You cannot lure investors away from the industry titans by copying them. Instead, follow a strategy proven in the natural world.
Consider for a moment the finches of the Galápagos Islands.
Around two million years ago, having migrated from South America, their ancestors were struggling to find enough food to eat.
Ground dwelling birds that lived on a diet of seeds, the islands’ first finches scoured the land looking for food. Fierce competition meant it was hard work and delivered meagre returns.
There had to be a better way.
There was, but to access it they needed to adapt.
As Darwin famously recorded, evolution did its thing and the rest is natural history. Today there are around 15 different subspecies of finch on the Galápagos Islands. Each has adapted to a specific diet by developing beaks that give them an advantage. Those with long beaks focus on pulling juicy insects from the ground, while those with broad, blunt beaks spend their time cracking nuts and seeds.
This anatomical differentiation was key to their survival.
Be more finch
Many fund managers find themselves in a similar situation to those ancient finches.
They scour the land for every ultra-high-net-worth individual, family office and pension fund with money to invest. But they can’t compete with the reach of the industry titans, who those investors perceive to be a ‘safe haven’.
There must be a better way!
There is.
But you must abandon the policy of chasing every investor and hoping for the best. And you must abandon messaging that is made to appeal to everyone, but delights no one.
Instead, craft your metaphorical beak into a tool that is perfectly designed to get to your ideal investor.
First, determine who your ideal investors are and what they are looking for. Second, focus your messaging on the distinguishing features that will appeal directly to this investor group.
If you do this, you will survive. In fact, you may thrive.
Understand your ideal investors
Determine whether insects or seeds are your delicacy of choice.
These are the investors whose risk appetite and return expectations align most closely with what you deliver.
If you’re not clear on who your ideal investors are and what they want, talk to your existing investors.
Investors who have already bought into what you are selling are likely to be among your ideal investors. Talk to as many of them as possible, as candidly as possible.
What drew them to the fund in the first place? What excites them about the fund? Is there anything about it they wish was different?
Taken together, these answers will paint a picture of who your ideal investors are, what they want and how they think.
Armed with this information, you can position yourself to increase your appeal to this investor base.
Determine why your ideal investors should choose you over your peers
Will it be the blunt beak or the long beak that helps you reach your prize?
Build your messaging around the differentiating features most likely to draw your ideal investors in.
Do you focus on a sector that others misunderstand? Is there a particular trait you look for in investees that others undervalue? Do you have relationships that give you access to deals others may never see?
It is important that these differences are properly interrogated to determine how unique they really are. It helps to involve someone from outside the fund. They will be better placed to question assumptions that were long ago accepted as facts.
Most managers, however, do bring something unique to their fund. If examined closely enough, and with the right questions, that difference will reveal itself.
Once the difference has been established, you should build your messaging around it – always thinking about how it benefits your ideal investors.
In conclusion: Focus on one food source and you will be well fed
Managers who communicate the right message to the right people are more likely to close their funds faster and start bringing in the management fees.
Pursuing a more targeted approach may result in fewer meetings, but the meetings you do have will be more likely to deliver results.
For more help thinking about how your fund is different to its competitors, including talking to your existing investors, contact the Apex Strategic Marketing Partners team.
