Marketing at Venture Capital and Private Equity firms is a trend that is still shaping up. It was in year 2001 that Marry Meeker published her first internet report, which could be tentatively marked as the beginning of Marketing as a function in Private Equity and Venture Capital echelons. Marry Meeker’s influence today can be gauged from the fact that Alibaba’s stock dropped 6.25% on the day of its latest report release.

A lot has happened since 2001, industry grew and contracted at-least twice, first during the dot com bubble crash of 99-01 and then Lehman Brothers aftermath of 07-09. But application of science and art of Marketing at Venture Capital firms is more resounding than ever before. Here are the pillars of a Private Equity and Venture Capital firms’ brand building efforts:

Reputation: Reputation takes years to build. So does that mean a GP which has not seen even a single cycle of fund-raising, investing and harvesting, which typically takes a decade, can’t do anything for years regarding this? Yes, it takes years to build but with emergence of connectivity across the globe, that cycle of years can be short-circuited with Marketing hyper activity at the start. A reputation can be created online in a relatively shorter span and the good news is that online reputation matters as much; and greatly influences the offline reputation too. What is online reputation? It’s the content that is available against your firms name on the net. Its combination of industry reports, PR, blogs, partners’ speaking gigs and any events that you may have conducted in the past.

Communication: Your brand of communication defines how you are seen in investor and investee communities. Communication plays a vital role in your positioning with LPs and entrepreneurs. Great firms focus in multiple aspects of their communication with both of these communities in terms of frequency, quality, availability and relevance. David Skok’s blog ‘For entrepreneurs’ is a fine example of a great communication strategy aimed at investee companies in terms of frequency, quality, availability and relevance. Twitter has also come to rescue the communication efforts of Private Equity and Venture Capital firms. Smart firms are using it to communicate what they stand for

Experience: Nothing speaks louder than an impressive delivered IRR figures from the past. If you have completed a cycle and have returned 5-10X to investors, you are in an exclusive club of a few who can be proud of being there and done that. Softbank’s growth is miraculous for a firm that came into existence in 2004. It’s simply on the back of impressive returns that it has generated for its investors and its Marketing blitzkrieg that follows all its activities. No wonder its 100 billion dollar vision fund closed in record 7 months’ time. So then, is it all over for fund managers starting now? The other alternative is to sell the expertise of partners through a smart content management strategy. Better still is to chose a niche technology that itself is new and there are not many fund managers who can boast of harvesting profitably. Almost all good emerging managers focus on emerging technologies; and who is perceived good there? One who has the most relevant content that can be found online and offline.

Specialization: Branding and communication strategy revolves around pedalling the specialization of a Private Equity or Venture Capital firm. A marketing strategy is weaved around a specialization and would go haywire in case there is no specialization. Specializations that firms chose can be a specific technology like AI, Blockchain, Crypto or a specific industry like logistics or Real Estate. Specializations are also on the cross-sections of a specific industry and a specific tech like AI in healthcare. Investing strategy itself forms specialization in many cases. New strategies like “second seed”, “very late stage funding”, “Pre-Series A” amongst others still have space to accommodate new fund managers. Here it’s imperative to chose a specialization and follow it up with an immaculate Marketing strategy

Methodology: Methodology is what differentiates boys from men in the VC game. A process oriented firm is stable in turbulent times and can beat returns expectations of the investors. A firm that is cut above the rest will have a well documented process for fund-raising, investor relations, investee relations, deal origination and sourcing, portfolio management and an excellent and well timed exit strategy. All VCs claim they have processes but most of the time it just stays just in their heads and is not documented. These processes give a leg up to your marketing effort. Once processes are established, focus can move to reduce the costs of operations, which means more dry-powder for investments and better returns for investors.

….but my fund is small, I may not need marketing!!

An economic cycle bubble bursts every decade or so. With geopolitical tensions in biggest economies, we may be on the cusp of another one. If your fund is small and you don’t invest in Marketing, you may not survive the next bubble burst. Maiden fund is small and second fund may just never come, pretty much wrapping up the business. Also when subsequent fund is 10X size of your last closed fund, without any change in your strategy for fund-raising, it’s bound to fail. Your marketing effort needs to match your ambitions and show you as a serious long-term player in the game.

…..I am into angel investing and I have ears on the ground, I may not need marketing!!

In Angel investing your brand to help entrepreneurs is as important as your wallet size. A well researched report carrying opinions of all entrepreneurs on challenges that they face and how you help is a typical stunt that will tilt the scale in your favor when entrepreneurs sit and chose the best VCs for them

….I am in a very local business, I may not need marketing!!

With the advent of internet, there is nothing that is absolutely local. Highly targeted marketing campaigns for a locality can do wonders for your business.

In conclusion, marketing is the only differentiator between the VCs who crop up in a boom cycle just to go down with the next bust and the ones who are in the game for long term. A sincere Marketing effort shows knowledge, commitment and capability of the VC, all of which go a long way in attracting investors and investees.

I represent Magistral Consulting that helps Private Equity, Venture Capital and Asset Management firms across the globe offshore their marketing activities for better effectiveness and lower costs. For more information, please write to me at prabhash.choudhary@magistralconsulting.com

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Softbank achieved fund-close of its latest Vision Fund of 100 billion dollars in record 8 months. This fund is dedicated towards late stage funding of tech companies. To keep things in right perspective, the amount raised by Softbank is more than the total amount invested by all of American VCs in 2017. This success comes on the back of past record of returns generated by earlier Softbank’s funds, which is in the range of 25-30% IRR.

