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Signal Strength

With stronger marketing efforts, VC firms are making sure their message gets heard.

Looking for signs of a VC rebound? Take a second glance at those press releases in your company mailbox. VC firms are ramping up their marketing efforts twofold by hiring PR firms to promote their own portfolio companies and full-time marketing people to get their company names before prospective entrepreneurs. "I would estimate that the number of dedicated marketing professionals who work on staff or [on] a consultant basis for venture capital firms has more than doubled in the past four years," says Emily Mendell, director of public affairs at the National Venture Capital Association.

As VC firms try to raise new funds from limited partners, they've discovered that brand recognition is becoming more important. VCs are growing more aggressive so they can be the first to discover a hot deal or get a shot at the most promising entrepreneurs. This is especially true at smaller, regional firms that don't already have high visibility within the entrepreneurial community.

"This trend is saying that many venture capital firms have picked their heads up from the triage mode they were in from 2000 to 2002," says Mendell. "Now they have the time to look ahead and think strategically about positioning. It's a positive sign."

VCs are also realizing the need to selectively target certain sectors and then create brand awareness to appeal to entrepreneurs in that space. Says Jennifer Jones, marketing director at Mayfield, a top-tier VC firm in Menlo Park, California, "The industry has grown from a cottage industry to something much more sophisticated and mature."

The push toward increased marketing efforts is by no means uniform throughout the industry. Some VC partners still prefer to work behind the scenes and leverage the visibility of their portfolio firms. "We see very disparate strategies throughout the industry," says Mendell. "It varies firm to firm depending on the philosophy of the partners."

This story appears in the March 2005 issue of Entrepreneur. Subscribe »