A historic rules change by the Securities and Exchange Commission, SEC was voted into place yesterday (7/10/13). Since the Great Depression, private companies seeking investment were not allowed to advertise. When the sun rose today, that rule completely flipped.
The SEC voted Wednesday to lift an 80-year-old ban on “general solicitation” for equity shares in companies that aren’t traded on a stock exchange. There are rules around who is allowed to invest based on the person’s wealth, and there are opinions – as there always are – to whether this rules change is a good thing or a bad thing for society.
But if you’re a private equity or venture capital firm or hedge fund manager looking to attract investment, the really question is whether turning to mass marketing is the right thing for you at all.
Just because you could, doesn’t mean you should.
Your Audience is Likely Small
The first thing you need to consider before plopping down hundreds of thousands or even millions of dollars to place a TV spot is “who is your audience.” The SEC rules state that an investor has to have a net worth of $1,000,000 or show that he or she has made $200,000 annually for a few years. So that narrows the playing field right there.
Then, you need to consider which people among this field are actually interested in investing in this marketplace.
And lastly, your particular offering is probably appealing to only a small fraction of this group – some people like to invest in energy, others in technology, others in health care, etc.
Your audience could be a very narrow field. Will you have a lot of waste if you mass market?
Precision is Key
So is a TV spot on ABC’s Shark Tank or CNBC’s Mad Money really the best use of your money? Today’s technology allows you to be very precise with your marketing. Precise with whom you talk to, and precise with how you talk to them. So before you decide to mass market, make sure you’re taking advantage of other relevant distribution streams.
Is your website dynamic, allowing you and your team to project points of view on your particular investment style via a blog series?
Are you leveraging social media – particularly LinkedIn – to engage in conversation with audiences that may be interested in investing in your type of offering? For example, if you are marketing a clean energy fund, perhaps you should be engaged with cleantech-focused groups on LinkedIn.
Are you working with trade associations? Trade associations are excellent distribution networks, and they generally are open to win-win opportunities with organizations that want to market through them.
Are you using email marketing, and striving to collect to more names? Email marketing allows you to stay in front of a precise audience – people that already know you, and have shown some interest in you.
Are you using video – to sell your philosophy, to highlight your leadership, to showcase the companies in your portfolio? Short video vignettes like these go a long way in telling your story to potential investors.
Here are two videos we’ve done for clients in the financial services space:
– Estate Planning Professionals
Are you engaging on other people’s blogs? Every industry has expert opinion-makers writing blogs relevant to that industry. Find them, follow them, and comment on their posts to show your own expertise and promote yourself to the blogger’s readers.
If It’s Right, It’s Right
These are just some examples of ways you can better promote your investment opportunities without having to turn to mass marketing. And all of these strategies can be measured for their effectiveness.
If after you analyze your audience and your marketplace potential, and still think a spot on the 6 o’clock local news makes sense, then have it!