AlphaWeek Q&A: Challenges that private equity firms face in 2018 when it comes to raising money
**Article first published on: Alphaweek (https://goo.gl/8BySmf)
AlphaWeek’s Greg Winterton spoke with Kyle Dunn, CEO, and David Allison, Director of Brand Strategy at Meyler Capital, a capital raising boutique based out of New York and Vancouver, about the challenges that private equity firms face in 2018 when it comes to raising money.
GW: Kyle, David, to begin, what challenges are private equity marketers facing in 2018?
KD: After a string of record fund-raising years for private equity, the challenges for fund marketing executives are both immediate and long-term. Big name brands are dominating the action, but innovation in fund structures, management, and portfolios is coming from more nimble players. Challenges facing these new leaders include the need to direct allocators and target company interests away from the established PE firms, adjusting communication techniques to account for changing allocator profiles, and being "heard" above the noise.
GW: Are there any specific marketing strategies that are gaining traction right now and if so, what are they?
KD: Private equity marketing requires a long-term view. Given the average PE portfolio holdings top 5 years, relationships are key. The best PE firms understand this; they focus on nurturing allocator relationships over the long haul. Traditionally, this has meant building firm awareness when not in the market, participating in professional networking channels, and more recently, highlighting expertise and connection through video and content. In addition to these tools, we are increasingly using a new perspective, which is a new strategy based on values that allows us to structure marketing communications around what people genuinely care about in order to improve LP and prospect engagement.
GW: What is a values-based approach?
DA: It's an accepted truth in many fields of scientific inquiry into the workings of the human mind that what we value determines what we do. ‘Valuegraphics’ is the first database of shared values large enough to provide audience profiles based on a statistically representative sample of the population of the United States and Canada. We now have a depth and breadth of data about how people make decisions, and we can mine it, which gives Valuegraphics users an advantage because we can influence those decisions.
GW: How is this applicable to private equity marketing?
DA: PE firms can use Valuegraphics to assist in building language and tactics around what people value. In doing this, people will feel a stronger connection with the firm, which in turn builds loyalty. This ultimately pulls LPs away from less inspiring managers and it helps with re-ups; brand loyalty creates sticky money.
PE firms that understand the values of the audience they are trying to influence will hold the keys to the kingdom. They will use Valuegraphics as a way to inform their messaging, determine brand position, choose the front-line team, order sandwiches for lunch…and I'm only half joking about that last one! If you knew your audience was incredibly motivated by three things, let's say the environment, family, and loyalty, would you be able to create a pitch that highlights those three values? Wouldn't the messages you send out about the way your firm conducts business be different than if you knew your audience valued education, honesty and financial success more than family and the environment? There's a thousand ways to tell a story. What Valuegraphics does is point to the most motivating direction to help produce tailored communications.
GW: So, in effect, they are building connections with LPs on a different level?
KD: Yes, you are marketing to the values of the individuals within an organisation, not the organisation itself. We are getting at a very personal level, a human level, and this is the basis of building a "real" relationship. We think that this is the direction in which private equity marketing is heading.