Monogrammed Stüssy Tees? Making Sense of Private Equity-Creative Agency Hookups

Private equity and venture capital firms are hiring creative agencies to accelerate their investments. While no publicly available trade data exists, in my conversations with consultants, PEs and VCs—and having managed a handful of such projects—it’s become abundantly clear that investments from PEs and VCs to agencies are real. And they have the potential to subvert not just the traditional agency-brand dynamic, but also to catalyze durable, sustainable business transformation.

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On the face of it, pairing investment firms with creative shops makes zero sense. The monogrammed Patagonia vest and Stüssy tee are both aesthetically and philosophically opposed. Investment firms are frequently cast as evil raiders who ruthlessly gut an organization, load it up with debt and temporary leaders, then draw a profit, leaving the business to its own devices and burdens. Of course, the quieter narrative around these firms is that they often save companies, create jobs and drive innovation. 

Creative agencies, meanwhile, traffic in ephemeral quantities like brand equity and consumer mindshare. Traditionally high-growth and in-demand, they earn fees based on their understanding of the intersection between design and technology. Often hired by brands to reimagine existing experiences, they trade on speed to market, leading-edge tech and their ability to understand consumer behaviors. They also tend to focus solely on execution rather than attacking the underlying mechanics that can create or hinder growth. 

So why would these divergent worlds attract one another, let alone grow codependent? 

For one, a handful of agencies have been burnishing their consultative chops. Now they not only complement PEs’ and VCs’ due diligence by digging into the guts of the acquired brand to see which parts are strong and which require targeted interventions, they can also marshal and deploy the creative muscle that fuels growth for those acquisitions. 

Additionally, as consumer markets have become more crowded, digital platforms more accessible and talent more ubiquitous, the burden has increased for PE and VC firms to prove real value and distinguish their investments from the competition. Given the imperative to drive more conversions in digital experiences, it’s not a stretch to see why the left-brain world of PEs and VCs would seek out creative partners to help them realize greater returns. PEs and VCs are purpose-built to pinpoint where a business made the wrong move but, provided strong investment and leadership, holds untapped potential. Designers, strategists and engineers at creative agencies now form an important part of that calculus. 

But beyond added capability, plussed-up creative agencies—or less clunkily, creative consultancies—bring an ability to see growth through a creative lens. Granted, many investments are about optimizing a digital experience, squeezing out higher conversion rates or improving lead generation. But I’ve seen creativity be a force multiplier, too. In one recent partnership, we worked with a PE-acquired business that was making money despite an outdated brand, disjointed messaging and unengaged customers. Applying creative expression and tension to the acquired brand made it more fit to purpose and ripe for growth. 

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This intersects with yet another area where creative consultancies add value: seeing opportunities where analysts or investors may not. Creativity is about perceiving patterns and connecting experiences that aren’t readily defined or even understood. It’s the collective experience of many things that yields a new, novel idea or opportunity—the tradecraft of creative consultancies.

Which begs the question: What’s needed to scale these examples of intelligent, creative growth and transformation? First, we need a more generally accepted method for measuring creative potential. But as anyone who’s worked in a creative organization will tell you, simply designing an algorithm to quantify creativity isn’t enough. Method matters, especially when it comes to fostering an environment where failure and irreverence are accepted inputs into how great work gets done. To that end, creative consultancies must uphold the following hard-won guidelines to ensure the engagement’s—to say nothing of the relationship’s—success.

Invest in business strategy 

While the PE firm will always represent the commercial POV in the partnership, an agency with business strategy expertise can spend less time onboarding and more time problem solving. It can also train its creative and communications teams on business modeling or common strategic frameworks and conduct deeper sector analysis of the client’s space. Bonus points when the agency puts industry or vertical experts on the working team. 

But first, KPIs 

The creative consultancy must stay laser-focused on the business outcomes the client hired them to drive. The urge to meander may be strong, and it can be difficult to curb creative impulses that don’t necessarily bolster the acquired brand’s bottom line. Indeed, straying from the KPIs established at the start of the partnership is a sure way to kill both the dynamic of the partnership and the pledge of ROI for the portfolio company or investment itself.

The best agency-PE partnerships start with clear alignment on the investment’s KPIs. Are we working to drive conversion or reduce cost of acquisition? Are we improving brand sentiment? Ensuring both teams have a clear sense of KPIs—and a means of keeping each other accountable on the delivery path—will beget fewer issues and better work. 

Become a student of method 

When agency-PE partnerships go sideways, it’s often due to a lack of understanding of how each side prefers to work. The best PE firms understand the creative process and how it drives growth. Likewise, a good agency partner understands how the lead team, backed by the PE firm at the brand, works—their decision-making culture, brand ambitions, etc. The client also must come in for a sit-down where we ask them to assume a potentially unnatural posture: humility. VCs and PEs are not expected to fully grasp user experience principles of web design, but their partners do, and they’ll bring that expertise to bear on the acquired brand’s digital assets. 

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Ultimately this is new ground, and everyone is performing a trust fall. Such a dynamic can make PEs and VCs squeamish. For these and other reasons, high finance and unbridled creativity may always sleep in separate bedrooms. But in our current era of rapid automation and fiscal uncertainty, finding a more perfect union could offer both agencies and brands—whether investing or being purchased—a new path toward durable, sustainable growth.