Challenges in the Era of Globalization - iaabd

Proceedings of the 12th Annual Conference © 2011 IAABD
Venture capitalist marketing strategies for attracting portfolio companies in South Africa: A
theoretical review
Olutoye O. Ayodeji, tilakinv@gmail.com
Tilak Investment, Pretoria, & Post-graduate Student, Vaal University of Technology, Vandebijlpark,
South Africa.
Titilola Okusolubo, tilak2ng@yahoo.com
Tilak Investment, Pretoria, & Post-graduate Student, Vaal University of Technology, Vandebijlpark,
South Africa.
Abstract
Olutola Ayodeji, bigtollyray@yahoo.com
Tilak Investment Nigeria Limited, Lagos, Nigeria.
Marketing is central to any organisation, particularly businesses. Marketing factors are prominent among the
critical success factors for business firms, and effective marketing management involves the development of a
coherent plan, that assembles all the relevant market considerations and identifies the strategies and actions
required to achieve high and realistic sales goals. However, the marketing of specialised financial services such as
venture capital (VC) is a relatively new phenomenon in most developing countries and even within developed
countries. While the marketing of physical goods have been subjected to classical marketing theories, principles,
skills and approaches in addition to competitive pressure, financial services have not been subjected to the same
market pressure in order to survive. Financial services are more complex to market than physical goods. The
marketing orientation and relationship marketing concepts are important when comparing and contrasting
corporate markets for venture capital and their debt-financing counterparts (the banks). The focus of this paper is
on the ‘marketing function’ by venture capital firms and how they market their services and product to portfolio
companies. While there is a dearth of research on the financing side of the venture capital and private equity
industry in South Africa (i.e. how to generate/source funds from investors, the size of loans, number of funds being
managed, the screening criteria etc), there is very little to nothing in terms of research on the marketing side. By
using exploratory research design, this paper identifies the importance of the marketing function in the success of
the venture capital firms. It generates insights into how VC firms can market their products and services to portfolio
companies more effectively and efficiently.
Introduction
The importance of the marketing function in the success of any organization, whether profit or non
profit making, manufacturing, trading or service rendering cannot be overemphasized in view of the
traditional and modern role that marketing plays. From marketing research (determine customer
needs) to product features, packaging and placing at the convenience of the consumers, including
creating awareness about the existence of the organization and its products.
A formal approach to the marketing of financial services is a relatively new phenomenon, even within
developed countries. While it arguable that the marketing of physical goods has been subjected to
classical marketing theories, principles, skills and approaches in addition to competitive pressure,
financial services have not been subjected to the same market pressures in order to survive (Ennew and
Waite, 2007). In time past, the financial service industry in many countries have operated within a
comparative market environment and in some instances, they have been substantially state-managed and
controlled.
670