Investors instinctively know that a company's social media success represents a valuable intangible asset. How to value this asset is still an open question, but hasn't discouraged billion-dollar investments in companies like Tumblr, YouTube and shortly Twitter.
What's new is that this sentiment is moving downstream to play a role in investor decisions in earlier stage and startup companies.
Today's Wall Street Journal moved this storyline forward in an article, "If you look good on Twitter, VCs may take notice." VCs in this story make the case that social media visibility indicates how well a new company knows its target audience and connects with its customers.
Ted Leonsis, a partner in the venture capital firm Revolution LLC and chairman of Chicago-based Groupon, told the Journal that '...social media is meaningful and helpful ...' in evaluating a young company. To illustrate this point, the Journal follows Leonsis through his digital footprint audit process and its role in his decision to invest in Chicago startup BenchPrep Inc.
"Ten years from now, social media will be the starting point of any investment," Leonsis said.
This is a bold point of view, given the brouhaha about any kind of meaningful measurement of social media ROI. Yet, it makes perfect sense.
"Drilling down on a company's digital footprint and assessing their online engagement is core due diligence work," Leonsis writes in his blog post The Elephant in the Room. "If a company cannot meet the basic test of capturing an online community with its product then it will have a difficult time becoming a significant business worthy of time and capital."
Here's the takeaway for young companies and startups:
As social media matures as a medium, the creative development of a social media personality, voice and engagement that reflect your brand is what will compel followers, users, advocates and perhaps, your next round of funding.
