HEDGE FUND

MARKETING
Best Practices for Building
Rapport with Investors
 HEDGE FUND MARKETING.
Best Practices for Building Rapport with Investors

Building a strong brand

Strategic marketing and telling a unique brand
story are significantly important when raising
assets for a new investment management firm. not only establishes you
For alternative investment managers,
establishing clearly defined, consistent core as a financial leader, but
it also differentiates you
values and messaging help build trust with
investors. Consequently, branding must become a
major focal point for firms operating in the from your peers,
alternative investments space.
Keeping messages consistent demonstrates to
creating investor value
both prospective investors and potential joint and market share growth
venture partners a willingness to honor and fulfill
commitments regarding their financial assets. every step of the way.

As the financial services industry becomes more competitive, firms will need to embrace
innovation by creating a robust brand development strategy. Their reputations depend on
it. Clean, accurate, and high-end branding conveys to prospective investors that an
investment manager is serious about building their business, instilling confidence, and
ultimately increasing the chances that investors will trust the firm with their money.

The best branding techniques go beyond a logo and showcase a firm’s personality and
values through design and a coherent brand story. Brand representation should be
consistent across all marketing collateral, websites, and social media sites. Proper messaging
can help minimize risks and strengthen values such as trust and transparency.
From a regulatory perspective, investment managers should be knowledgeable about what
is permitted and prohibited by the various self-regulating bodies. Engaging experienced
securities legal counsel and marketing professionals who have a background in investment
management will position the firm for success and mitigate potential liability with the
Securities Exchange Commission (SEC).

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 When building a brand strategy as an investment
management firm, keep the following components in mind:

01 Brand Guidelines:
Establish brand guidelines from the start to build trust with stakeholders. A strong
brand guideline encompasses your mission, core values, personality, tone, and elevator
pitch, all of which establish the firm's brand identity – making it easier for investors to
recognize your business. These guidelines will also define brand assets and the proper
way to use brand elements, including logo placement, colors, spacing, fonts, and
imagery.

02 Brand Messaging:
This includes everything from how you define your firm’s investment approach to how
you describe the why behind the creation of the investment firm. Strong brand
messaging should be clear and consistent. It should describe your value proposition in a
way that fosters trust, confidence, and, ultimately, motivates investors to entrust you
with their money.
Tell your unique story in an approachable, authentic way to build credibility with
prospective investors. Think through the firm culture: why you chose the firm name,
what strengths you and your partners offer, and the significance of setting up your
office in a specific location. In other words, pull back the curtain and give investors
a glimpse into who you are as people. Build a relationship. Build trust.

03 Pitchbook:
It’s not about putting a pretty graphic on a slide. It’s about telling your story in the
right way. It takes time to develop your firm’s story or pitch. Consider the storyboard
approach. Think about who you are pitching to and put yourself in that person’s shoes.
What does an investor want to hear?
Investors typically want an understanding of who they will be working with. Yes,
pedigree and experience are important; however, showcasing how your background and
story shaped your decision to launch a firm is also important. Investors want to
understand your investment approach, how you select investments, and how you plan to
manage firm and portfolio-level risk. The best rule of thumb is to use the pitchbook
slides as a guide. Speak to investors using examples or stories to build rapport.

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 Most importantly, practice, practice, practice your pitch. Enlist the help of a
colleague, mentor, or professional to record you talking through the pitch. Ask them to
interject and ask questions to help you learn how to pivot and answer the questions
without losing composure. Then, watch the video together and pinpoint areas of
improvement. Repeat this process until you feel comfortable and confident walking into
an investor meeting.
Steve Jobs, one of the most effective presenters in modern times, turned presentations
into an art form by practicing his keynote speeches for days on end. Every gesture,
arm movement, and pause were carefully orchestrated until it became second nature.
Steve Jobs never needed to use a teleprompter because he practiced and knew the
story inside out. Practicing your pitch arms you with the confidence necessary to
portray that you are organized, diligent, and serious about your business.
Materials investment managers distribute to investors are where law firms find the
most common issues, such as misleading words or phrases, promoting their firm, or a
fund managed by their firm, as more than they are, or making promises they cannot
guarantee. Below is a list of mistakes, that if not corrected, will undoubtedly put the
investment manager on the SEC’s radar and, in some cases, bring about enforcement
action.

Embellishing experience or education

The manager stated in her bio she held a master’s degree. However, although she was
working towards her master’s degree, she had not yet graduated.

Misleading performance
The manager included a chart in his pitchbook highlighting past performance. However,
this chart was only a hypothetical representation of performance and did not have the
necessary disclaimers advising of its hypothetical nature.

Overuse of disclaimers
To allow for a wide range of content, including potentially misleading language, the
manager added an “all-encompassing” disclaimer, assuming this would mitigate him of risk.

Examples of misleading language, ambiguity, or implying guarantees

‒ “Producing stable and predictable rewards.” Instead, say, “that are expected to pay
rewards on a specific schedule.”
‒ “One of a kind strategy.” It is closed-minded to assume the fund is the only fund in
existence that employs a similar strategy.
‒ Vague source referencing or no referencing at all. There must be a detailed description
and location of where this information came from and where it can be accessed.
‒ Specify, specify, specify. Even if you believe the description seems elementary, do not
make this risky assumption. For example, “fees” could imply all fees when it is probably a
specific fee, such as performance or management fees.

