Let’s be honest. There’s a common idea in the world of raising money for investments: if you get great returns, investors will automatically show up. It sounds nice, right? That your good numbers alone will bring in all the money you need, and marketing is just an extra, not a big deal.
But that idea is wrong. It’s a big mistake in thinking!
The hard truth is, many investment funds with truly great performance have failed. Why? Not because their investments were bad. They failed because they couldn’t explain their value well. They didn’t connect with the right investors. Or, they didn’t understand that even the best investments need good marketing investments. Plain and simple: bad marketing, or no real marketing plan, can quietly kill a fund.
Marketing Isn’t Just Spending Money: It’s a Skill You Need
So, let’s change how we think about this. Marketing for alternative investments—like private equity or hedge funds—isn’t about fancy brochures or being a smooth talker. It’s a real skill. [Source 4] Think of it like learning a trade. You can learn from people who are good at it, but you only get really good by doing it yourself. [Source 5]
Reading books or going to talks won’t teach you nearly as much as actually trying to market your fund and talking to real investors. [Source 6] You have to get in the game.
But before you do, you need the right tools. This isn’t just about pretty materials. It’s about understanding the basic ways to reach investors and what makes them decide to invest. [Source 7] It’s about clearly explaining what makes your fund special and why your investment ideas are solid, in a way that actually clicks with the people you want to reach. [Wolfable Source 2.1, Qubit Capital Source 9.1]
Once you understand these basics, you can change your approach to fit your style, your firm’s strengths, and what your investors really need. [Source 8] This smart way of getting your message out is what good marketing investments are all about. It’s about building a solid system to connect with investors, not just trying a few random things.
Investors Have Changed: What They Expect Today
A big mistake any fund manager can make is thinking that what you think is important is what investors think is important. It’s usually not that simple. Whether you’re talking to wealthy individuals or big institutions, they all have their own views. [Source 9] And, very importantly, what they expect from you has really changed, especially since the financial crisis in 2008. That was a wake-up call.
That crisis showed big problems with how some funds and investors were doing things. Investors are now much more careful. They want more proof, and they want to feel like real partners with the funds they invest in. It’s not that they’re trying to be difficult; they just learned tough lessons when many people lost trust in the financial system.
Think of these as the basic rules for building trust and a good reputation when you’re making marketing investments:
- Be Totally Clear (Transparency): This means more than just sending out reports. It means being open and honest about everything important: how you charge fees, why you have certain expenses, how you figure out investment values, and any situations where your interests might not perfectly match your investors’. Bottom line: tell investors what they need to know, clearly and upfront. If you’re not comfortable sharing something, maybe you should ask yourself why. This builds trust.
- Make Sure Your Interests Match (Alignment of Interests): Good investors can spot it a mile away if your fund is set up to benefit you more than them. Your fund’s setup—how you get paid, how profits are shared—should clearly show that you win when your investors win. It’s about making sure everyone is in the same boat, working towards the same goal.
- Have Strong Rules and Be Accountable (Governance): Investment funds can be complicated. So, it’s key to have clear rules for how you invest, good oversight (like an active advisory committee of LPs), and fair ways to handle any disagreements. This shows investors their money is being handled responsibly and ethically. This is what helps them sleep at night.
Ignoring these ideas is a big mistake. They show what it takes to earn and keep the trust of smart investors today. Your marketing investments and how you run your fund need to show you live by these principles. x
The Power Team: Marketing and Investor Relations (IR)
One last key point: Marketing and Investor Relations (IR) are different, but they work very closely together. Think of them as a one-two punch. In smaller businesses, the same people might do both jobs. But it’s important to know how they’re different so you can do both well.
Marketing is what you do to attract, teach, and convince potential investors. It’s about finding the right investors for your fund or deal, clearly explaining why your fund is a good choice, answering their tough questions honestly, and helping them decide to invest. Marketing builds that first connection.
Investor Relations (IR) is what happens when someone invests. It’s about keeping that relationship strong. IR delivers on the promises of openness and communication you made during your marketing. It means managing expectations, giving clear and regular updates, and making investors feel like valued partners. Here’s a bonus: great IR doesn’t just keep LPs happy; it often turns them into your best salespeople. They’ll tell others about you and invest more themselves. That’s a huge win for your future marketing investments.
Understanding how these two work together is key. Both are critical. Both need smart thinking.
Raising money is hard work. It takes brains, effort, and really understanding the people you want to invest with you. But it’s not impossible. The moment you stop believing that just having good returns is enough, and the moment you start treating marketing investments as a vital part of your business, you start to really improve your chances. This isn’t just about getting checks; it’s about building real, long-lasting partnerships based on clear communication, honesty, and trust that you’ve worked hard to earn.
That’s the plain truth. Acting on it is the smartest investment you can make.
Ready to build a better way to connect with investors? To get started go to findmoreinvestors.com/get-started.
