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Individual venture capital companies receive more than 1,000 proposals a year and are primarily interested in businesses that require an investment of at least $250,000, as stated in Embroker. However, according to the same source, only 1% of startups turn out to be the next Uber, Airbnb, Slack or Stripe. That is why it is tough to get a VCs' attention. But PR can significantly increase your chances of getting funded, and here's how.
PR helps you show off your expertise
Founding a startup doesn't make you an expert in your field. If nobody knows about your expertise, investors might see you as an outsider. Investing in PR, you are investing in building a portfolio of your public opinions, mentions and columns in the outlets that matter in a startup scene.
Being a guest on a podcast talking about the future of your industry, authoring an opinion column or giving a quote on product innovation will help you build your credibility. Publications don't publish articles from authors that have nothing useful to say to their readers, and journalists don't ask for quotes from random people.
Every word you say in the press is your chance for investors to notice you, and see you as an expert who explores daring innovations and has the knowledge and courage to create a fast-growing, successful company.
When the investor's FOMO kicks in, PR is gold
While you still have to be working on your concept, business plan, MVP and risk management, PR has to be your "significant other" if you are looking for funds. Every investor's FOMO is to miss an opportunity of catching another unicorn. VCs are constantly looking for the best deals — they open TechCrunch, VentureBeat and Crunchbase every morning to find another potential multi-billion dollar company.
This is why you have to create hype air around your startup using PR:
Get articles about your startup published in publications
Work on different formats to reveal the best angles of your business (ex. articles, mentions, interviews or commentaries)
Focus on what problems your startup solves, and why the world needs it
Make it a big deal, give bold statements and provocative quotes to create a buzz around your company.
Related: What Van Halen Can Teach You About Public Relations
PR sells you and your vision to investors
Your early-stage startup data undoubtedly contributes to investors' decision-making. However, at the beginning of your startup journey, you sell yourself and your vision and not the product yet. Therefore, you have to make sure you are telling your story right, and take your name out in the right publications. Remember that PR is not all press releases and interviews. Secure placements in online media, but grab more innovative opportunities as well, such as:
Clubhouse appearances where game changers in your industry hang out
Reddit "Ask Me Anything" sessions, where you can participate as an expert and authority on a subject that matters in your field
Product Hunt launch campaigns
Twitter and LinkedIn chats, where you can create a buzz around your persona as an expert
Alexa Flash Briefings
PR helps you stand out
Competition is fierce for venture capital, and budgets are tight. You may have a service or product that is innovative and so needed for your potential customers. But if investors never heard of you, it can be almost impossible to prove that your startup is worth investing in, especially if your market is already crowded. What are the odds of you standing out?
This is another reason to be active in the press and on socials to get the funds. Seeing you in every major tech publication and on social platforms is a form of proof that you are worth their money and time.
Differentiate your brand and yourself from other startups by strong PR appearances and get the money you need for your company faster.
Related: How to Leverage Artificial Intelligence in Public Relations
PR adds value to your company
PR helps you and your business become known for all the great things you and your team do. It increases visibility and raises your company's profile — everyone wants to use the products and services of the go-to company with a good reputation. Engaging your customers with case studies can build trust and a positive attitude towards your brand. PR drives demand among your customers and helps you build strong relationships with VCs. Therefore, it attracts investments and pushes your business towards new goals, metrics and success.
Related: Is Your Brand Ready for Public Relations and Press?
FAQs
PR can help business owners build relationships with potential investors by keeping them informed about the company's progress, goals, and any upcoming developments. Regular communication can help establish a sense of trust and build a rapport, making investors more likely to consider investing in the company.
How can PR help a startup? ›
A good PR strategy for startups can help raise brand awareness, reach wider audiences, and even boost conversion rates. Rather than focusing so much of the budget on advertising, PR for startups can help increase conversion rates up to 50 times compared to ads.
How do startups attract investors? ›
How to Attract Investors to Your Startup
- Understand an investor's mindset. ...
