Marketing Best Practices, Traps and Takeaways for Emerging Hedge Fund Managers

Recently published in the Hedge Connection blog, this article is reprinted with permission.

What’s the difference between marketing, advertising and branding? Why is ‘thought leadership’ a big deal? How can you get heard? How can you avoid common marketing traps? These are among the questions prepared by me for speaking during the recent Emerging Manager Seminar (April 19, 2018 in New York, hosted by Pepper Hamilton). The Q&A below offers a mix of takeaways designed to facilitate and improve managers’ impact in developing an effective marketing and communication plan.

1. What’s the difference between marketing, advertising and branding?

Marketing is how you see yourself. Advertising is how you act in public. Branding is how others see you. These three related but not equivalent concepts are incorrectly though commonly interchanged (Read more – Inc. article). Your marketing strategy serves as a core building block, necessary to achieve fund-raising objectives. The effectiveness of your message and image will influence your value proposition.

2. When is the best time to initiate marketing vs. a fund launch?

Remember, first impressions become lasting impressions. . . Pull together your key marketing strategy and communication tools before (not after) you meet with prospective clients including seed or anchor/founding investors. Using your time wisely, it’s best to first identify suitable target investors and how you could meet them to develop relationships and understand their allocation criteria as well as investment process rather than marketing to those that have investment criteria beyond what’s realistic on your end.

3. What are the most critical presentation elements?

Absolute minimum communication tools at the outset, regardless of how basic or complex, are your tear sheet, presentation deck that tells your story and an elevator pitch. Make sure that everyone on your team is conveying a consistent message. Your website becomes a critical digital hub for your image, contact platform and message. Consider your site as a fluid platform whose structure expands with your business growth.

4. Why is thought leadership a big deal?

Your market insights and expertise can provide the foundation for trusted investor relationships reflecting your content credibility while you are capital raising. More importantly, your ability and willingness to communicate those capabilities – applied to relevant timely topics – supports and enhances your marketing strategy. Solid thought leadership content can provide your means of differentiation and marketing edge.

5. How can you get heard? Are there thought leadership best practices?

• Focus on content first. Start with your investment strategy and current trends in the relevant market as a potential content framework to develop an article or series. For example, if your strategy is industry-specific or geographically focused, use one of those drivers to spotlight the rationale for investors to consider either of those opportunity set components. Don’t forget to discuss the investment risks. Your message needs to be very clear and concise (short article vs. long white papers preferred).
• Content is not limited to text. You can improve the impact of your message in a few ways. Relevant imagery, supporting graphs and meaningful infographics are excellent content features. Moreover, audio and video are highly useful to elicit attention.
• Equally important is distribution. Select channels to distribute your content – they should match or overlap with your target clients and market intermediaries. Don’t forget email distribution. Be sure to apply best practices including your own contact list, catchy subject line, personalization with merge fields. Include your own ‘call to action’ and website contact information with the conclusion of your message.

6. What are some common marketing traps? Strategies to avoid them?

• Absence of a meaningful marketing budget is very common. Many managers focus only on the ‘field of dreams’ approach and while successful at generating alpha do not realize a meaningful inflow of investors, especially during the early business stage of their fund lifecycle.
• Managers are often unrealistic as to the investors likely to allocate capital. This trap can lead to a long setback. Instead, try to match your current and near-term business profile including AUM, track record and infrastructure with the type of investors whose criteria overlap with your capabilities. For example, you can avoid the likely frustration and wasted time of prospecting institutions during the stage in your business lifecycle as an emerging manager when you are a better fit with high net worth and family office investors.
• A common communication trap is leading with performance. People remember people more easily than metrics such as performance data. Focus on telling your story, featuring the qualitative aspects that will differentiate you from the crowd. Performance-driven communication, especially as a means of developing initial relationships may lead to fair-weather marketing rather than the trusted relationships that will endure as your business grows.

Communication Alpha® – the capability and willingness to create and deliver clear, consistent, frequent and targeted communication – is a key attribute. Check out https://hsmarketing.com/ and the Hedge Connection blog for prior marketing articles including Smile, You Are on Camera: Video Advice for Newbies, Is Your Press Release Newsworthy? Best Practices to Create a Successful Release, Communication Tips and Traps: Five Common Traps.