Solidifying a Hedge Fund Brand – What Not to Do
|November 24th, 2009||
|Contributed by: Quoin Partners|
|In our article last week we discussed the philosophical components of hedge fund brand identity, specifically, the introspection process that is required to truly define who you are as a firm and the ability to exude your corporate identity through all of your interactions: partners, colleagues, investors, and the broader marketplace. Standing on solid self-knowledge, it becomes necessary to now focus on how to best portray your firm, your employees, and yourself to the world. Believe it or not, this is a major undertaking for a startup hedge fund and it is absolutely not as simple as it might seem to the average outside observer. With this in mind, this week I will move past the prompting you to philosophically establish your firm’s ipsism and challenge you to explore the more aesthetic, tangible, and conventional aspects of building your firm’s brand identity.|
When considering your firm’s corporate identity, you must keep in mind that you are establishing a legacy, a footprint which all who come into contact with identify and associate with you. I have anecdotally heard from more than one source that simply deciding on a name is one of the most difficult stages of starting a hedge fund…whether it be in getting all the partners to agree on a name or finding the “perfect” name that best represents the firm’s strategy. As I’ve mentioned earlier, this is an intensely personal process and it requires you as the manager to find the answer for yourself…once you have come to a conclusion then you can enlist outside support in creating the more tangible depictions of your corporate brand. What type of logo do you want? How do you want your print communications and business cards to look? How do you want your website to look, feel, communicate, and convey? And so forth… We live in a 24/7, highly digitized environment that demands a best in class brand identity…where the world judges each “book” (and company) by its cover. Let’s start with acknowledging that fact, accept it to be indisputable, abide by it, and adapt to it…period.
I cannot tell you how many entrepreneurs scrimp on brand identity in the beginning and as a result have major challenges in gaining clients/investors because they simply do not appear legitimate. Whether a firm’s website looks less than professional or their logo looks like a three year old drew it with a crayon, the net effect is that their corporate brand positioning is unprofessional as a result and will quite literally deter people from working with them. In the hedge fund space, a world of high finance where emerging managers are trying to convince investors to trust them with hundreds of millions, if not billions of dollars in assets, appearances are a huge component of a firm’s success…Would you ever think of showing up to a job interview in shorts and flip flops? What about showing up to a Presidential dinner in jeans and a ball cap? Are you just some fly by the night chop shop, boiler room or are you a world class asset manager? It’s up to you…just remember, a big aspect of who you are and what you are trying to become consists of how you (and your colleagues) carry yourself and present your firm. You may not yet be a $25 BN hedge fund, but you can sure act like one and form the foundation for the brand identity of one. As a startup fund manager, how does one build his/her firm’s brand? How do you market yourself and your firm to prospective investors and gain their confidence? How do you create the right image to portray to the world? Before we explore the tactical best practices of building your fund’s brand identity, I think it is important to understand some of the common mistakes that seem to be epidemic in the startup hedge fund community.
As a quick caveat, I absolutely accept the fact that I will most likely offend some of our valued readers because inevitably some of you have done some of these things yourself…but if through my sarcastic humor and allegory, I can somehow shame you into changing or adopting best practices, I will have done you a tremendous justice…hopefully you will thank me down the road. I apologize in advance! Now that I have disclaimed Quoin Partners, I’d like to start with my list of “de-legitimizers” or brand identity “faux pas” that many entrepreneurs fall into. While you may not know it, you are hurting your firm’s brand identity if:
(1) You are using hand drawn or homemade logos – unless you are a closet graphic design artist with actual software and talent do not do this…
(2) Your website is homemade (e.g. template ‘build your own site’ design) – refer to the above…build your own website tools are for local bakeries and auto mechanics NOT multi-million dollar hedge funds.
(3) Your web address ends with a .net, .org, .biz – you are a hedge fund, not the local library…there is no reason to have one of these ridiculous addresses. Your domain name should absolutely end with a .com…period!
(4) You do not have a corporate domain name with your email address – bar none one of my biggest pet peeves. We’ve all seen these types of addresses: email@example.com, firstname.lastname@example.org, or email@example.com... You get the drift. This is about as unprofessional as it comes…spend the $2 with GoDaddy.com, Network Solutions, or one of the million other hosting providers out there to get a basic domain name and a professional email address. You aren’t fooling anyone (especially potential investors) by sending your firm communications from a Hotmail account, we all know these are free and it just looks lazy.