While likes of Softbank are able to achieve fund closes of eye popping amounts with amazing alacrity, emerging managers find themselves struggling to close even their maiden funds.

We at Magistral, have been working with some of the global funds in assisting them with the fund raising efforts; and here is what we think can help emerging managers close their funds quickly:

1. Specialized Content: If you claim to be an expert in real estate related to cannabis, and your fund aims to invest in this and generate superior returns, how much content regarding this area do you carry in your opening meetings? Is there a credible content available with Investor relations, business development and fund-raising teams? What are the legal-social aspects of investing in this? Compelling content establishes your authority right away and places you favorably with investors. Get the content and strategy regarding your fund right.
2. Exhaustive Reach-out: Achievement of fund-close with target amount is a function of number of LP meetings a fund is able to achieve. At the same time, number of meetings is a function of LP reach-out efforts. LPs can be reached through calling, emails, references and social media. An exhaustive reach-out program ensures there is no door left to knock.
3. Past Performance: Past performance in individual capacity of partners goes a long way in convincing investors to put their money in a GP. Pitch deck should clearly talk about realized paid up returns delivered by partners in the past. It establishes credibility of the GP.
4. Capability to park funds: LPs not only see the capability of GP to provide handsome returns, but also the experience to handle and deploy large amount of funds. A GP capable of parking bigger checks means less hassle for LPs. In this scenario, smaller niche funds tend to miss out
5. Events: There are hundreds of LP and GP events that take place across the globe throughout the year. Finding out the relevant event for your fund, and participating in the same has the potential of opening flood gates of investors for your fund. A slot for keynote speaker ensures some more mileage
6. Social Media and SEO: Social Media and SEO still remains a black box for majority of GPs. These channels may not directly bring in funds, but are crucial for setting up opening meetings, getting references, supporting information and distributing content. A credible online presence helps LPs in its due diligence of GPs
7. Over-dependence of Private Placement players: In our experience, we came across GPs who before giving out any details about their investing philosophy started talking about the brokerage; they are willing to give out for introductions. This is short-sighted. A Placement guy who will be attracted to such schemes would be short-sighted and will not benefit both the LP and GP. Even if the broker is well connected, it’s not possible for him to work with all type of GPs. It’s better to take responsibility of reaching out to LPs organically rather than depending on brokers and enticing them with ‘cuts’, which of-course would be paid from the fund that should have ideally contributed to returns to LPs. A situation where everyone is a loser.

I hope all the experience shared by us here is helpful and helps you close your maiden fund as soon as possible.

I represent Magistral Consulting, that has helped Emerging Managers in the areas of Private Equity, venture Capital, Real Estate and Infrastructure and Hedge Funds  raising their maiden funds. We have assisted GPs in all the above mentioned areas. For more information, please drop a query at prabhash.choudhary@magistralconsulting.com

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Rules of the game for online content marketing have undergone a sea change in last few years. It’s established even for B2B marketers, that their target customers are spending most of their time on internet either hooked on laptop, mobile or tablets. If you need to reach your customers, going online is the only imperative.

Though it’s obvious that internet presence and compelling content is of paramount importance for B2B marketers, reaching the top decision makers is still an Achilles’ heel for most. People at CXO levels are extremely busy and getting their attention for content requires some serious homework. Putting in some content in hope of getting top management’s eyeballs, is spray and prey technique, that in today’s world of incessant barrage of irrelevant content, is a ploy of diminishing returns.

Here are few rules that in my experience have worked wonders and have helped clients in engaging top deck in meaningful conversations:

Topic of content: Generalized content gathered from other sources of information is passé.  A report on an industry say as big as Management Consulting, is expected to draw a blank. What helps here is coming up with topics that are of immediate interest to the decision makers in the industry that you are targeting. Targeting a very specific sub-market helps.  Rather than report on ‘Management Consulting’, a report on executive search market for CXO level recruitments in a defined geographical space is far more appropriate. Ofcourse, executive search is also a subset of management consulting industry like dozens others. It helps to know your exact market and in as much details as possible.

Data, data and more data: “In god we trust, everyone else brings data”. A piece of statistic communicates in thousand ways. It establishes the credibility of the content. A top management professional would rather prefer a neat data table that tells him what he needs to do, rather than an elaborate piece of report with recommendations that gathers dust. Let him draw his own conclusions

Understand the challenges of your target: It’s a ground rule and probably oft repeated, but it’s appalling to see so many B2B marketers failing at this. The board of a family business being run in India would not be concerned about IoT interventions on assembly line, but about the ways to manage a non family member CXO, that they hired recently for salary more than they ever paid themselves. It’s important to understand what keeps a board member awake at night, before you decide to make content for them. Next obvious step is to weave content around it and dovetail your products and solutions into it.

Infographics: A texty report is still in vogue. Marketers feel more text means more information. Sadly nothing gets read. Even if it gets read, there is no chance a busy executive will read it in the details that marketer would have envisaged.  Cutting down on text, as ruthlessly as you can helps. Building on infographics to convey the same information is time consuming but well worth the effort. Any report or content that can’t be skimmed in 5 minutes is out of the window.

Once you are done with finalizing a crisp, data and infographics loaded, relevant report for your target, its distribution through online channels is the next hoop. About that in some other blog, some other time!!

Author is CEO of Magistral Consulting which has helped multiple B2B corporations in creating winning content for top management. He can be reached at prabhash.choudhary@magistralconsulting.com

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