Build Consensus, Raise More Capital
Everyone is well aware of Nike’s tagline, “Just Do It.”
Would it have become as iconic as it has if the team in Texas used the phrase “Get it done,” the team in New York, “Do not hesitate,” the team in California, “Go all in,” etc. My two cents, probably not.
Surprisingly, this is exactly what happens in the alternative investment industry. Senior leaders of hedge funds and private equity funds very rarely use the same language to describe their value proposition. It is no wonder LPs struggle to figure it out.
Coming together as a team and clearly defining the exact language to be used to describe why and investor should care about you is one of the single most important things you can do. First, it forces your team to figure out what your precise value proposition is. Second, it helps distill a lot of words down to fewer words.
This is easier said than done. Here is an exercise to help. Have everyone on your team write down their top 10 reasons why someone should invest. It is important this is done in isolation. After that, write all the reasons on a whiteboard, eliminating the duplicates. Next, on an individual basis, have everyone prioritize the top three attributes. Write 1, 2 and 3 beside the corresponding attribute on the white board. At this stage you should see some clustering around what your team believes to be your firm’s top attributes. If you don’t, then this exercise is even more valuable. Best figure it out.
After you have gone through the process above, there is one more important screen. You have to determine whether the top three attributes identified through the above process are distinct or simply white noise. And this is gut check time. If they sound like everyone else, it will force you to dig deeper.
At the end of the process, everyone on your team should be able to concisely and unilaterally list the three reasons why a prospective LP should pick your firm over another.
“You should invest with (insert your company’s name here) for these three reasons: 1, 2 and 3.” Why is this process so valuable?
Well, I have yet to see anything that raises capital faster than clear messaging and confidence.
