Loud and Clear – November 2018

POISE: Four Easy Steps to Pitching Your Fund

 

Every November, private equity investors and fund managers from across the globe flood in to SuperInvestor International, at the Hotel Okura, in Amsterdam. Here, LPs and GPs meet and converse; they strengthen partnerships and strike up new ones. There are formal meetings and informal networking events; seminars and canal cruises. If you are a fund manager at SuperInvestor, one thing is certain: there are going to be opportunities to introduce your fund to potential investors, so you had better be ready.

Sadly, one more thing is certain, too: the majority of managers will fail to do a good job.

At MJ Hudson, we see hundreds of manager pitchbooks, teasers, PPMs and DDQs and very few are very good. Some struggle to make their point clearly; others try too hard to be something they are not (more on that, here). Some completely miss the point.

Now, every investor is different, but, in some regards, they are also all the same: Limited Partners are looking for fund managers that have a real reason to exist: They want to meet managers that have identified a compelling opportunity, have figured out the perfect way to capitalise on that opportunity and can provide evidence that they are able to execute.

In short, they want a manager with POISE.

POISE is the shorthand we use for the structure that we find most helpful for managers pitching the highlights of their proposition to investors. It breaks down into four easy steps:

1. Purpose
2. Opportunity
3. Investment Strategy
4. Evidence (that you can execute)

Let’s take a quick look at each.

1. Purpose

This is a single, simple sentence that outlines the reason you do what you do. It’s an “elevator pitch”, and should highlight how you are exceptional, but it should contain specific elements that can help a potential investor quickly understand if they can invest in your fund. Experienced managers know that efficient fundraising is as much about getting investors to say “no” quickly, as it is about getting them to say “yes”.

Using plain language, explain:

  • What you are raising
  • Where you will be investing
  • What you are hoping to achieve (not just a target return)

2. Opportunity

If you have piqued their interest, or if you maybe still have them cornered on the canal barge, it’s time to set out the opportunity you are looking to address. Explain briefly:

  • Which markets you are addressing
  • What makes them interesting
  • Why it is important to start investing now

3. Investment Strategy

Once you have established an attractive opportunity, you need to explain how you will capture it:

  • How you will source deals
  • What you will do to create value in the portfolio
  • How you will realise a return for your investors

4. Evidence (that you can execute)

Finally, you need to provide evidence that you can execute this strategy, consistently. This means explaining two things:

  • That the governance and structure of the fund is “institutional quality” (hard to define, but obvious when it is lacking)
  • That you have a strong track record of successfully executing your strategy – ideally in the same market and with the same team

Fund managers that can articulate with POISE have a huge advantage over the competition. It won’t guarantee success with investors that aren’t interested in your strategy, but at least you will find that out quickly and save yourself valuable time, and those that are interested? Well, you have given yourself the best possible chance of securing a commitment to your fund.


If you would like help developing your brand or positioning your firm, please contact Matthew Craig-Greene using the contact details below.