JOBS Act Reality Check #2: Saying more while talking less

The “silent era” ended eighty-plus years ago, when technological advancement in film-making ushered in the age of “talkies.” And things were never the same again. The actors, writers and directors who were able to adapt went on to seek stardom and those who could not adapt were left by the wayside.

Fast forward to today. A parallel, but somewhat opposite change is taking place in the alternative space.

Hedge fund and private equity managers who have always depended on talking directly to prospective investors to gain their attention may now be relying more on electronic screens for making that all-important first impression.

Welcome to “silent” marketing in the age of the JOBS Act. The good news is that you will now have the opportunity to “advertise” via email, social media and your website to pique and build an investor’s interest. You’ll also be able to magnify your marketing presence through web-based portals linked to legions of accredited investors.

The less good news is there’s a big difference between “advertising” and direct one-on-one selling:  the same perfunctory text and charts you may have used to accompany your in-person narrative will probably not do the trick now that they have to stand on their own. (Hey, there’s a reason why enterprising companies hire advertising firms.)

Going forward, you’ll need a “story” that speaks for itself. Most of what passes as alternatives marketing today tends to emphasize “kicking the tires” long before the prospect is even remotely interested in buying the car. The marketing story often begins and ends with pedigree, process and performance.

While these “credibility factors” have an important role to play, they won’t usually break through the competitive clutter and attract an investor’s attention. First of all, they’re not what’s foremost on a typical investor’s mind. Second of all, it sounds like everyone is touting all the same things.

To get the investor’s attention, you will need to go back to principles from Marketing/Advertising 101 and…

• Develop a succint “positioning” that differentiates your investment strategy and finds a window into the investor’s mind. Positioning is as much (if not more) about the investor and his or her needs as it is about your firm and your fund.
• Create provocative headlines, messages and visual techniques that dynamically deliver your positioning.
• Develop a concise narrative that supports your positioning and convincingly brings alive your investment strategy—without you there to explain and embellish.

Notice that we haven’t mentioned “brand” or “branding.” These terms have been much bandied about recently in connection with alternative investments, sometimes well-meaningly, sometimes self-servingly. Buy invariably, they are defined in lofty ways that would make you think hedge funds and private equity firms were going to do battle with the likes of Coke and Apple in the marketplace.

The harm is that these grandiose discussions of branding usually divert attention away from the most critical factor in efficiently getting the intitial attention of serious alternative investors—a strong, compelling position/story regarding your strategy and the benefits it offers.

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OK, let’s say you’re intrigued by the new marketing opportunities—how do you stick your toe in the water?

The first step is to audit your current marketing materials and ask yourself—or an objective third-party you trust—whether your positioning and marketing “story” are up to the task. Don’t be cavalier about this assessment. We see loads of pitch books every year and the sad truth is that almost none of them do the job—even with someone presenting it.

Most pitch books offer up a stream of disconnected marketing sound bytes—often embedded within a series of ubiquitous template pages, such as:  our philosophy, our team, our process, and so on. The result is that they all tend to sound rather similar and aren’t particularly engaging.

So if you intend to merely plug your existing marketing content directly into advertising or PR initiatives, you’ll probably be setting yourself up for disappointing results.

Even if you’re not planning to take advantage of the new post-JOBS Act marketing opportunities any time soon, it’s still important to tell a self-propelling, investor-centric story in your pitch book that speaks for itself when a prospect re-reads the book two weeks later or passes it on to a colleague, spouse, etc. That’s the key to converting more prospects into investors.