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 Referencing an unaffiliated individual or entity
Warren Buffet may be an underlying inspiration for your investment strategy, but,
unless he’s part of your management team, he shouldn’t be included in your marketing
materials – unless it’s explicitly citing a direct source.

04 Website:
A simple brochure style website that clearly and compliantly describes your firm’s brand
promise and investment approach will help build brand awareness. Be consistent with
the brand messaging to ensure a cohesive story that is recognizable across all public-
facing materials. Content should be brief, concise, and straightforward. Website
content detailing your firm’s past or present offerings, or any fund-related documents,
should only be accessible through a password-protected secure access point.

05 LinkedIn:
Creating a LinkedIn company page is a great way to establish your brand on a
networking site used by many of your peers. Today, people go to LinkedIn to view not
only a person’s profile page but also the company’s page. Again, ensuring that
messaging and branding are consistent across all outward-facing materials will build
brand awareness and trust.
Investment managers often set up their LinkedIn page with an incorrectly sized logo
and an overview of the firm that is inconsistent with marketing materials or the one
that was filed with the SEC. An individual’s personal LinkedIn page may have dates of
employment that differ from what is written in the ADV. It is imperative to ensure
information is consistent across the marketing materials, website, LinkedIn, the ADV,
and any additional documents.

The best LinkedIn company

pages provide a brief
overview of the firm, the
appropriate disclosures,
and consistent branding.

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 The SEC narrowed in on investment management firms and their use of social media
due to the increasing popularity of networking sites such as LinkedIn, Twitter, and
Facebook. In October 2017, the SEC amended parts of their ADV Brochure
requirements, one of which now requires a registered investment adviser to list their
firm’s website address and all social media site addresses controlled by the investment
management firm. The SEC closely monitors the social media content provided by
investment firms, especially when it comes to previous client and investor testimonials.
As it stands, testimonials are prohibited under the Investment Advisers Act of 1940, yet
this is a consistent violation brought upon investment managers by the SEC. More
recently, an investment management firm, HBA Advisors, LLC, and a marketing firm
they entered into business with Create Your Fate, LLC, were issued an order by the
SEC for violating Section 206(4) of the Advisers Act and Rule 206(4)-1(a)(1), as
follows, “...it shall constitute a fraudulent, deceptive, or manipulative act, practice, or
course of business for any investment adviser registered or required to be registered
under the Advisers Act, directly or indirectly, to publish, circulate, or distribute any
advertisement which refers, directly or indirectly, to any testimonial of any kind
concerning the investment adviser or concerning any advice, analysis, report or other
service rendered by such investment adviser.”
This example, among many others, emphasizes that marketing and advertising
materials should be prepared by reputable industry professionals that understand the
rules set forth by the SEC and other self-regulating bodies. Additionally, investment
managers are encouraged to engage their legal counsel to periodically review the
manager’s marketing and advertising materials, as well as any associated online sites
to ensure compliance.

06 Stationery:
Last, but certainly not least, remember to incorporate your brand design on business
cards, letterhead, and any other marketing collateral. Again, consistency fosters trust.

Investment management firms are bound by

federal laws regarding marketing and
advertising. Therefore, it is essential to
abide by the rules set forth by the SEC and
have all external-facing materials reviewed
by legal counsel prior to publishing.

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 The right materials and tools help alternative investment firms differentiate and
distinguish themselves, add credibility and consistency to their services, and allow
clients and partners to identify with the brand easily.

Your brand is a promise to

investors and professional
connections that your products
and services are reputable.

Investors and institutions will clearly understand what makes your firm, team, and
investment approach effective and unique to you. The right marketing firm can help
you create a strategy that promotes your company’s core values, explain your firm’s
investment approach, and build shareholder value every step of the way. And an
experienced law firm can mitigate potential liability with regulators.

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 ABOUT Capital Fund Law Group is a boutique
investment management law firm focused on

CAPITAL FUND advising emerging and established investment

managers on all aspects of their pre-launch

LAW GROUP
planning, formation, and post-launch legal
compliance. Our legal team has extensive
experience advising hedge funds, venture
capital, and real estate and private equity funds
in various structures and strategies, both
domestic and internationally. Included in our
expertise and flat-fee service is any necessary
registrations, state and federal, as well as
introductions to and coordination with other key
service providers in the alternative investment
fund industry.

Learn more about Capital Fund Law Group

www.capitalfundlaw.com

www.linkedin.com/company/capitalfundlawgroup

LaunchPad Creative partners with financial ABOUT

services firms on tailored marketing, brand
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them into their next phase of exponential LAUNCHPAD
CREATIVE
growth. We pride ourselves on delivering
strategic innovation, creative design and content,
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services firms develop and execute their
marketing strategies. With over twenty years in
the industry, we understand the marketplace and
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Learn more about LaunchPad Creative

www.launchpadcreativellc.com

www.linkedin.com/company/launchpad-creative-llc

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