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LPs see branded VCs as the best bet

When evaluating a venture capitalist’s request for a new fund, obviously performance track record goes a long way in swaying a limited partner for or against.

Another key factor is “brand.” A firm or general partner with a brand name can drive deal flow and capital.

It’s a brand business, said John Powers, former Stanford Management Company CEO and now a lecturer at the Stanford Graduate School of Business. “There’s a stickiness to the brand.”

Powers, who spoke at last week’s PreMoney conference sponsored by 500 Startups, said he even evaluates new funds on their potential to establish a brand.

Hand in hand comes a firm’s ability to differentiate itself, added Michael Kim, managing partner of fund of funds Cendana Capital. Good examples are IA Ventures, with its focus on big data, and Kirsten Green’s digital commerce-centered Forerunner Ventures.

“I don’t think venture is an asset category,” Kim said. LPs should attempt to get into the best funds and leave it at that.

There is no point getting into a second or third-tier venture fund, he said.