This is Benchmark’s website.
It’s just one page.
No “contact us”.
No “apply for investment”.
No “about us”.
But they can get away with it.
The firm was early to Asana, Docker, Dropbox, eBay, Friendster, MySQL, OpenTable, Optimizely, Snap, StitchFix, Twitter, Uber, WeWork, Zendesk, Zipcar, and Zillow, to name just a few.
The firm and many of its partners past and present are iconic — Bruce Dunlevie, Bob Kagle, Andy Rachleff, Bill Gurley.
Heck, Gurley was immortalized in the Showtime TV series Super Pumped, on the battle for UBER.
Since its founding in 1995, the firm has lived up to its name and intention, becoming the benchmark in venture capital.
The firm’s brand is so strong that they now consider investments through warm referrals and by invitation only.
They don’t have issues with deal flow.
But chances are, you are not Bill Gurley and your firm is not Benchmark.
If you’re a new venture capital firm, you can’t afford to sit on your hands like Kevin Costner in Field of Dreams, and expect that if you build it — a one-page website like Benchmark’s — that they will come.
And here’s why.
1. The venture capital market is saturated
There are thousands of increasingly global venture capital firms in the world competing for the best deals. And if you subscribe to StrictlyVC, you’ll notice that several new funds are closing each and every week, even in a down market like the one we find ourselves in 2023.
2. Most venture firms don’t generate target returns
Historically, 50% of venture funds don’t return 1X their investor’s money.
Over the past 20 years, the average firm has failed to beat the NASDAQ Composite (12% annual return).
Heck, 25% of firms didn’t even beat the S&P500 annual return (6.79%) over the ten years to 2018, a boon period for tech startups.
Data Source: Cambridge Associates
3. You don’ have a brand, visibility, or a reputation yet
The best founders want to work with trusted brands.
As a new firm, chances are you’re not one.
You need to do everything you can to build brand awareness and reputation, if you are to stand a chance of getting on the cap table of the handful of great companies that generate the lion’s share of venture returns.
4. The best VC brands get the best deals
As our analysis of the best venture deals in US history below shows, unless you have a solid brand, you’re unlikely to get in on the seed, series A, or series B rounds of companies that can return a fund not just 3X over, but 10X+ over.
Data Source: Crunchbase
5. Website traffic is correlated with fund returns
Except for Benchmark, our analysis of VC deal flow and website traffic finds that the firms with the busiest websites also happen to be the best-performing firms.
There are numerous reasons for this, but firms like a16z, FirstRound, Bessemer, Blackbird, and numerous others are investing heavily in content to build brand awareness, relationships, and drive inbound dealflow.
6. The cost of missing out is fatal
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.
Data Source: Y-Combinator
7. Content offers asymmetric returns
The cost of content is tiny relative to management fees, but the potential upside is almost uncapped.
Let’s say you’re a seed stage fund and spent just $200,000 over three years on a modest content strategy with the subsequent visibility and brand leading to a $1M investment in one seed stage company whose valuation grew by 10X.
At a $10M seed valuation, your 10% ownership stake, undiluted, would be worth $10M at 10X. Assuming a 20% carry, you would have made $2M for the firm on the back of a $200K investment.
8. Content showcases your expertise and value-add
You might have unique expertise in your chosen sector. You might have a secret sauce that can help your startups succeed. But unless they know this and believe it, it’s kind of pointless.
In a sea of venture firms, having a truly valuable differentiator can be key to building relationships with other firms, and getting the best deal flow.
Content can help you package your value add and broadcast it to the world in a way that’s compelling and not self-promotional.
9. Alternative paths are expensive
What’s the alternative? Attend countless conferences, spending tens of thousands of dollars in the process, taking days and weeks out of your calendar, to shake hands, exchange business cards, and probably not hear from anyone ever again?
Not only that, but if you fail to build a solid brand you might get deal flow, but it will all be bad deal flow. You’ll have to plow through hundreds of terrible and unsolicited emails, messages, and pitch decks, making it almost impossible to do your job and driving you crazy in the process.
Most funds fail to raise a Fund II. That’s because Fund I performed so badly that it sacrificed the trust of existing LPs and signaled to the market that this fund manager doesn’t know what they’re doing — steer clear.
As a first-time fund manager, you need to get early runs on the board — markups, to build confidence amongst existing and prospective investors to help you raise a second, third and fourth fund and build a truly enduring VC brand.
Content might seem like a nice to have, but if you are in the business of VC, and you are a new firm with no real brand yet, it’s hard to see it as anything other than a must.