Audience and Asset Management
Generalizing, everyone wants 10 investors to allocate $20 million into their fund.
I am not saying that it is impossible, however, the chances of selectively identifying 50 prospective LPs, directly reaching out to those prospects, and closing 10 allocations are extremely low. The industry is too competitive, there are too many funds and LPs can no longer rationalize only allocating to their close contacts.
Anyone out there raising capital will attest to the systematic battle that occurs. You have to reach out to 100s, sometimes 1000s, of prospective LPs in order to make gains – and even then, you may not raise the amount of capital you are hoping to raise.
How do you improve your odds of raising capital?
You can increase your likelihood of raising capital by communicating to a large audience and subsequently tracking those that are paying attention. It is simple math, the more people engaged in your story, the more chance you have of raising money.
That said, you can’t build “audience” by continuously asking people if they are interested in receiving information about your fund.
Are you interested?
Are you interested?
Are you interested?
It gets tiresome fast.
To build an audience you want to identify a group of prospective investors and consistently share your thoughts, opinions, and ideas – typically through email or LinkedIn. And appreciate that you aren’t trying to “get them to invest.” All you want them to do is look your way and have it register in their minds that your thinking is intriguing and worth paying attention to. If done well, over time, you will notice that you have a committed group of LPs continuously absorbing your content. Who is more likely to invest, someone that has never heard of you, or an LP that has been following your thinking for months and months?
Having executed these sorts of strategies for decades, I have made a number of keen observations:
Regardless of how much you try to predict who is going to be interested, you are typically wrong. (This is an extremely relevant point for our industry and strong justification for building audience. Let the market and objective data tell you who is interested… don’t guess.)
If no one is engaging in your content, it’s you, not them. (Just because you want to sell something doesn’t mean there is a market. Your audience can be naïve and wrong a lot longer than you can sustain a failing business.)
You need to invest a great deal more time in building an audience than you think you should. (Fancy marketing books say that you need to touch a prospect 7 times before they express interest. In my opinion, this is a bold face, out right, fallacy. I don’t know what the number is, but is a lot higher than 7.)
Finally, the ROI on effort will always be lower than you think it should be or want it to be. (Welcome to marketing my friend.)
