Tech Startups: VCs Might Care More About the Environment Than Equity
The traditional stereotype of the venture capitalist (VC) is that of a gray-haired man in a grayer suit who cares more about cash than climate change. But today's VCs are just as interested in sustainability as sales, with an ever-increasing focus on environmental, social, and governance (ESG). More post-Series A startups, especially those in B2B tech, now prioritize their non-financial credentials in the hope of an acquisition or Series B funding.
But how do these startups showcase values like energy efficiency, corporate responsibility, and social justice? Through marketing — the loudest way to get these values heard. Here are three marketing best practices for startups applying ESG to their venture capital strategy.
#1. Know What Investors Want
VCs are increasingly looking for ESG principles when doling out venture capital to B2B tech startups. That's not to say all investors care about issues like climate change or corporate responsibility. They don't. But customers certainly do, and VCs know they need to incorporate ESG into their analysis of startups to identify potential growth opportunities.
Funds linked to ESG principles made up $51.1 billion of net new investments in 2020 — more than double that of 2019. That proves ESG is just as critical for VCs as business readiness or next year's sales forecast. But why do investors care about ESG so much? Because regular people do. An enormous 81 percent of customers prefer to purchase products from sustainable sellers, while 88 percent want brands to help them become more ethical and environmental.
#2. Realize ESG Isn't a Fad
ESG isn't a trend or the 'right thing to do.' Instead, it's a long-term commitment when targeting customers who are increasingly aware of ethical and social issues. And investors are looking for these values when distributing capital to startups.
"All VCs seek to back companies that will have long-term transformational and positive impacts on society, and supporting portfolio companies with appropriate ESG tools and perspectives at the early stage will increase their odds of long-term success," notes Crunchbase News.
Communicating ESG in startup marketing or B2B marketing is a challenge, with brands unable to articulate these values in campaigns, let alone pitch decks and promotional materials for VCs. That's why tech companies call in professional marketers who can weave powerful narratives of environmental and social responsibility into their marketing. These storytellers communicate ESG without the typical PR fluff. No pat-on-the-back corporate spin that tells VCs about a startup's 'wokeness' — just incredibly sharp startup marketing that demonstrates the brand's environmental, ethical, and social achievements.
#3. Work With Marketers That Understand ESG
While most marketers don't even know what ESG stands for, storytellers like Arch Collective know how to communicate these values and capture the attention of VCs. Startups get exclusive access to world-class fractional CMO Amanda Rabideau and her network of unbelievably talented marketing creatives — the "Collective" — for the same cost as a regular CMO. It's a revolutionary approach to marketing that secures Series B funding and gets startups acquired. It's as easy as ESG.
Final Word
How can a startup convey its values of inclusivity, equality, and environmental consciousness to VCs who can spot fake corporate responsibility from a mile off? Through storytelling. Arch Collective knows what investors want and realizes ESG isn't a fad, helping startups secure Series B capital and acquisition through tech marketing messages that resonate.
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