(5) You use the slide design template tool in MS Power Point for your investor presentation – while it may look perfectly fine to you, using the “slide design” templates in MS Power Point is a definite “no-no.” They look cheap and are highly unoriginal…you know the kind of presentations I’m talking about: the ones with the deep blue background and huge white (40 size) letters…white background with balloons…come on! By now everyone can identify those of you who use the template “design-a-slides”…just because it’s a stock design on Power Point doesn’t mean it is okay to use it! These cheap looking designs are meant for high school sophomores to create their English Book Reports or lazy college professors…NOT multi-million dollar hedge fund managers. Trust me, this is important, I’ve worked at firms where they literally have teams of people whose sole job it is the design custom Power Point presentations.
(6) You have no logo and all your firm communications are written in MS Word black and white – if you are creating investor presentations with stock Power Point slide design templates…at least you are trying. A black and white MS Word investor presentation with no corporate logo, letterhead, etc. is a huge faux pas! I’m sure your strategy and returns are stellar, but at least take some time to make your presentation look professional. Subconsciously, I guarantee you that this does not look good to investors either.
(7) Your telephone area code does not correspond to your firm’s physical address – I never cease to be amazed by the startup funds who are located in one place but list their contact phone number as a completely different area code…I’ve seen funds in Stamford who advertise with a Florida pre-fix number or with literally three separate area code prefixes for their phone, fax, and cell. The common response I get from clients who are using different area codes is that they are choosing to use their cell phones for the time being…okay I get it you went to Stanford Business School and now you live in CT but are using your Palo Alto phone…I get it, but think about it…is an investor really going to get comfortable with someone who runs their fund off of a cell phone? NO! Get a phone number! It isn’t expensive at all.
The list goes on and on…I cannot tell you how many smart, highly pedigreed, and sophisticated managers make some of these mistakes…sometimes they breach all seven of them! I worked with a firm when we just started out that was using a hand-drawn logo which they scanned on their home PC and placed on their template slide design Power Point. The manager was using a Florida telephone area code to raise money for his Fairfield County, CT-based firm…all the while using an aol.com email address. He was a very smart guy and had a pretty sophisticated strategy that could have potentially attracted some big names, but I was just too distracted by his lack of brand that I had to hold an intervention and help get him on the right path. I jest here, but he meant well, and was a world class trader...he had skills identifying opportunities in his markets that I could never hope to have…he just didn’t know the first thing about establishing a professional, crisp brand identity for his firm. He was in the process of raising capital so he didn’t have the operating budget he would have liked to and was under the impression that in order to do so he would have to “break the bank” so he made due with what he had…and it showed! What he didn’t realize was there is a universe of cost-effective solutions out there which would have allowed him to accomplish something unique for his firm and its self-identity in a matter of weeks.
Look, it’s not difficult and it is certainly not tremendously expensive to get a legitimate website, corporate email, company logo, and professional stationary. However, it is critical to get this right and have a brand identity for your fund in place as you embark on raising assets. Without question you should have a professional website for your colleagues, network, and prospective investors from day one. You should have a crisp corporate logo and stationary (e.g. business cards, letterhead, presentation templates) on hand to pass out to anyone you may meet formally or in passing from day one. These are necessities because they not only communicate professionalism (and are customary) but it clearly shows that you and your firm has their act together…you have a consistent identity, a corporate image, and have taken the time and spent the money to legitimize yourself to the market. Do not wait to raise your first round of capital to do this, rather this is something that you should do when you decide to start your firm along with setting up your legal entity and service providers…yes, it’s that important.
Now that I have sufficiently humiliated some of my readers by exposing their unique acts of brand identity malfeasance and driven home how important it is to get this right from day one, we will focus our upcoming articles in the Building a Brand Identity for Startup Hedge Funds Series on best practices for your firm’s logo, website, stationary, and marketing materials.
Spencer Knibbe is the Managing Partner and founding member of Quoin Partners, an innovative startup advisory services firm dedicated to helping emerging fund managers build, scale, and grow their businesses. For more information on Quoin Partners please click here.