- Craft a compelling business plan. ...
- Build a strong team. ...
- Demonstrate market potential. ...
- Highlight key milestones. ...
- Leverage connections and networks. ...
- Conduct targeted outreach. ...
- Utilize angel networks and online platforms.
The Top 10 Traits That Attract Investors To Your Startup
- A market they know and understand.
- Powerful leadership team.
- Investment diversity.
- Scalability.
- Promising Financial Projections.
- Demonstrations of consumer interest.
- A clear, detailed marketing plan.
- Transparency.
How to add value to your business
- Be a customer. You could become a customer if you want to understand your company's business better. ...
- Submit high-quality work. ...
- Make a unique product. ...
- Encourage faster production. ...
- Adjust your marketing strategy. ...
- Ask the right questions. ...
- Become an expert. ...
- Focus on what you can do.
Successful PR increases awareness, builds relationships, cultivates positive sentiments from the general public, and—at its best—directly drives your company toward its objectives.
How can PR help a business grow? ›
Positive media coverage
By keeping the press informed about your products, services, and wider company, and generating outstanding media exposure opportunities, PR can help raise your company's authority, build relationships with key audiences, and ultimately take your business to the next level.
How do you impress an investor? ›
How to Impress Investors: A Comprehensive Guide to Preparing for Investor Meetings
- Research your investors.
- Prepare your pitch.
- Practice your delivery.
- Prepare for potential questions.
- Follow up after the meeting.
In summary, startup evaluation is based on stage-relevant analysis of the founder's strategic vision, team quality, product-market fit evidence, growth sustainability, customer understanding, financial health, evolution milestones, and traction benchmarks.
What do investors get in return from startup? ›
Investors provide startups with the capital and resources necessary for growth while startups exchange a percentage of their value, which will lead to profits once it's time to exit. This investment does not have to be paid back to the investor.
If your company is early stage and has a valuation under $1M, don't ask for a $5M investment. The investor would be buying your company five times over, and he doesn't want it. If your valuation is around $1M, you can validly ask for $200K–$300K, and offer 20–30% of your company in exchange. Type of investor.
Can investors pull out in startup? ›
As an investor in a startup, you may have the opportunity to exit your investment early by selling your shares to another investor. This can be a good option if you need to cash out your investment quickly or if the startup is not doing well and you want to cut your losses.
How do investors in startups make money? ›
Just like the public markets, startup investors make money by selling their shares in a company at a higher share price than they paid for them. Unlike the public markets, there aren't as many opportunities to frequently trade shares in private companies and startups.
What are 3 ways to value a startup? ›
The various methods through which the value of a startup is determined include the Berkus approach, cost-to-duplicate approach, future valuation method, the market multiple approach, the risk factor summation approach, and discounted cash flow (DCF) method.
How to put a value on a startup company with no revenue? ›
7 Ways to Value a Startup Company With No Revenue
- Berkus Method: Developed by angel investor Dave Berkus. ...
- Scorecard Valuation Method: Compares the startup to others in the same industry. ...
- Venture Capital (VC) Method: ...
- Risk Factor Summation Method: ...
- Combo Platter Method: ...
- Asset-Based Valuation: ...
- Cost-to-Duplicate:
Calculation: Valuation = Total Assets - Total Liabilities. Example: If your startup's total assets are $1.5 million, and liabilities are $500,000, the book value valuation would be $1 million. Use When: Appropriate for mature startups with substantial tangible assets.
What is the primary benefit of a startup using press releases for its public relations? ›
By using press releases as a PR tool, you can attract new and potential customers to your business. With press release distribution, it becomes easier to track the views, clicks, shares and scope of your campaign, thus improving your marketing and communication effectiveness.
What is the role of PR in product launch? ›
PR will build up the anticipation for a product before its launch. This is to similar teaser campaigns that brands use before a product launch. The product launch event will also be covered by the media and this will generate the much needed hype.
