From our experiences as investors and marketers we have seen a lot (and much of it is quite ugly). Here is a sample of 5 mistakes to avoid.
5. Neglecting PR Opportunities
PR? But what about mass-solicitation rules...
Ray Dalio, founder of Bridgewater was recently featured on the cover of Absolute-Return Magazine, giving an exclusive interview. The funds that ignore PR opportunities do so because they are unfamiliar with the securities laws. If done correctly (ie:legally), TV appearances, magazine articles, and speeches can be a great boost to credibility.
4. Sending Documents Over Email
Do you send your critical marketing and due-diligence documents over email? This could lead to major problems:
- Control. This is a security and compliance nightmare. Your critical documents may be forwarded to competitors, regulators, the media, or unaccredited investors.
- Feedback. You don’t know which prospects are reading your materials versus which are deleting everything.
- Next step. Prospects often read your update, close the email, and move on. There is nothing to draw them in to a further discussion.
3. Abusing the pitchbook
Investors don't read your pitchbook, they flip through it. Assume they are reading anywhere from 5-10 pitchbooks a day.
Differentiate. How do you stand out? Start by going through your pitchbook and replacing the name of your fund with your closest competitor’s. If anything is still true, you are not differentiating.
2. Adding unnecessary steps
Every step between the initial meeting and closing is another instance where the investor can say no. For many funds, the process goes:
- Initial contact
- Send marketing materials
- Send DDQ and recent investor letters
- If still interested, send 'complete' due-diligence documents
- Investor has questions and requests more materials
- Investor has more questions and requests more materials
ClaritySpring cuts out steps and helps you present more effectively. In general, try to provide as much information as you can up-front to avoid the frustration of drawing out the process.
1. Missing the point
If the goal in your marketing efforts is 'to raise money' you are approaching it from the wrong perspective. Try focusing on the following:
A. Cultivate trust. Prospects need to trust you personally if they are going to invest. Without this, it doesn't matter how great your investment process is. Your personal story is your opportunity to build rapport.
B. Build confidence. Prospects need to also trust your competence in managing a business, in managing a team, and in capitalizing on investment opportunities. Weave examples of your competence into your pitch to build their confidence.
When you go into meetings and marketing communications with these goals in mind, you will build stronger relationships and instill confidence in your abilities. The money will follow.