I don’t know how many people have told me that raising capital is about relationships. This is indeed true. In the majority of cases, no investor (regardless of the form they take) is going to invest without feeling they have a genuine relationship with the team they are allocating to.
More often than not, the answer is no!
A click is not representative of a relationship, someone joining a webinar is not representative of a relationship. A true relationship requires a mutual feeling of respect and a genuine concern for another’s wellbeing – and, yes, I am talking about a “good” relationship.
And this is the art of good marketing and brand building. The CEO of Nike or BMW is not personally connecting with everyone who buys shoes or vehicles. Marketing and brand building is designed to nurture and foster relationships. Corporations accomplish this by demonstrating that they can relate to the trials and tribulations that their existing and prospective customers face. They take positions on controversial topics to demonstrate awareness and understanding – climate, politics, etc. People like to gather in like-minded tribes.
My point to all of this, asset managers need to reach beyond talking about returns. Say something meaningful, show true empathy, don’t suck every dollar out of every situation, etc. In doing so, LPs won’t immediately redeem when performance dips, you will get the allocation when your performance isn’t the best, and re-ups will occur more often.
Friends don’t immediately abandon friends.