyed it.  My partner, David Aronoff, did it recently and
blogged about it here: http://bit.ly/8b8J28.
 By the way, I’m a huge fan of Chris Dixon as well, but just not sure he’s
Christ. J

 

As a newcomer to the world of entrepreneurship, I, for one, am extremely grateful to you and the other VC's for blogging, no matter what your reasons. I don't think you realize just how much direction you provide to us noobs, who now get to benefit from your experience as not only VC's but as entrepreneurs. Thanks and keep 'em comin'!

Thanks, Alisa! And thanks for teaching me a new spin on "newbie"!

Jeff, thanks for the post. Blogging definitely makes information more readily available to the masses and has helped to demystify the topic of venture capital. As a seed-stage venture investor with a focus on companies in the Midwest, I enjoy reading posts from my brethren around the country - it helps me keep abreast of current trends. (Just last month I highlighted 12 great VC-related blogs worth reading). I think you make some great points about why people blog. I know at our firm we started a blog not only to provide an outlet for personal viewpoints on various venture-related topics but also as a PR opportunity for the firm and the individual bloggers. That said, keeping a blog timely and relevant is hard work. Keeping the material fresh is a challenge and I’m impressed (and thankful) that so many VCs take the time to post. I wish I were as diligent. Active blogging by a VC may get them increased deal flow and definitely gets them enhanced name recognition which, for the amount of time and effort a blog requires, is more than deserved.


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Thanks for the kind comment, Lynn-Ann.  It
is a lot of work but glad to hear it’s appreciated out there!

 

I completely understand the value of self-education in blogging, and think it is hugely undervalued by most non-bloggers.
I moved from being an equity analyst, via entrepreneurship, to working as a consultant to games companies wanting to become self-publishers. And that can be a lonely place sometimes. My blog at www.gamesbrief.com started as a personal blog that allowed me to explore themes about how the games industry was changing - and forced me to think my ideas through to their logical conclusion.

It was only later, when I discovered that people were reading it, that I decided it was worth turning it into something more formal.

But for me, the huge value of a blog is that it makes you think your ideas through - and then let them kicked about by commenters. The more senior business people become brave enough to do this, the more they will become brave enough to admit mistakes, change their minds, alter course.
Which can only be good for society.

You make a good point, I guess it just go with the cards of being a VC.

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