Private equity isn’t as much privacy as it is supposed to be. To get deals and even for fundraising or get investors, private equity firms need to market themselves. Public relations and marketing are important for private equity firms to get the limelight required to shine in the market and gather fundraising.
So let’s delve into the strategies that private equity firms can utilize to grow their business. Below, as is the case with all marketing plans, we will define the target audience and share some marketing tactics for private equity and venture capital firms.
So let’s get started.
What is private equity marketing?
Private equity marketing is a means of digital marketing that seeks to achieve a private equity firm’s goals –make more deals or raise more funds.
Unlike traditional marketing –where tactics tend to push people to buy a product, which is a mismatch in the case of private equity firms—the marketing strategy for a firm aims to achieve a firm’s goals. The goal could be a promotion, repo building, thought leadership, or branding, where traditional marketing techniques and PR would apply.
Additionally, a strategic marketing plan can assist a firm in increasing the number of deals. To do this, a firm needs a continuous flow of deals and strong professional relationships with business owners. By building a list of prospects and nurturing with regular content and private equity-related resources, new leads for acquisitions, funding, and more can be generated to make more deals.
Adequate capital is also important for the success of the private equity firm’s success. This requires networking and fundraising, which can be achieved by identifying investors, high net worth individuals who have the likelihood of investing in the firm. Thereafter, firms can work towards fostering their relationship with them. Marketing automation (MarTech) comes handy in achieving this using hyper-targeting and personalization.
Who is the target audience?
Let’s get into who is the target audience.
For a private equity firm, there are two major audiences:
- 1. Companies (that seek funding)
- 2. Investors (that invest)
Let’s discuss each, one after another.
A company can seek funding for a number of reasons – growth, expansion, product development, hiring, acquisitions, and more.
As a private equity firm, you’re always looking to build relationships with start-ups and businesses. Investing in high growth start-ups and businesses will boost your capital performance. This will help build a portfolio of companies and drive more business from the relationships that have already been built.
A marketing campaign to identify and build a list of high growth start-ups and fledgling companies that need capital will help you focus and start work with. Further, you use an analytical approach – lead scoring –to identify the most suitable companies that fit your goal and maximize return on your investment. Overall, this is an effective approach to find the most lucrative partnerships to work with.
To invest in companies, private equity firms need funds. High net worth individuals, venture capitalists, and seasoned investors are major sources for firms to raise funds, which can be later invested. In return, investors receive profit on their investment.
In the private equity industry, investors are classified as --
- Limited Partners
- General Partners
Limited partners, as I described above, are those who provide capital for further investment. These people are associated with companies and schools. They do not have a direct relationship with private equity firms. The money comes from limited partner to goes to a general partner, who is responsible for investment strategy and generates a return on the investment and oversees the complete cash flow.
General partners are also responsible for overseeing portfolio companies – companies in which the firms have invested – and driving investors’ decisions.
Marketing tactics for venture capital and private equity firms
Now that you’re convinced that marketing can help your PE firms grow, let’s know which channel you can use to grow your firm. So here you go:
1. Social media – In the capital marketing industry, social media is hardly thought of as a marketing channel. Surprisingly, using social media can do wonders for PE firms. As described earlier, building relationships with prospective clients is the key to growth in the private equity industry. Social media – LinkedIn, Twitter, and Facebook are strong channels to build relationships. These platforms can be used for vetting start-ups, know about customer review, and assess the room for growth.
2. Content marketing – This encompasses content creation and dissemination. Apart from helping your firm reach on the top pages of Google, content marketing helps in several ways.
Content marketing and social media work together. When you create content, it can be reposted on social media to drive more traffic to the firm’s website. Further, content marketing helps PE firms establish their thought leadership in the industry. When you create good content relatable content, it inspires actions, investors are likely to see content and new relationships can start, right away!
However, long-form content isn’t the only option. Short content formats – infographic, videos, slides, etc. also work equally well for lead gen and branding activity.
3. Lead segmentation/ scoring
Irrespective of what a firm is looking for – investee companies or investors, lead segmentation can significantly increase the chances of getting investment.
To achieve this, a segmenting the list of companies or investors that best fit your criterion will do wonders. Further, allotting numbers to each lead for their activities in favor of their activities and deducting points due to unfavorable activities will help you come up with a list of companies that are most suitable for investment.
For instance, in case of creating a list of investors, you can add points for an investor who clicks an email sent to them, while deducting points for if he/she follows you on social media. Similarly, if an investor likes one particular blog, you may give them more points.
This way a firm can end up with a list of investors that are highly likely to provide funds for the firm and building relationships with them will be comparatively easier. This will save time for both the firms that spend time scouring for investors and investors that spend time vetting a firm and finding opportunities for investment.
Ariaa Reeds, writer, USPEC