Communications in start-up and scale-up firms: what investors look for

Managing communications effectively in start-up or scale-up firms is an underrated skill for founders. What does a well-managed PR strategy and plan look like from an investor’s point of view? Here’s what angel investor Isobel Spencer told me during a recent conversation.

“You begin by asking yourself what does PR need to do for this company, and what is the right emphasis and focus? The answers are often a mix of things like awareness and understanding, attracting customers or partners, building credibility and winning attention.

“Timing can be critical.  At the very early stage, staying below the radar may be wise.  There’s no need to alert potential competitors until your offer is defensible; you want others to see you as a potential acquisition target, not as the source of a good idea to replicate within their own businesses.

“Once the business has some real traction, I look for a distinct market position; a clear and focussed message, consistent with long-term plans. Good thought-leadership reassures me that this firm knows the market and its place within it – where it is headed. It also demonstrates the intangible value of the firm’s people and thinking. That kind of value is hard to copy; something distinct from the inherent value in whatever the company sells.

“I would also look for evidence of effective risk awareness and issue handling. All kinds of things can quickly go wrong and blow up publicly.  How these situations are managed can decide whether the business survives or not.

“Current investors are also the most likely future investors, so how does the company communicate with this group? Investor relations aside, I look to see how the business is reported more widely. Positive press coverage in quality publications adds reassurance that I’ve backed a winner.  Too much self-publicity for the founders can be a warning sign, though. Is it helping the business or is it more about ego-massaging, or some private agenda?

“I check that the public face of the company tallies with the private. If not, it can be another warning sign. All things being equal, I think a firm with a better reputation – a well-managed, truthful one – attracts a higher valuation.  And it could be the difference between being considered for investment or not.

“An intangible like reputation works on a subconscious level; investors will almost certainly have absorbed lots of positive press before deciding to invest.”

Isobel Spencer is an active angel investor and board advisor.  Prior to this she was a consultant in corporate marketing and business strategy and has co-founded a start-up venture.  She has a bachelor’s degree in Experimental Psychology and a Masters in Management from London Business School where she was a Sloan Fellow.

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