Alternative Investment Marketing in the Second Quarter
– Strategies and Advice for the “New Abnormal”
This is a confusing time for everyone in the alternative investment community. Uncertainty reigns – both at home and at work…which for many is also…at home. From my perch in Brooklyn, the sounds of sirens punctuate the otherwise eerily quiet streetscape. The mechanics of an institutional allocation – the actual steps and processes needed to make an investment – are frozen. ODD, IDD, site visits…are impossible in the foreseeable future…and therefore, the standard marketing playbook –should be thrown out the window.
So, what are funds and marketers to do in the Second Quarter of 2020 – a three-month period during which absolutely nobody knows what is going to happen? Sometimes it takes cataclysms to shock the industry to change and innovate. After the global financial crisis, investors gained much more agency in the diligence process and managers upped their game across all IR and marketing efforts. This crisis offers the opportunity to innovate and bring Alts marketing in line with the sophistication of mainstream marketing.
But that’s down the road, in Q2, our goal is to be both relevant and respectful, additive but not annoying – a challenge in the best of circumstances, even more so now.
Keep the following in mind and you’ll be better positioned when old normalcy returns.
One of the nice elements of the video conference movement – Zoom, Microsoft Teams, Slack, etc. is the ability to see your clients and prospects and friends and colleagues in their home environments. I find it wonderfully humanizing to see kids wander in or suits being replaced for t-shirts and hats or the art shown on the back wall…for the time being anyway…until everyone figures out how to use Zoom backgrounds. Now that we see them in their “natural habitat” it is not much of a leap to understand that we’re not their number #1 priority…or perhaps even crack the top 50. The best marketers know this and have a strong relationship and often deep friendship with investors well in advance of them becoming clients. It starts with understanding that people are at the center of alternative investments, alpha driven investment strategies – the most personal of investment strategy/product marketing products.
Whereas we may wish to keep our head down in the fox hole, the statute of limitations on that is over. It’s time to get out there and communicate. Performance may be bad, terrible or in rare instances, fantastic and you have little insight or confidence in the portfolio. This is not time to hide. I am on the distribution lists of a few managers that engage in what I refer to as “selective marketing” – turning it on and off as the circumstances and performance suit. It’s a strategic mistake and tactically dumb – akin to playing hide and seek with my 7-year-old who chooses to stand behind a sapling. It doesn’t work and there’s a downside to trying.
Stay consistent and plow forward – in the good times and the bad.
The world is long uncertainty. Don’t add to it.
Over the next 3 months, the objective in all external communication is to hew as closely as possible to what you know to be true: in your market, in your book, in your strategy, in your life. Clients, prospects, service providers and colleagues need insight and signal – not more noise. Based on the proclivity of managers to opine on the fed, politics and a range of topics not central to their strategy, I fear that managers will find it near impossible to resist the siren song of sharing their thoughts on COVID-19. Please don’t. I actively advise against inserting your thoughts on the coronavirus in the Q2 letter. We’re all consuming the same media. Unless you are an epidemiologist – and even then – I am skeptical of the value that hedge fund and private equity managers can add with their “take”. A creative solution would be to share links to interesting articles or the media that you’re consuming as it provides insight into the data you process and how that informs your decision-making process.
Outside of that, please stay in your lane
What’s going on in your fund or specifically in your portfolio? What are the short, medium, long term implications of the current uncertainty in your particular asset class? Where are the pockets of dislocation that can’t be explained by deleveraging and present an opportunity for investors? Probabilistically weigh different outcomes in specific trades or set-ups. Share your thoughts on how the world will be different when we’re through this?1 Show insight on how you’re thinking about the current opportunity set. Contemplate the unthinkable, however unlikely, but let’s, as an industry, leave the virus and our (lack of) preparedness and response to Dr. Fauci.
Easy and Efficient
Now is the time for “Just the Facts Ma’am” communication style. Focus on what’s important and how that information is delivered to the investor. Communication should be both more frequent and shorter. Keep it simple and apply this to the entire marketing suite. Consider providing a mid-month update. The situation on the ground is fluid. What is the weekly estimate? mid-month estimate? What are you seeing What are you doing?
In parallel, conduct an audit of the current marketing suite. Do I have everything at my fingertips that an investor might need – either in a data room or zip file2 e.g. DDQ, risk reports, references, service provider contact information, exposure reports, attribution, contribution? When the sirens stop…are you ready when an investor grants you precious bandwidth? Do you have all your “fund stuff” in one place that makes an allocators job easier?
r(E)-invent your marketing efforts
Sheltering in place has forced everyone online. The first wave is internal communications via Slack/Microsoft Teams/Google Hangouts etc., which has then been pushed out to investors and prospects. In fact, I have heard of a 4-hour Zoom diligence meeting3. Now that you’re used to seeing yourself on the screen, consider taking this opportunity to record short updates on the markets and your strategy and your performance. You may consider sharing this information broadly or, behind a password-protected wall on YouTube or Vimeo. The most creative and forward-thinking funds are doing this already. Outside of our industry, these tools are standard. Nowhere else does a 10-page annual letter or 20-page deck make up the crux of the marketing effort. Where possible consider how to incorporate technology tools into your marketing effort.
The current disruption in “normal” marketing methodologies provides an opportunity to deepen relationships and add value while improving our own internal processes. Let’s take it.
Stay safe and be well.
1 – Hat tip – LT
2 – Hat tip – TB
3 – Hat tip – AG
Andrew is the President and Co-Founder of Castle Hill Capital Partners (Castle Hill) . Castle Hill is a broker/dealer with 18 registered representatives engaged in raising capital for alternative investment strategies to sophisticated active allocators including endowments, foundations, family offices and public and private pension plans. Andrew has successfully raised seed capital, acceleration capital and fund investments as well as managed accounts. He advises his clients on marketing strategy, fund structuring and team development with a goal to reach capital raising goals thoughtfully and efficiently.
Prior to founding Castle Hill, Andrew was the head of Capital Introduction at Lazard Capital Markets.
His first position on Wall Street was with Taylor Rafferty, a boutique cross-border investor relations firm. During his 7-year tenure, Andrew assisted senior management in implementing all aspects of their investor relations programs including corporate strategy development, IPO/Secondary roadshows, media relations and assisted senior management to coordinate the investor relations activities for 12 ADR listings and IPOs on the NYSE and NASDAQ.
Andrew graduated from Haverford College in 1993 with a B.A. in Economics. He holds the Chartered Alternative Investment Analyst designation (CAIA) and is the Head of the New York Chapter with +1,000 members. Prior to entering the financial services industry, Andrew spent four years in Malaysia and Indonesia as a teacher and entrepreneur.
Andrew holds the Series 7, 63 and 24 licenses.
Andrew is married with two children and lives in Brooklyn, NY.