VCs are market makers; they facilitate their LPs investing into their portfolio companies. Brand is applied in two directions; upstream to their LPs (who are upstream of them in the capital supply chain) and to prospective investment opportunities (who are downstream of them in the capital supply chain).
From Upstream: Yes, brand matters. Having good returns is important. Many LPs also have LPs themselves; being an investor in a good fund makes explaining things that much easier. The "Nobody got fired for buying IBM," issue exists everywhere in capital supply chains. Dozens of LPs enjoy casually dropping, "We invested in Google."
For Downstream: VCs manufacture capital returns for their investors. They source inputs, private companies, in which they invest, oversee operations, and assist in the creation of exits. Having a lower cost of private company acquisitions is similar to any manufacturer who has a lower COGs, or an IT group who is able to design and build more efficiently. So, yes, brand matters there too.
In a community that has experience with VCs, brand matters less, just as it matters less in any community that is more focused on results rather than karma. The role of brands in VC, regardless of the directionality in which it is being evaluated, is similar to any other marketplace. The complexity comes in realizing that brand flows in two directions.
From Upstream: Yes, brand matters. Having good returns is important. Many LPs also have LPs themselves; being an investor in a good fund makes explaining things that much easier. The "Nobody got fired for buying IBM," issue exists everywhere in capital supply chains. Dozens of LPs enjoy casually dropping, "We invested in Google."
For Downstream: VCs manufacture capital returns for their investors. They source inputs, private companies, in which they invest, oversee operations, and assist in the creation of exits. Having a lower cost of private company acquisitions is similar to any manufacturer who has a lower COGs, or an IT group who is able to design and build more efficiently. So, yes, brand matters there too.
In a community that has experience with VCs, brand matters less, just as it matters less in any community that is more focused on results rather than karma. The role of brands in VC, regardless of the directionality in which it is being evaluated, is similar to any other marketplace. The complexity comes in realizing that brand flows in two directions.
I wrote a longer comment on upstream / downstream capital flows here: [http://web.mac.com/flybrand/fredlybrand/Blog/Entries/2008/9/...]