Public relations plays a vital role in the process of raising venture capital for a company. PR is particularly crucial ahead of a Series A funding round, which is the first major round of financing for a startup.
PR efforts can help build trust and credibility in the management team and the business plan, attracting investor attention in a crowded marketplace. PR activities can demonstrate market traction, shape investor perceptions, and mitigate risks. In this blog post, we will explore the importance of PR in the fundraising process and discuss how businesses should approach PR ahead of a funding round.
What is a Series A Funding Round? And what has it got to do with PR?
Series A funding is the first major round of venture capital financing for a startup company. It typically comes after the company has raised seed funding from angel investors or other early-stage investors. Series A funding is used to help the company grow its business, develop new products or services, and expand its operations.
The amount of money raised in a Series A round can vary widely, but it typically ranges from £2 million to £15 million. The exact amount of funding that a company can raise will depend on several factors, including the company’s business plan, its market potential, and the experience of its management team.
As one of the UK’s foremost PR agencies we’ve handled PR campaigns ahead of funding rounds for numerous clients, including Claro Wellbeing and Push Doctor, and PR can be essential in maintaining investor confidence and securing funding. Here’s why:
PR builds trust and credibility in the management team and the business plan
A strong PR strategy helps a company establish trust and credibility with all stakeholders, including potential investors. Positive media coverage in national news titles, vertical sector publications or trade magazines, thought leadership content, and a favourable public perception can create a positive reputation for the company, making it more appealing to venture capitalists who are looking for reliable and trustworthy investment opportunities.
Journalists can provide extra scrutiny and third-party endorsement to help endorse the management team and their plan, helping investors see more upside and less risk to their investment.
Good publicity can attract investor attention in a crowded marketplace
Venture capitalists are often inundated with investment opportunities, and they rely on various sources to discover potential companies. Effective PR efforts increase a company’s visibility, ensuring that it stands out from the competition.
Well-executed PR campaigns can generate media coverage, create buzz, and attract the attention of venture capitalists who are actively seeking innovative and promising startups. It is a cutthroat, dog-eat-dog world and entrepreneurs need to use every tool in their armoury to raise capital. Good PR is essential.
Press coverage can demonstrate market traction
PR activities can highlight a company’s market traction and progress. Through media stories, case studies, customer testimonials, and other PR initiatives, a company can showcase its growth, customer acquisition, product development milestones, and revenue generation.
These indicators of success can significantly enhance a company’s appeal to venture capitalists, as they demonstrate that the business has a viable market presence and potential for further expansion. Investors want to know that a business has a unique offering that will scale quickly, offering the best returns.
Media relations plays a major role in shaping investor perceptions
PR efforts can help shape the narrative around a company, controlling the way investors perceive its products, services, and overall business model. By effectively communicating a compelling story, the company can influence the perception of its value proposition and competitive advantages, making it more attractive to venture capitalists who are looking for innovative and disruptive ventures to invest in.
Good PR can mitigate risks and challenges
PR is not solely about positive news; it also helps a company effectively manage and address negative situations or challenges that may arise.
A few historic negative articles can put investors off, so it is important to start PR early and dilute any negative press with positive coverage.
Timely and transparent communication during difficult times can help maintain investor confidence and trust. By demonstrating the ability to handle crises and challenges, a company can exhibit resilience and professionalism, factors that are important to venture capitalists evaluating investment opportunities.
A comprehensive PR strategy helps a company establish a positive brand image, attract investor attention, demonstrate market traction, shape investor perception, and mitigate risks. These factors contribute to making a company more appealing and competitive when raising venture capital.
How should a business approach PR ahead of a funding round?
- Start early: It’s important to start your PR campaign early in the fundraising process. This will give you time to build relationships with journalists and other media contacts, and to generate positive coverage of your company. Briefing a PR agency and getting the right plan can take time, and then there are lead times and deadlines to map in. Things always take longer than you think.
- Focus on your story: What makes your company unique? What problem are you solving? What are your goals? When you’re pitching your story to the media, make sure you focus on these key points. The key to a successful venture capital round is to clearly articulate the business plan and model.
- Be prepared to answer questions: When you’re pitching your story to the media, be prepared to answer questions about your company, its products or services, and its financials. You can’t hide behind a press release. Journalists will scrutinise the detail and it is this scrutiny that provides the third-party endorsement that investors need.
- Follow up: After you’ve pitched your story to the media, be sure to follow up with journalists to see if they have any questions or need any additional information.