A study has found that getting PR for your startup not only helps get funding (which is obvious) but also helps identify the right kind of PR to help you raise venture capital. The study points out that particular blogs are the ones that venture capitalists are most likely to read., namely TechCrunch, GigaOM and VentureBeat. I’d point out that not all of these are great outlets for getting customers, but OfficeDrop’s experience is pretty similar in that when we get press in these venues we are more likely to get inbound calls from VCs.*
Quoting from the study’s press release: “Besides the fact most venture capitalists only have time to read so many blogs, the research shows that negative coverage of a startup venture has more of an effect than positive coverage. In other words, a venture capitalist is more likely to take notice of a negative blog post about a potential investment than take notice of a positive post. “After all it is more of a rejection process than a selection process,” Aggarwal said. “VCs want to sift through the pile of startup plans on their desks quickly, and are essentially looking for a reason to reject a plan and move on.”
The study also examines how the influence of blogs may change with the progress of a project’s funding rounds. The findings indicate that the effect of blog coverage is strong at the earlier funding rounds, but then it starts to decrease in subsequent funding rounds. “This makes sense, because in the early stages, all they may have is a dream of what they could be,” Aggarwal said. “As time passes, users, usage, and other accounting measures start to give a better signal about their actual potential.””
It is good to see that 10 year venture capital returns are becoming positive as the dotcom bubble burst is leaving the average. Cambridge Associates has data showing that Q2 2012 returns are 5.3%. From the press release, “there was continued improvement in the 10-year period as the strong down quarters of 2001-2002 continued to roll out of the calculation. Additionally, the venture capital index outperformed the DJIA, NASDAQ Composite and S&P 500 across most time horizons with the exception of the 3- and 10 –year periods.”
Note that the returns are highest for the expansion and later stage funds in the 10 horizon. A lot of funds (as in the big, well known successful funds) have now raised either huge multi-stage funds, or growth and early stage funds. We’ll see how they perform now that there is more competition at these fund sizes. There was obviously some aggressive (dare I say crazy?) late late late non-strategic investments in companies like Facebook early last year and the year before. I’ve blogged about those late stage investments being really aggressive before.
I’m having problems actually linking to the press release, but according to the release: “To view the full, comprehensive report, which includes tables on additional time horizons, vintage years, and industry returns, please visit the Cambridge Associates or NVCA websites.”
At OfficeDrop we continue to get good reviews and drive a lot of new customer adoption + engagement with our mobile offerings. PR is still an important part of our app distribution strategy, since getting found in the app stores is getting a lot more challenging. But it’s working for us!
We recently got a nice piece of press from iPhoneLife writer Nate Adcock. Nate wrote a piece on how he uses cloud storage on his iPhone, and also said:
“OfficeDrop is so far the Mercedes of the mobile file service offerings”
How amazing of a review is that?!? We were really excited.
Nate loved our mobile scanning and search capabilities, saying: “Probably the coolest aspects include the ability to scan docs in with your phone, and then search them using voice recognition software.” He also highlighted how the OfficeDrop app is great for organizing and finding documents on the go an integrating the files into your workflow on the go.
And if you don’t have the most up to date OfficeDrop iOS apps, you can get them in Apple’s iTunes here.
PWC is reporting that venture capital investments in the third quarter of 2012 are down. From the report: “investment activity declined 11 percent in terms of dollars and five percent in the number of deals compared to the second quarter of 2012 when $7.3 billion was invested in 935 deals. Investment for the first three quarters of the year was $20 billion into 2,661 deals, a level well below this point last year, making it likely that 2012 will fall short of 2011 in terms of both dollars and deal volume.”
The sector data from the report does shed a little light on what’s happening:
Cleantech investing dropped 20% in dollar terms, but stayed flat in terms of dollars.Software was off a little bit as well, and “Internet-specific investing fell 12 percent in dollars and eight percent in deals from the previous quarter with $1.7 billion going into 250 deals but remained well above the billion dollars per quarter level that has been prevalent for the last two years.”
In terms of stage, “First-time financing (companies receiving venture capital for the first time) dollars declined eight percent in dollars to $1.0 billion in Q3, but the number of deals increased one percent to 297 deals in the third quarter.”
It feels like the big thing is a drop in dollars committed per deal. Since companies are require less to get going, since there were fewer big blockbuster $100mm plus deals and since the number of VC funds (and size) are decreasing it all makes sense that we see a decline.
So this is the middle of a major shift in how the US venture market functions. Smaller deals, smaller VCs with a few big funds… this is reality.
Recently there have been two very interesting analysis on seed funding – on showing the optimal amount of companies in a seed portfolio is an amazing 60! And another showing that seed investing remains healthy, but is likely not in a bubble like situation.
I’d love to dig more into both of these, but surprise surprise, OfficeDrop is really busy! But it’s a good thing!