Despite the existence of some genuinely distinctive individuals in the private equity industry, the difficulty of distinguishing private equity funds from one another is well-trodden ground. Indeed, the notion has become so accepted that it even has its own acronym, “JAMMBO”: Just Another Mid-Market BuyOut fund.
So, in an industry rich with strong personalities and charismatic characters, why are the firms they founded often so bland? And why do so many GPs imagine that claiming the same “differentiators” as all of their peers will somehow make them stand out? As an identical twin, this is a subject close to my heart…
In this edition of Loud and Clear, we will look at three of the most common positioning pitfalls and provide you with some simple strategies to help you take the steps (and sidesteps) to avoid them.
When on the fundraising trail, it can be tempting to trot out the latest buzz words or, worse, to ape the overheard elevator pitch of Successful Buyout Fund VII, as shared by an enthusiastic placement agent over drinks in the Hotel Okura lobby.
The result? That’s right: you end up all making identical claims and being just as indistinguishable as before. What a disaster.
Make sure you tell your story, the good and bad. Due diligence will reveal the truth and you are just wasting LPs’ time (not to mention your own) if you try and make your fund out to be something it is not.
And make sure you strip out the clichés from your pitchbook and your fundraising patter. For example, try to avoid the following:
Successful GPs are so focused on getting investors to say “yes” that they forget the importance of getting them to say “no”.
Every minute spent with an investor that won’t back your fund is a minute you could have spent with one that might, or getting on with the business of investing, yourself.
Before each meeting, make sure you are just adapting the authentic story of your fund to highlight the most relevant areas. If you are going beyond that and are contorting the facts to tell the story you think the LP wants to hear, desist:
It is always better to focus on what you are and articulate that in as distinctive a fashion as possible. By doing so, you will be far more convincing and credible.
Of course, articulating what makes your fund different is impossible if you have never dedicated the time to think about it. With so much else going on, it can be tempting to ignore branding and communications, but a GP that has buried its head in the sand shouldn’t be surprised if its bellowed pronouncement “our performance speaks for itself” fails to reach the ears of potential investors.
Take the time to ponder and record:
If you need help with this, please let me know, but you can get the basics done on your own, in as little as an hour. Knowing what you stand for is the first step in standing out.
In a market saturated with similar funds, LPs want differentiated offerings, but there are no shortcuts: copying a competitor is the worst possible strategy for demonstrating uniqueness.
Remember, in the battle between bland and brand, there is only one winner, so:
If you do all that, you’ll be several steps ahead of most of your peers.
If you would like help developing your brand or positioning your firm, please contact:
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