Throughout the fundraising process, a fund manager must be prepared to develop the appropriate marketing materials before they are needed, revise as they progress through the fundraising process and gather feedback from potential investors on both the style and substance of the material. Marketing materials should look professional, even if not professionally produced, as they are investors’ first impression of the fund. Both style and substance matter.
Before the Go-to-Market phase, three basic pieces of marketing material should be in place:
- Teaser: Often the first piece of marketing material developed, the teaser is typically one or two pages with crisp text and bullets that tell the story of the fund and its investment strategy and outline key terms in clear, concise language.
- Pitch Deck: A fund management company, like most companies, requires a presentation that reflects its business model. Although this should come as no surprise, many LPs consulted in designing the GIIN’s training course expressed that many new fund managers need significant work on how they pitch their funds. The pitch deck should be a concise presentation of the fund’s operations, investment strategy, and investment pipeline. Fund managers communicate their investment thesis differently depending on their stage in the fundraising process and target LPs, highlighting different aspects of their value proposition. A fund manager should develop a well-crafted elevator pitch to pique investors’ initial interest before tailoring the messaging for different investor audiences.
When preparing the pitch deck, fund managers should consider the following best practices.
Figure 10: Slides of a great pitch deck
- Limit the number of slides. Being clear and concise suggests limited length. The common convention for a pitch deck to investors is approximately 10 slides (Figure 10). The common but unnecessary tendency towards over-explaining may distract from a fund’s compelling investment and impact strategy. If absolutely necessary, supplementary information can be offered in an annex and provided if the fund manager is asked. PowerPoint is commonly used for both in-person presentations and as a standalone document to send to prospective LPs. The former requires less information, since the presenter can speak over the slide and therefore minimize text distractions, whereas the latter requires more information as a stand-alone document. Fund managers should have both prepared.
- Adapt for different audiences. Fund managers will have different audiences, different investors, and different categories of investors with different priorities. They should tailor their messaging accordingly.
- Be consistent in all materials. Despite differences in investor audiences, consistency and accuracy in all messaging must be ensured.
- Key Terms Document: This document defines various elements of the fund:
- size of fund (capital commitments);
- management fee;
- any hurdle rate;
- carried interest to fund manager and GP;
- expected returns to investors; and
- specific description of organizational costs.
When Going to Market, other materials are necessary, which can be developed after the fund has begun to approach investors:
- Website: A professional-looking website should convey a positive, established organization to potential investors and pipeline companies.
- Brochure: Opinions are mixed on the need for brochures, especially in the digital age, but brochures offer another medium to demonstrate that a fund manager is established and professional.
- Term sheet: Often GPs will have a draft term sheet in place to share additional information regarding the rights and responsibilities of the GP and LP with potential investors.
- Investment (or Private Placement) Memorandum: This document, essentially a business plan for the fund, includes details on the key terms, social and environmental performance metrics, and so on.