For Cryptocurrency Fund Managers: Some Thoughts on Effective Marketing

by | Feb 5, 2018 | Alternative Investments

This article recently appeared in Opalesque New Managers (Issue 69, January 2018) – an online news publication focusing on the global emerging hedge fund manager.

Given the surge of new cryptocurrency funds coming onstream, we thought it might be helpful for us to share some of the thoughts and ideas that have grown out of our firm’s marketing work on cryptocurrency offerings.  We hope that our suggestions can provide a beneficial framework for crypto fund managers creating their marketing presentations.

Be mindful of your market and competitive landscape

After all, in the current environment, you will be facing:

  • An investor audience—whether high-net-worth or institutional—that may be relatively unfamiliar with this new asset class.
  • A consistent stream of provocative, often negative, headlines in the media.
  • Competition from a rapidly growing field of crypto offerings.
Help your prospects get more familiar and comfortable with cryptocurrency

Even though most everyone has been exposed to headlines and sound bites about cryptocurrency, news reports tend to dwell on crypto’s more controversial aspects:  Is it merely speculative?…Will it pass regulatory muster?…And so on.  What tends to get lost are cryptocurrency’s utilitarian advantages in the realms of finance and business.  So…

Define it
Unless you’re marketing to sophisticated institutional investors, be sure to take a step back and give your target investors at least a brief overview of the benefits that cryptocurrency and its underlying blockchain technology can bring to monetary transactions and other aspects of commerce.

Normalize it
Cryptocurrency will strike many people as a radical—and therefore, untrustworthy—departure from traditional currency.  You can ease misgivings by analogizing the advent of cryptocurrency to the monetary innovations of the past that they are familiar with (think credit cards, internet transactions, etc.).  The idea is to position cryptocurrency as a natural consequence of technological evolution.

Mainstream it
Never underestimate the power of honor by association.  Be sure to point out that certain sovereign jurisdictions have promulgated positive regulations with regard to cryptocurrency, and that some well-known financial institutions and corporations have “endorsed” crypto by their actions.

Don’t over-emphasize its past performance

Harping too vigorously on the past performance of star crypto coins such as Bitcoin and Ethereum could prove to be a double-edged sword with unintended consequences.  For one thing, too much emphasis on their giant gains could lead to the perception that the train has already left the station and the opportunity has been missed.  Even worse, it could reinforce the view that it’s all a big bubble, one that may be about to burst.

Go beyond the here and now—look to the future

Perhaps the best way to dispel the notion that cryptocurrency’s growth may soon be a thing of the past is to shine a light on the future:  Talk about the important role cryptocurrency and blockchain technology are expected to play in global commerce in the years and decades ahead.  Rather than positioning cryptocurrency as an “opportunity du jour,” paint the picture of a fundamental technological advance that could potentially be at the heart of a seismic long-term opportunity.

Differentiate your investment approach

In the crypto fund marketplace, there is already significant and growing competition vying for the attention of a still relatively small number of investors.  What’s more, many investors may be inclined to invest directly in cryptocurrency rather than through a fund because they don’t see the value of paying fund fees in acquiring this type of asset.  Perhaps the best response to competition and the DIY investor mindset is to show that your fund possesses value-add resources and features that other funds and individual investors may lack, such as…

  • A superior methodology for selecting crypto coins and for knowing when to exit.
  • A strategy designed to earn profits on crypto coins other than by just holding them and capturing market moves.
  • Proprietary technology that enhances the investment strategy.
Get ahead of potential objections

Crypto’s short history has already revealed certain risks, such as the hacking of crypto exchanges and the asset’s high degree of volatility.  Be sure to address these and other key risks and show how your fund deals with them.

Help resolve confusion

With so many commentators suggesting that the dominant cryptocurrencies show many of the signs of a classic bubble, there is considerable confusion in the marketplace.  Don’t ignore it; deal with it in a forthright intelligent way.  If you can, be a thought-leader who puts all the conflicting facts and opinions into perspective for your prospects to help them make an informed investment decision.

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Learn More

The above thoughts are aimed specifically at marketing cryptocurrency offerings.  It may also be helpful to check out some of our other articles previously appearing in Opalesque New Managers [and on this blog] that discuss more generally how to create effective marketing presentations.