Modern investors are currently in their most proactive phase and making direct investment manoeuvres.
My research for this article showed much has been written on this topic in trade press, spoken at conferences and so forth, what could I add to this topic that hasn’t already been said? In a recent discussion with a PE Manager, analytics showed they received 3000 approaches from funds, the majority of which were poorly written pitch book’s/prospectus’s/marketing materials, only 5 of the 3000 gained a commitment, that’s a lot of work and effort for very little reward?!
Clearly funds need help in their route to the investor, of more importance however is for funds to invest in first impressions to the direct investor, what I mean by this is the investor is looking for the next fund online, using smart phones to make an investment, and they are making use of Artificial Intelligence (AI)/Algorithm’s to find the highlights in a prospectus/pitch book – investors are taking direct control. How prepared are funds to target/market effectively to the inbound investor? For example a PE department within a pension fund are reaching out to a fund directly, family offices might have become their own LP’s/investing capital directly?
What can the fund do then in the short term? This year, research from the University of Pennsylvania and Southern California calculated that a “1bp increase in marketing expenses leads to 1% increase in a fund’s size”.
If marketing materials are rewritten with AI in mind, if marketing strategies communicate to those using smartphones, this is a very efficient way to raise capital for little cost. This is what we do at Finscoms.
Don’t get me wrong it is possible for a fund to raise capital through the handshake/roadshows etc, but that the direct investor is where the action is at…