Before a new investment management firm puts in its first few dollars, founding partners spend a significant portion of their time and personal savings on legal fees, technology and hiring staff on day one. One of the last boxes to check might be the communication feature and schedule.
It should be one of the first for the reasons given below.
Where to start
In probable years, a successful start in this entrepreneurial journey begins with a friendly farewell to the old gig. For the big offspring, the news of his departure will end up in the specialist media. It’s important to be organized when texting your former employer, because failure could end the startup dream before it even begins.
Once on “garden vacation”—Wall Street lingo for the non-compete period—aspiring managers not only have to stick to their selling points to investors, but also design their new organizational structure. “Three people and one Bloomberg” is an outdated concept in 2022, and the competition for investor funds is getting fiercer every year.
|This article is from O’Dwyer’s Aug. Featured in Financial PR/IR & Professional Services PR Magazine
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Beyond the investment team, new managers must secure the services of world-class service providers, supported by institutional investors in the areas of legal, accounting and fund administration. Formalizing PR and communications functions can be an expensive idea. What many people don’t realize, however, is that their former employer’s brand glamor will remain as long as they don’t ramp up. The time to set up a public profile is limited.
Where does com. seat function?
Whether budding managers like it or not, they need to devote time and resources to this task and delegate it to an owner. (It could be the founder!) Wealth management startups are no different from other industries: Each initial employee employs three people.
In both emerging and veteran investment organizations, PR typically falls under the purview of marketing and/or investor relations teams. Aside from previous media relations experience, the individual in this seat at the start-up will seek agency support as the organization expands.
Choosing the right partner
Large agencies and sole proprietors can serve this niche audience equally well. But the best businesspeople go beyond a page of influential client logos: they understand the lucrative terminology of the industry, the media, and the centers of influence. It’s the introductions outside of the reach of journalists that can really move the needle. This is hardly a job for a generalist.
The right agency partner also understands that their fees will initially come from a founder’s personal savings and not from a formal company budget. This dynamic creates a great sense of urgency to deliver top results and mentorship – and shows the same enthusiasm as the founding team. If that level of service orientation isn’t in the agency’s DNA, then stay tuned. In practice, managers should also keep in mind that launches are brought forward and agencies may charge for their time in advance.
Preparing for launch: who should know?
A budding manager’s public debut is like any company that goes through the IPO process: it likely only happens once, and you only get one chance to fix it.
Seasoned new managers know exactly who to reach. Allocators implementing liquidity strategies will focus on community and bank counterparties, while those investing in privately held assets will focus more on potential sellers and intermediaries.
Once the target audience is determined, it’s time to start planning the public relations effort, which includes website content, targeted media lists, key “launch” press releases, a letter to a professional network, and social media posts. As the company matures and grows, founders can delegate this responsibility more, but they need to be heavily involved up to the day of incorporation.
Especially when it comes to acquired media, managers should attract as many eyes as possible. If news needs to be shifted to accommodate top outlets’ priorities, so be it. Like an IPO, there is a short window of opportunity to use Spotlight.
stick to the routine
Once the launch circle has settled, the daily blocking and tackling begins: meeting more journalists, establishing a regular social media rhythm, and planning a conference and events calendar.
Depending on the investment strategy, the needs and goals of PR and communication vary. Stock pickers, ETF sponsors, and managers targeting retail investors may prefer TV shows and podcasts. Private equity firms need a press release &com. Plan template ready for any transaction and fund close. The same applies to venture companies.
Small companies will take a while to get into the right routine, but once they’re done, they’ll be ready to punch past their weight.
Calculating ROI: reputation insurance
Fund managers spend most of their professional time evaluating return on investment, “added value” and outperforming a benchmark. However, implementing a similar linear framework for the PR and communications function can be short-sighted and ultimately costly.
The best investors know that every trade, purchase, or venture deal carries downside risk, and they work diligently to reduce it. As such, agency partners should not only be viewed as an extension of marketing and fundraising efforts, but also as a reliable insurance policy for your reputation should things inevitably go wrong.
Without sufficient wealth, lasting investment franchises cannot be created, and institutional investors rely on reputation when handing over their wealth to their managers. With this in mind, when eight- and nine-figure checks are at stake, an upfront investment in a proper communications infrastructure is one that managers cannot ignore.
Chris Gillick is Senior Vice President at ICR.