The "kingmaking" power of elite VCs is overstated in enterprise sales. While a top-tier brand can help with recruiting, it provides little advantage in acquiring customers, as most buyers are unfamiliar with the venture capital landscape. The product, not the investor, closes the deal.
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There's a strong reluctance in venture capital to fund companies that are number two or three in a category dominated by a "kingmaker"—a startup already backed by a top-tier firm. This creates a powerful, self-fulfilling fundraising moat for the perceived leader, making it unpopular to back competitors.
Trying to win a competitive Series A against a firm like Sequoia is nearly impossible for a smaller fund. Top firms leverage an overwhelming arsenal of social proof, including board seats at the world's most valuable companies and references from iconic founders, creating an insurmountable competitive moat.
A common belief is that investment from a top-tier VC can guarantee a company's success. However, the hard-learned lesson is that capital alone cannot create a successful company. True success is predetermined by the founder's quality and strong product-market fit; VCs can only help navigate.
A top-tier VC's primary value isn't just capital; it's the immediate credibility they lend to a startup that may not have earned it yet. This credibility is then 'harvested' to attract elite talent, future funding, and crucial brand momentum.
While every VC has a network, true sourcing edge comes from building a brand and belief system that resonates deeply with founders. This makes founders proactively seek you out, creating a high-quality inbound channel with deals that competitors aren't seeing, allowing a small fund to punch above its weight.
The firm intentionally builds a powerful, public-facing brand so portfolio companies can 'borrow' its force and reputation at critical development points, accelerating their own growth and market presence.
When fundraising, the most critical choice isn't the VC fund's brand but the specific partner who will join the board. Sophisticated founders vet the individual's strengths, weaknesses, and working style, as that person has a more direct impact on the company than the firm's logo on a term sheet.
Competing to be a founder's "first call" is a crowded, zero-sum game. A more effective strategy is to be the "second call"—the specialist a founder turns to for a specific, difficult problem after consulting their lead investor. This positioning is more scalable, collaborative, and allows for differentiated value-add.
The buying committee is larger than just the key contacts sales engages. Hidden influencers, particularly in procurement, play a crucial role. If they have no brand awareness or trust in your company when the deal reaches their desk for final approval, they can single-handedly block it.
QED Investors realized they were misusing their famous founder, Nigel Morris, by only bringing him in for the final call. They now strategically deploy him early in the process to open doors and build relationships with target companies, using his reputation as an asset for outreach, not just a closing tool.
