All the signs suggest venture capital spending is poised for a rebound in 2011, but that does not necessarily mean there is an easy windfall for PR wanting a piece of the action.
While the National Venture Capital Association (NVCA) projects an uptick in spending through 2010 compared to 2009, VC firms aren't going to throw money around recklessly in the technology and digital sectors like they may have done in the past.
"This time we are a lot smarter and we will not overfund the sector," says Emily Mendell, VP of strategic affairs at the NVCA.PR opportunities
Even so, startups and later-stage tech and digital companies need PR services, and there are dollars and accounts to be won if the right moves and deals are made.
By the end of Q3 2010, $16.7 billion in deals had already been handed out by VCs, compared to $18.3 billion in all of 2009, according to NVCA data. (By the end of Q3 2009, $12.9 billion in deals had been handed out.) Mendell expects overall spending in 2010 to eclipse 2009 and ramp up even more this year.
A track record of working with startups goes a long way. App developer Smule hired San Francisco-based Atomic PR for its experience in working with companies in beta stages. Smule attracted $14.5 million in VC funding and its CEO and cofounder Jeff Smith retained Atomic a few months before the startup launched in 2008.
Andy Getsey, CEO of Atomic, says, "One of the big differences between today and 10 years ago is that VCs are becoming much more sophisticated in their understanding of PR. They are now more interested in bringing PR strategists to the table early. There is a trend of them being more involved with the agencies."
Each firm's challenge is to de-fine exactly what it brings to the table, when many others are also scrambling for work and clients.
"Everybody is focused on digital," says Tim Dyson, CEO of Next Fifteen. "Digital is the one thing people will spend more money on this year. Right now, digital is a race. Companies are doing anything they can to win that race."
In anticipation of this, Lewis PR bought social media-focused agency Page One PR in October. In November, the firm hired digital marketing pro Adam Singer to head its social media practice.
Lewis EVP Morgan McLintic acknowledged the acquisition and hire were part of a plan to position the agency for business this year. He said hiring and retaining people with digital talent is necessary, but that it is a significant challenge because such skills are in furious de- mand right now.
"Our profession is becoming more technical," he explains. "The skills to build an app are different - now we are recruiting designers, developers."Staffing challenges
Finding and retaining skilled staff is an enduring problem for all firms. But in the wake of a devastating recession in which many people fell out of the workforce, including PR, bringing experienced PR pros up to speed on the newfound digital demands in the industry exacerbates the challenge, says Georgiana Comsa, managing partner at Silicon Valley PR.
"If you didn't work in PR in the last year, you missed a lot," she says. Comsa's is a small shop amid Silicon Valley's tech giants and sexy Web startups, but it has created a niche focusing on data storage and networking companies.
As VC funding trickles down into marketing budgets, Comsa says her challenges are as basic as doing her homework, making sure she's seeking business that is right for her firm, and settling on the right social media monitoring and measurement tools.
If the fit isn't right, Comsa will turn down some new VC-backed business. "Even though they have the money, I don't want it if they have a product that's too early in the market," she says.