Rise of the Celebrity Investor

Nearly everyone in the startup space has recognized the rise of a new class of VC and angel investor over the last few years. I’ll call them the “celebrity-investor” because much of their reputation stems not necessarily from their accomplishments (though most have achieved and invested in remarkable things) but from their personal brand – often centered around a popular blog.

Examples would include:

Fred Wilson of Union Square Ventures

•  Paul Graham of YCombinator

Mark Suster of GRP Partners

Bill Gurley of Benchmark

Chris Dixon of Hunch

David Hornik of August Capital

David Cowan of Bessemer Partners

Dave McClure of Founders Fund

And there’s 120+ more listed here. Jeff Bussgang of Flybridge in Boston estimated in January of 2010 that this represents 10-12% of all the active VCs in the United States.

And it’s no surprise.

Some of the biggest things entrepreneurs hope for from their investors can be achieved remarkably well by building a powerful personal brand on the web. When Fred Wilson or Chris Dixon or Mike Hirshland (Polaris Ventures) blog, people listen. They read. They retweet. They email their colleagues.

Fred Wilson of AVC.com
Fred Wilson of Union Square Ventures: When he talks, everyone listens.

And when they invest, their names carry a weight and a premium that brings tremendous value. Other investors, entrepreneurs, potential acquirers and press pay attention to those startups. One might draw a parallel to the way Hollywood celebrities’ every t-shirt, nightclub, restaurant and trash bin is scoured and obsessed over.

I’m not saying this behavior by the rest of the startup or press community is fair, reasonable or even logical. But, it works and for that reason, I’m surprised more investors don’t put more of their time into this type of buzz building. The power of a blog with a few thousand subscribers, a Twitter account with 10K+ followers and posts that regularly hit the top of Hacker News and Techmeme is immense.

Every startup will want your name attached to their company. You’ll get emails with “hot” companies who want your input and review. When portfolio companies mention your investment, they’ll have extra clout in making connections and getting business development done. Other investors will want to work with you.

Of all the benefits entrepreneurs get from VCs (outside of the money), nearly every one can be bolstered and enhanced by the construction of this personal, celebrity brand. Glen Kelman wrote on the Redfin blog that this may not be the right move for CEOs and founders, Mark Suster wrote a similar piece about “conference whores” (which I intend to address directly in a future post). I’d argue that for VCs and angel investors, it may actually be one of the best uses of your time.

p.s. Just after I wrote this, Fred himself authored a post about how investors can differentiate themselves in competitive deals. He didn’t mention the power of the “celebrity” brand, though I’d argue it’s a huge reason Fred himself (and others like him) don’t need to jump through as many hoops to get good deals.