Rocks

We Are on the Same Team

In most fundraising campaigns, the outcome is defined as either a win or loss: either the marketer meets the manager’s goals and earns a fee or minimum thresholds are not met, and both parties end up empty handed.  This is the reality managers face as they search for the perfect marketing partner.  The key to the manager/marketer relationship lies in the creation of the relationship.  Unless there is an alignment of interests, a collaborative effort, and a common goal, there is little chance for success.  Simply, the synergy, rapport, and communication between an asset manager and a marketer is the foundation of a successful campaign.  Without it, all efforts will fall like a house of cards.  If this cannot be established from the beginning, efforts between the parties will be a waste of time, money and resources.

Coming together is a beginning; keeping together is progress; working together is success.” – Henry Ford

Alignment of Interests

A healthy manager/marketer relationship begins with trust, a mutual “buy-in” for each other’s abilities along with a clearly articulated alignment of interests around a specific goal.  Obviously, the goal is a successful raise, but the alignment of interests goes one step further.  Raising capital is a challenging undertaking, even when the parties involved are working seamlessly together.  A lack of collaboration, respect, or synergy will lead to diminished communications and fragments cooperation, decreasing the odds of mutual success.  Communication comes from common goals, shared respect and a collaborative effort.

Not a Competition

Often, managers create competitive environments, believing a competition between internal and external markets will lead to greater outcomes.  Unfortunately, this kind of alignment more commonly leads to less communication, less sharing of allocator intel, and inconsistent messaging in the investment community.  Competitive cultures also eliminate the team’s ability to leverage relationships or embrace new marketing strategies.  The reality is, each party brings critical expertise and relationships to the process, creating a 2+2 = 5 scenario.  A competitive culture creates just the opposite; slowing or diluting the process tremendously.  Considering the likelihood that both parties will have relationships to lever off one another to build a stronger presence in the market, the faster a manager and marketer can establish trusted lines of communication, the more effective a fund will be when its story is shared with investors.

Focus on What You Do Best

A capital campaign is designed to highlight a team’s attributes to impress investors.  A manager builds a pedigreed team that is poised to deliver meaningful results to LPs, while often attempting to run the capital raising campaign as well.  All this does is guarantee less than optimal results, while sending mixed signals to those considering investing.  This is true for the following reasons:

  1. The manager’s unique ability is in running a strategy.  Time spent on anything other than that, such as fundraising, can be a prohibitive to achieving the highest return potential;
  2. Investors are allocating money to managers they think will supply them with superior returns.  Any time an investor sees a manager focused on areas other than sourcing quality deals and maximizing returns, they will become concerned;
  3. Showing current and potential investors that a manager doesn’t know what they “can” and “cannot” do, sends a message of business immaturity.

Good third-party marketers should be able to screen potential investors and then lead interested parties through the initial steps of introduction, education, positioning, and relationship building, without taking any time away from the team.  When it is time to meet, the manager and their team can be correctly injected into the conversation at a place where their skillset is magnified.  This later-stage introduction in the fundraising process positively changes the dynamics of the manager/investor connection by elevating the manager’s role in the relationship.

Our Advice

The best thing a manager can do is spend adequate time performing diligence on a marketing partner.  Verify that they come from similar philosophical beliefs as it relates to fundraising, their market focus and capabilities represent areas in which the manager needs help and that the spirit of the relationship between the two is synergistic, collaborative and clearly aligned.  With those pillars in place, a manager must then put their trust behind the marketer to represent their firm properly in the market.  A competitive and non-collaborative approach has a perfect track record: it never works.  However, a culture of mutual respect, common visions, and collaboration can lead to a successful raise that sets the foundation for the firm’s future.  You have made an investment in the marketer.  Make sure the spirit of the relationship is protected every step of the way, and success will follow.

Securities offered through Growth Capital Services (member FINRA, SIPC). Office of supervisory jurisdiction 582 Market Street, Suite 300 San Francisco, CA 94104.

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