Venture capital (VC) firms play a pivotal role in shaping the media landscape for startups, influencing public perception, talent acquisition, and future fundraising efforts. The paper “Investor Influence on Media Coverage: Evidence from Venture Capital-Backed Startups” by Brian K. Baik, Assistant Professor at Harvard Business School and a researcher at D^3’s Digital Value Lab, and Albert Shin, doctoral student at Harvard Business School, sheds light on how VCs strategically engage with the media to bolster their portfolio companies. By examining survey and empirical data from nearly 400 VC investors, the study reveals that investor actions significantly enhance media coverage, ultimately leading to better branding, awareness, and talent quality.
Key Insight: Media Coverage Boosts Brand Awareness
“’The respondents who take steps to increase portfolio company media coverage claimed that they mainly do so to enhance the company’s brand and awareness.” [1]
Venture capitalists recognize that increasing a startup’s visibility in the media is essential for building brand recognition, particularly for younger companies that lack an established reputation. Media coverage allows startups to gain public recognition, which can be crucial for attracting stakeholders such as customers and suppliers. By strategically managing their portfolio companies’ media exposure, VCs help these companies break through the noise in crowded markets, enhancing their brand presence and increasing stakeholder engagement.
Key Insight: VCs Use Active and Passive Strategies to Influence Media
“VCs can actively influence company policies and actions [and…] VCs may influence portfolio companies’ media coverage through a passive channel by leveraging their reputation.” [2]
VCs employ both active and passive strategies to enhance media coverage for their portfolio companies. On the active side, VCs may directly engage with media by facilitating interviews, issuing press releases, or working with public relations firms to boost visibility. Passive strategies, on the other hand, leverage the reputation of the VC firm itself, with media outlets covering companies simply because they are backed by a well-known venture capitalist. This dual approach helps VCs ensure that their investments receive the media attention they need to thrive, whether through direct involvement or by reputation alone.
Key Insight: Media Coverage Varies by Company Type and Stage
“Our respondents claimed to prioritize media coverage for B2B companies (65%, rather than B2C) and earlier-stage companies (i.e., seed/early stages, 43%), where reputation is most limited.” [3]
The type of company and its stage of growth heavily influence how VCs allocate media resources. VCs focus more on business-to-business (B2B) companies where media coverage is more effective, as it is targeted at specific groups, rather than the general public. Additionally, VCs are more likely to increase media coverage for early-stage companies, which typically lack the reputation and customer base of more established firms. These companies, with relatively limited public information available, experience the greatest benefits from increased positive media attention.
Key Insight: Media Exposure and Talent Acquisition
“[W]e find that portfolio companies experiencing an increase in positive news post-investment are correlated with better employee quality.” [4]
The research highlights that VCs’ efforts to increase media visibility also plays a critical role in attracting top-tier talent. By enhancing public awareness and company reputation, startups can draw higher-quality employees, which in turn significantly influences the company’s success trajectory. This underscores the multifaceted value of media in shaping both external perceptions and internal capabilities of growing startups.
Why This Matters
For business leaders and C-suite executives, understanding the role of media in shaping public perception and driving business outcomes is essential. Venture capital firms have long recognized the strategic value of media coverage, using it not just to promote their portfolio companies but also to attract talent, secure additional funding, and prepare for exits. As competition in the startup ecosystem grows, leveraging media becomes a crucial tool for gaining a competitive edge. Executives should consider how to integrate media strategy into their overall business planning, ensuring that their company is not only seen by the right people but also perceived in a way that aligns with their long-term goals.
References
[1] Brian K. Baik, Albert Shin, “Investor Influence on Media Coverage: Evidence from Venture Capital-Backed Startups” Harvard Business School Accounting & Management Unit Working Paper No. 24-073 (August 1, 2024), 12.
[2] Baik and Shin, “Investor Influence on Media Coverage: Evidence from Venture Capital-Backed Startups”, 2.
[3] Baik and Shin, “Investor Influence on Media Coverage: Evidence from Venture Capital-Backed Startups”, 4.
[4] Baik and Shin, “Investor Influence on Media Coverage: Evidence from Venture Capital-Backed Startups”, 7.
Meet the Authors
Brian Baik is an assistant professor in the Accounting and Management Unit at Harvard Business School. He teaches the Financial Reporting and Control course in the MBA required curriculum. Professor Baik studies how information, financial reporting, and corporate taxes matter for PE/VC investors or startup firms. Some of his works have focused on the role of financial statement disclosure for PE/VC investments, and whether and how private equity fund managers inflate their interim fund valuations (net asset values) during fundraising periods.
Albert Shin received a B.A. in Economics and Mathematics from Yale University and M.S. in Finance from MIT. Previously, he worked as an investor at Susquehanna Growth Equity and served as a fellow and mentor at the MIT Sandbox Accelerator Fund.