The following article is an adaptation of a report written by DeskElf. The full report will reported at some point in the near future.

Venture Capitalists tend to know how to use their money; they spend much of their time listening to people try to convince them to do just that. We've seen VCs pour billions in to the social media wave, but how many are actually using this new media?

The value of social media has been in question since 2006, picked up speed in 2008, and now, in 2010 has been proven successful by large corporate brands such as Old Spice, Lionsgate Films and Burger King. Small businesses and personal brands alike have taken to social media tools as well, for both networking and marketing. Easily compared to the boom of the Internet, in which presence has become an undeniable business necessity, social media is becoming a increasingly growing requirement for identity and reputation.

The use of social media is not clear for all industries. It’s obvious use is found in the middle ground; start ups, small businesses, personal brands and corporations have all jumped on the train. While these economy fueling endeavors are able to find use of social media, and many are able to prove rate of return, both “Mom and Pop” shops (vintage style businesses with little to no web presence) and identities such as venture capitalists (higher level services avoiding web-based public access) are not as commonly found.

We would like to address Venture Capitalists and the social media reality; are VC’s in fact not on social media, and if not, why should they be?

The following excerpts from a May 2010 article found on Mashable.com (sourced by Gist) help shape our point that venture capitalists do need social media presence, and only if they are willing to do it properly.

“[But] it’s not just founders who need to have good online karma and well-rounded profiles. Investors need to build and manage their own online reputations as thought leaders with a keen eye for what models will make for good businesses. Don Dodge is a well-known blogger and has been eyeball-deep in the startup scene for ages, formerly at Microsoft and now at Google. He wrote to us saying, “Brad Feld, Fred Wilson, David Hornik, Mark Suster, Jeff Clavier, Josh Koppelman, and many other VCs write blogs and use Twitter to communicate to the startup world. They do it because they are building their reputation.

“Everyone has money to invest; there are hundreds of VCs. Entrepreneurs want investors who have a reputation and can add value.” Dodge added that many of the better-known angel investors, such as Dave McClure and Chris Sacca, use blogs and Twitter for the exact same reasons.

All that reputation has applications after the investment, as well. If there’s one thing the social web is great for, it’s word-of-mouth marketing. If a VC has taken the time to build a reputation online, he or she is probably an influencer in the tech startup sphere. A simple tweet or blog post can do wonders for a new app’s adoption rates and interest from mainstream media.

McClure told us he uses the social web to help generate buzz for good companies. “I regularly share and tweet articles about companies both pre- and post-investment to get (their) attention, and to demonstrate awareness and marketing support,” he said. Trotzke also shared, “It just makes sense… that we would tweet about apps opening and closing — and that people would retweet the opportunity.”

This is a small example of what we are looking to create. Popular blogs (blogs being an integral part of social media) are steadily and successfully bridging the gap between venture capitalists and investment opportunities.

An excerpt from an August 2010 article on PitchEngine mentions the power of social media in the VC world as well.

“As recently reported in the Harvard Business Review, there is a new and unlikely entrant into the emerging Social Media arena: The venture capital firm.

Normally circumspect about their deal origination techniques, venture capital and private equity investors are increasingly placing their cards in full view on the Social Media table.

According to David Teten, the CEO of Teten Advisors, an investment bank specializing in sourcing new investments, and his co-author Chris Farmer, a managing partner at Ignition Search Partners, a hybrid venture search firm, a “first-ever study of deal-origination best practices at more than 150 VC and PE firms, along with other research, shows that some of the top-performing investors increasingly use such technologies to discuss the very information they once held close to the vest.””

94.7% of venture capitalists found on this Wikipedia page (Wikipedia being a social media tool) have presence on Facebook, nearly all of them have between 0 and 100 “fans” with the exception of Accel Partners who has over 3000.

There are thousands of pages online dedicated to this topic; we don’t wish to overload you with the obvious. The reality is, the world is shifting, as much of it already has, to social media. Venture Capitalists will greatly benefit by taking advantage.

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