Venture capital has long been seen as the darling of the tech investment world, with VCs often portrayed as daring innovators shaping the future. However, recent developments are challenging this narrative. A recent Business Insider article highlights how private equity firms are stepping into the spotlight, offering attractive exits for startups in a challenging economic climate.
The truth is that both sides are a lot more alike than most people think. The key to successful public relations and communications work lies in understanding those similarities and the subtle differences while leveraging each to meet their business goals.
At a high level, private equity and venture capital firms are investors that fund private companies in exchange for ownership shares. VC is a form of private equity that invests in early, riskier, albeit potentially more lucrative, investments in the form of companies, while PE firms typically invest in companies later on, taking larger ownership stakes, sometimes even controlling ones, for larger investments. With that in mind, there are some proven approaches to maximize media coverage for private equity firms and the companies in their portfolio.
Private Equity Doesn’t Have to Be Private
“Private equity is private for a reason” is a phrase employed to shield those firms from talking about their inner workings. But in an increasingly competitive world of investing, PE firms must step up to discuss their fundraising approaches and deals. Hiding behind a curtain of secrecy isn’t a great way to attract new business.
PR agencies should encourage PE firms to be open about their approach to investing and how they select companies. There’s no need to give away all the secrets, but a tightly crafted story can both personalize the firm and help raise awareness from potential LPs.
PE ownership often brings significant changes to acquired entities, sometimes leading to challenging situations. These scenarios underscore the need for robust PR strategies beyond standard communications. PR agencies must be prepared to handle complex change management narratives and potential crises. This involves developing clear messaging that explains tough decisions, addresses stakeholder concerns, and maintains the company's reputation during transitions.
Go Vertical
Successful PR campaigns for PE firms and their portfolio companies tend to focus more on driving revenue growth rather than awareness. A targeted feature in a key industry publication will likely have a bigger impact than a funding announcement in a general-interest tech publication. A story about a major partnership that runs in a local business journal can attract attention from like-minded companies and lead to additional business.
A strategic PR plan built around a theme and supported by smart demand-generation efforts (such as influencer marketing and analyst relations) will align best with the PE firms’ generally more conservative approach. The goal is to elevate their portfolio company into a market leader and position them for the best possible exit.
A Scalable Model
Beyond the PE giants like The Blackstone Group and KKR are smaller, more agile firms that are taking a more entrepreneur-friendly approach. This new breed of PE includes people who have founded their own companies and approach businesses directly rather than through an investment banker.
Working with these PE firms requires a PR agency to demonstrate some flexibility. A one-size-fits-all approach is a poor fit for the firm and the companies it has invested in. A scalable model, where an agency creates a PR program customized to a company’s maturity, opens up the opportunity to go after new investors and adapt PR efforts to adjust to changing goals or a changing economic climate.
Slow and Steady Wins the Race
Just because private equity firms are naturally more cautious about media, that doesn’t mean they have to stay out of it entirely. A deliberate investing approach that creates profitable businesses is just as newsworthy as a big bet on an early idea that eventually pays off.
For PR agencies working with PE firms and their companies, aligning with their business goals is crucial, then executing that aligned strategy with earned media placements that push the companies forward. Stability, proven success and long-term value creation can be amazing media stories, with effective PR campaigns that ensure a smooth exit.