5 Unique Fund Marketing Tactics (3 of 5)
This is part 3 of 5 within a series on unique hedge fund marketing tactics that managers should investigate further while working to raise capital for their funds. Before taking any of these actions please consult with your compliance and legal counsel for confirmation that you are able to use these methods to market your specific fund.
Forget about contacting more investors. Yes, it may seem illogical to forget about contacting new investors while attempting to raise capital, but this may be what you need to do to meet your business goals. Many of the hedge funds I speak to want to be connected with investors, they want lists of family offices, seed capital providers or HNW wealth management firms. While accessing more investor contact details may be a useful resource and improve your marketing efforts it is often not the real constraint which is holding your business back.
No business is perfect, every business has some constraint which if removed would help the business more than anything else. Sometimes this constraint is portfolio management expertise, sometimes it is marketing materials, and many times it is lack of institutionalized processes and tools. Very seldom do I meet with hedge funds which if provided with a long list of 1,000 investors would explode in assets under management.
Most hedge funds do not take the time to write down all of their current business problems or symptoms and ask the why questions needed to identify the root constraint within their business model. A good tool that I have seen used by half a dozen management consulting gurus is the "4 Why Process." If you ask why something is happening 4 times you will get to the root cause of the problem.
- Initial Problem/Symptom: Why don't we manage $100M in assets yet? Why?
- Potential Answer: We are not raising capital from wealth management firms as you had hoped. Why?
- Potential Answer: Our marketing materials have not been brought up to part with the competitions, they are light and our investment process is poorly described. Why?
- Potential Answer: We know that you should be paying a consultant or in-house marketer to help with both marketing materials and generating relationships but you have not hired one. Why?
- Potential Answer: We do not have the profits available to hire a full time marketer but we get around to creating a system to share equity, grow relationships with third party marketers or build a marketing related advisory board.
This is a unique marketing technique because it is a reminder that the smartest thing you could do for your marketing and sales campaign may have nothing to do with picking up a phone or buying a database of investors. Before spending more money or valuable time try to consider the following 2 tips for improving your ability to attract investors:
Use the "4 Why Tool" to drill down deeper into the top 5 problems that you see your fund facing right now. Often times 3-5 problems will often be symptoms of a single root cause which can be directly addressed.
Ask others including your advisory board, current investors, potential investors and co-workers what is holding your fund back. Do not settle with two word surface answers and try to identify what 3-5 action steps your fund could take this quarter to improve how you are positioned and address the #1 limiting factor in your business.
For Part 1 and 2 of this series please see the links directly below: