Fundraising is no longer just about knocking on doors every few years to pitch your next vintage. With more and more managers entering the market, new tools are needed to compete effectively for investors’ money.
Amid this abundance of choice, many LPs have adopted a consumer-like mindset to their existing, quantitative-heavy evaluation, focusing on a desire to invest in managers that project a set of shared values and purposes. As a result, private equity firms need to think of themselves as recognisable, distinctive brands, much like successful consumer-facing businesses such as Nike and Apple.
Bringing in capital now requires more traditional marketing and sales tactics, with a focus on continually developing and reinforcing brand values to build customer loyalty and gain market share in the midst of growing capital concentration.
A new approach
Stockholm-based investment firm EQT was an early adopter of a brand-focused marketing strategy. In answering some core questions about itself, such as “Why do we exist?”, “What do we stand for?” and “What is our mission?”, EQT identified a set of clearly defined values, focusing on a purpose-driven and long-term approach. Its slogan, “Future-proofing businesses”, not only encompasses EQT’s attitude towards its investments, but also its own internal growth and development strategy.
Private equity firms have also become more innovative in their approach to marketing and fundraising. Firms now use an array of digital media platforms to maintain constant communication with investors and reinforce their messaging. Blackstone, the world’s largest PE firm according to the PEI 300, uses YouTube and Twitter to share firm updates, fundraising-related news and deal announcements to its 115,000 followers. It also recently announced a deal to sell a division of one of its portfolio companies to Snoop Dogg, simply by retweeting the hip-hop icon’s own announcement. This kind of approach would have been unimaginable 20 years ago, and typifies the evolution of the industry.
Oakley Capital, which is focused on partnering with European mid-market founder-owned businesses, has built its brand around its entrepreneurial history, having identified a clear set of values that effectively encapsulate exactly what it does and why it does it. The firm’s underlying narrative appeals to a diverse group of stakeholders, focused on the idea that Oakley is built by entrepreneurs, for entrepreneurs.
Not only does this resonate with investors – preferential access to deals is at the heart of Oakley’s proposition – but it is a message that appeals strongly to the founders of the firm’s target companies. Presenting a narrative in such a concise way can make all the difference when differentiating yourself in the highly competitive mid-market.
Carving out a brand identity and investing in marketing and sales may sound trivial to those more used to carving out the unloved division of a corporate, but failing to take these things seriously can be the difference between success and failure when it comes to fundraising today.
Anna Jerstrom is head of investor advisory at Greenbrook, a UK-based strategic communications firm serving the alternative investment industry.