The short answer is “yes” (Mark Suster provides some good insight into the reasons this makes sense.) Among other things, it puts the startup in the spotlight, bolsters its credibility with potential and existing customers, validates the product, and throws competitors for a bit of loop.
The bigger consideration is how the news about a VC deal should be handled. Most startups take a pretty boring approach even though it’s exciting news. It usually something like this: “XYX is excited to announce it has raised $xxx to accelerate its growth”, followed by robot-like quotes from the CEO and an investor.
Truth be told, there are better and more creative ways to talk about raising capital.
When Simply Measured, for example, raised $8-million, its CEO, Adam Schoenfeld, wrote a blog post explaining why it raised the money and what it meant going forward.
This was a more interesting approach than simply issuing a boring press release that offers little value other than the amount raised and the investors involved. In some cases, these facts are all that is needed but a little panache or creativity wouldn’t hurt.
I like Simply Measured’s approach because it tells a story (and you now how much I like good stories!) and provides interesting insight into what a fast-growing company does with $8-million. The key lesson here for startups is raising money gives them the opportunity to do much more than tell the world they’ve raised money.
What do you think? Have you come across startups that have added a little sizzle or je ne sais crois to their VC announcements?