Are You Dependent On Market Inefficiencies To Raise Capital?
More often than not, investors allocate capital without understanding the full spectrum of investments available to them.
If the very best in the industry (those that do what you do) were lined up behind you 30 deep, would you get the money?
There are a couple of you out there that would say, “absolutely”; however, for the majority of you, the answer really is “no”. (And I know that you know this.)
So how do you close that commitment when you are not the best?
The answer is very straightforward. You inspire.
The alternative investment space has become so competitive that there are hundreds of funds circling almost every strategy, long / short, commodities, real estate, you name it. Whatever you’re doing, there already exists a bunch of other funds doing it. Chances are that you are not the best, because only one can be the best. And that person isn’t going to be the best next year, so don’t worry about it.
When a market place becomes ultra competitive product attributes become less and less important, back office support, performance, track record, experience, blah, blah, blah….
People buy BMWs because they feel “good” driving a BMW; people stay at the Four Seasons because it makes them feel important and successful; people spend money on fancy watches because of how they feel wearing them.
In speaking with investors stop trying to tell them what will happen if they invest with you. Everyone knows what will happen, money will go in, you will talk about risk, and if you are lucky everything will go well.
Instead, talk about what it means to invest with you, what it symbolizes, the statement and investor is making by giving you money. If you focus on the intangibles, and if you inspire, there is much greater likelihood you will close and raise capital – even if you aren’t the best.
By Kyle Dunn