A One-Two Punch For Capital Raising

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As published in HFM Week: “What boxing can teach you about marketing your hedge fund”

 

Good comedians set-up their jokes before delivering the punchline. Good investors analyze a company before buying its stock. Good boxers throw a jab before throwing a cross.

Putting yourself in position to succeed is pretty straight forward. First comes the preparation (or “set-up”)…and then comes the finish.

There is a reason you don’t see boxers standing in the middle of the ring randomly throwing haymakers and uppercuts. Those punches rarely accomplish much on their own because they are easily slipped by any experienced opponent when not set-up properly.

It’s no different in business.

Good salespeople will first set-up through marketing and positioning. This puts sales into higher probability situations with clients that are pre-disposed to be persuaded when she goes to make the sale.

That approach works the same in every industry – from automobiles to alternative investments.  The “set-up” creates initial interest making the rest of the process more efficient.

The idea is to drive interest by proactively shaping perception.

The big difference between selling alternatives and most others is the astounding frequency with which managers willingly skip over the set-up, the marketing process.  The reason it is “astounding” is because on practically any measure, it has to be one of the most competitive spaces on the planet. Think about it – where else can you find a trillion dollar industry (based on assets under management that is) with such a lopsided imbalance of products for sale relative to its audience of buyers?

So, if there is a better way to “set-up” the sale, the question is, what should you consider doing differently with respect to marketing?

 

Answer:

1). thoughtful messaging; and

2). deliberate positioning

 

First – you need to crystallize your message into two or three talking points, tops. Convincing someone that they should care about you is never easy – particularly when there is so much other choice. Therefore, your core differentiators need to leap off the page.

This means being ruthless in stripping away all of the other noise. Getting someone to hear a message is as much about eliminating distraction as anything else.  There will be time for the other stuff after the dialogue progresses.

 

Second, identifying the “fit” – this entails understanding your funds’ value within an investor’s portfolio. Spoiler alert: performance in a vacuum is not enough. Lots of managers perform – you need to demonstrate how you fulfill a need beyond that.

Specifically, this refers to how you create targeted market positioning – and understanding this is probably the smartest use of your time…

By the way, recognize that there won’t always be a fit. Conversely, there may be a fit but the reasoning for that is not obvious.

 

Back to boxing…imaging trying to arrange a fight between Cody Garbrandt, the reigning UFC Bantamweight champion, and Floyd Mayweather, retired former WBA Welterweight champion. Talk about a tough sell…particularly without investing heavily in pre-fight promotion.

Now swap Garbrandt with Conor McGregor, the reigning UFC Lightweight champion and pit him against Mayweather. Suddenly, the fight sells itself. Why? Because it has been so well positioned through hype and personality that the “close” becomes effortless. To say “marketing doesn’t matter” is ridiculous…tickets have only just gone on sale and this is already expected to be one of the highest grossing fights ever.

Bottom line…regulatory constraints notwithstanding, at some point, the industry will be forced to embrace “real” marketing. The truly amazing thing is that for an industry full of independent thinkers, for some reason, it requires a contrarian mindset to do the obvious when it comes to growing AUM.

 

By JD David 

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