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VCs and entrepreneurial ego

July 17, 2013: 3:31 PM ET

130717141344-typwwriter-620xaVenture capitalists are now competing on vanity, in addition to price.

FORTUNE -- Friends and family often ask if I want to become a venture capitalist. After all, I know the business after covering it for more than a decade, and the pay is infinitely better. But the truth is that I enjoy journalism too much, and couldn't stomach having to regularly crush the dreams of aspiring entrepreneurs. So no, I tell them, I'm good.

What I wonder, however, is if venture capitalists often get asked by their friends and family if they really want to be journalists? You know, if it didn't impact their ability to make payments on the beach house. And the ski house. So many venture capitalists not only blog, but have a deep desire to be considered "thought leaders." Or "influencers," in the LinkedIn (LNKD) parlance.

There was a time when I criticized this practice, arguing that VCs would best serve their investors by putting down the pens and hitting the pavement. But I was wrong. Blogging helped generate deal-flow, particularly by letting entrepreneurs know that there was someone out there who was thinking about similar stuff. Someone who had money to invest.

Now, however, venture capitalists are no longer content to publicize their own views. They want their entrepreneurs to be noticed as well. Not for what those entrepreneurs are actually doing, but for what they're thinking.

Battery Ventures yesterday hired Rebecca Buckman, formerly of The Wall Street Journal and Forbes, as vice president of communications and content. This follows fellow WSJ alum Ben Worthen recently joining Sequoia Capital as head of content, and ex-Wired editor Michael Copeland joining Andreessen Horowitz in a similar role.

These are all new positions, with the ex-journos each expected to spend part of their time helping their firm's entrepreneurs be viewed as thought leaders. Guest posts at the most-read sites, smarter tweets, more meaningful status updates, etc. Let someone else handle the ghosted quotes for press releases about a new product or client win.

The basic explanation for such hires is that one entrepreneur's insights can have a positive effect on another entrepreneur, thus improving the overall ecosystem. And the stronger the entrepreneurial ecosystem, the better for venture capital returns. It's important math, given that each of these folks is likely being paid at least a couple million dollars (out of management fees) over the life of a fund.

But let me offer up an alternate theory: VCs are trying to win deals by appealing to entrepreneurial ego.

It goes like this: "Yes, I know those other guys are coming in with a slightly better term sheet. But what are they bringing you besides a bit less dilution? We don't only believe in your business, but we believe in you. And we've even got someone here who knows how to get your ideas out there, and make sure that when people talk about [mobile/content/SaaS/analytics/tacocopters] they'll be talking about you. We'll make you a star, and the best people and customers will flock to your business. That difference in valuation today will be just a drop in the bucket compared to what we'll do together."

Okay, maybe it's not quite so explicit, but that's the general conceit.

And, to be honest, I think it just may work. Entrepreneurs generally think quite highly of themselves almost by definition. After all, they have forgone traditional employment due to an abiding faith in their own abilities. If the money is close, this a a strong secondary way to bolster the entrepreneur's sense of self worth.

What I don't know, however, is if the actual "content" strategies will really help businesses all that much. After all, people don't generally join a startup because they like how the CEO thinks, or because the CEO is well known. It's first about the money/equity package, and then about if the prospective employee expects to enjoy and be stimulated by the work environment. That may include a CEO's demeanor or vision, but not something they wrote on TechCrunch. Jerry Maguire isn't real life.

And this goes double for potential customers, who care that the product works and how much it costs. That's it. Maybe there are isolated exceptions like all those folks who did/didn't go to Chick-fil-A last year, but I don't imagine that most of these entrepreneurs will be encouraged to make controversial social policy statements.

Of course, if more and more VC firms begin hiring head of content, then the ego-stroking differentiation will be lost. And all the firms will have created at that point is a lucrative landing spot for ex-journalists. Well, until their investors tell them to send out pink slips.

Or am I wrong once again?

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About This Author
Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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