A Sale is Made on Every Call
“…hey look, man, tell me you don't like my firm, tell me you don't like my idea, tell me you don't like my neck tie, but don't tell me you can't put together 2,500 bucks….A sell is made on every call you make. Either you sell the client some stock, or he sells you on a reason he can't. Either way, a sell is made. The only question is: who's gonna’ close? You or him?
- Ben Affleck, “Boiler Room”
One of the biggest challenges about raising assets is that most institutional investors start at “No”.
As most managers know, there an entire multi-point checklist that you need to satisfy, along with a bunch of other pre-conceived notions that require explanation in order to be even considered for investment.
The process necessitates that you punch through a load of “No’s” prior to even being considered for a “Yes”.
It’s almost like talking to a compliance officer… Approach most compliance officer with something non-textbook and count how long it takes for the word “no” to escape their lips. I have not come across many open-minded folks in that role. Part of it is the position, I get it, – not much upside for them to think out of the box…but part of it is just plain habit.
We ran into this situation recently with a compliance consultant who expressed “serious concerns” about some marketing materials we sent over for review.
Holy crap – “serious concerns??” Guess we need to make some changes - glad we asked for her opinion.
Turns out the “concern” mostly came down to how we applied one word. After some discussion, we proposed just removing the word from the materials (but leaving the rest). She shrugged it off with a simple, “that will be fine.”
So – naturally the question is…why didn’t she just suggest that in the first place? Sure, there is a cynical response about lawyers and hourly rates but the reality is, that is just not how she is trained to think.
Investors are not much different - they have a ridiculous amount of investment choices. It makes sense for them to rely on their process. And an important part of that process is their checklist.
But there is stuff you can do….
Chances are you do have something that they want. Make your one or two differentiators very discernible (‘cause you don’t really have seven). Keep them simple and uncluttered and you have a much higher chance of staying on their radar as you mature. Bury that differentiator in an overwhelming mound of text and it is unlikely they will ever find it - because just like your compliance officer, there is little chance they will go searching.
Ensure that they have everything they need to make a decision when you become “investable” The investment cycle is a long process. If they have a six step process to making an investment – be sure that they are near step six when you finally fulfill their last few requirements. It doesn’t mean they will give you money, but they won’t give you thoughtless excuses either.
The only way to do this is through simple consistency. If you ignore them for two years and then come back to say you met an AUM minimum, you will definitely have to pass “GO” a couple of times ‘til they are ready to pay attention again.
Stop selling and start adding value. Don’t have a reason to stay in front of them? Provide some content. There is something in your investing universe that is of interest to people. Share it.
And to finish off Ben Affleck’s monologue…”Now be relentless.”
By JD David