pitch books

Pitch Books: 3 Dos, 3 Don’ts, and 1 Maybe

Posted by Mike McLaughlin on Aug 08, 2016, in Thoughts , tagged with ,

Few things cause more angst among institutional marketing teams than pitch books. At many of our clients there’s an ongoing, fluid dialogue focused on key execution issues:

  • What information is most critical?
  • What’s the right level of detail?
  • How should we structure the story?
  • Should we present multiple, related capabilities?
  • How much modification and customization should we allow on a case-by-case basis?

Several recent projects immersed us in a pitch book wonderland. So with that in mind I thought to share a few quick takeaways on what works and what doesn’t.

3 Things to Do

  • Include Case Studies: Roughly half of the pitch books we’ve analyzed contain a case study. When done well, these bring the investment process – which is among the least-differentiated content in a typical deck – to life by showcasing both the team and the specific way in which they operate.
  • Provide Context: A rare component across pitch books is broader macroeconomic or market context surrounding a strategy, which I see as a miss. Though it may not always be needed, including the bigger picture around a capability establishes its relevance, generates more buy-in for discussing its specifics, and communicates the firm’s overall expertise.
  • Reference Peer Data: A second infrequent element within the prototypical pitch book is peer data. As with macro / market context, incorporating how the strategy has performed and how key characteristics and risk measures match up with competitive offerings is an invaluable way to thoroughly educate a prospect.

3 Things to Avoid

  • A Process Funnel: As I referenced above, I think the investment process is often among the least compelling facets of the average pitch book. Nothing hammers that home more than the generic three or four-step funnel. Any presentation besides that is an upgrade.

Inv Process

  • Mammoth Team Slides: Do you have 85 fixed income PMs and analysts spread across 12 global offices? Fantastic. But nobody wants to see the entire org chart with names, titles, certifications, and other details. An overview of your organization is fine, but when it comes to team specifics focus on the core people that make the strategy go.
  • Opportunistic Performance Presentation: Occasionally firms will insert an outlier performance chart; something like rolling 3-month performance over a non-standard time period. I think this can hurt more than it helps, as unexpected presentations bring out skepticism (i.e., “why are you showing me this?”).

1 Thing I’m Unsure About: Reference Retail Success?

Some firms cite retail-oriented elements of a given strategy within a pitch book: AUM in the corresponding mutual fund, Morningstar ratings and other awards received by the fund, etc.

Most institutional marketers blanch at this retail infiltration, but I’m not so sure it’s a bad thing. I understand the concern of looking like a retail firm, but I also think it gives relevant and concise support to the overall message. Noting that the mutual fund has a 5-star rating, for example, will be quickly digested as a positive signal on the strategy overall by the average institutional investor.

I don’t feel strongly enough to say this is a definite “Do”, but I am confident that it’s not a definite “Don’t”.

Best of Q4 Blogs – A Few More

Posted by Mike McLaughlin on Dec 30, 2010, in Best Blogs of the Week , tagged with , , ,

Last week Anu revisited a few of his favorite posts from our blog over the last three months.  He promised I’d do the same, so here we go with three of my favorites so far:

  1. Spend More Time with the Best Wholesalers:  Most Sales teams we work with know their stuff, so the best way to get better is to consider new approaches for the same old activities.  Our thought on the pastime of coaching wholesalers fits the bill.

  2. Regulation is a People Business:  I tend to think that simple ideas are best.  They’re easier to come up with, easier to understand, and can have a big impact.  The insight from Anu regarding regulation is a forehead-slapper for me.

  3. Pitch Book Length:  With every blog post I write I ask myself “how can I make this more concise?”  Attention spans are shorter than even the most realistic person believes.  Pitch books included.

We’ll revisit the “Best Of” our blog at the end of Q1 next year.  After all, good/interesting ideas (at least in our minds) shouldn’t be lost just because they’re more than a week old. Gawker reminded me of that just a few weeks ago.

Happy New Year!

Pitch Book Length is Not Just About Pages

Posted by Mike McLaughlin on Nov 03, 2010, in Thoughts , tagged with ,

It’s become widely accepted that a hedge fund pitch book shouldn’t exceed 20 pages.  It’s a good goal, but it leaves out half the story.

While managers often succeed in keeping pitch books short in terms of slides, they just as often fail to keep them short in terms of words.  I’d argue word count matters more than slide count.

The average adult reads about 250 words per minute.  But reading rate doesn’t really matter when it comes to pitch books.  Near-constant use of the Web has changed the way people consume information, and there’s a lot more scanning than reading these days.  And that most definitely includes PowerPoint.

Consider two startling conclusions from a Jakob Nielsen study:

  • Users read about 20% of the words on an average Web page
  • Users read 50% of the words when there are ~100 words or less

Our experience with pitch books is similar.  Prospective investors just aren’t going to read your pitch book word for word.  And if it’s a live presentation, they’ll read even less (assuming they’re paying attention to what’s being said.)

A good rule of thumb is to avoid going over 125 words on a slide.  Beyond that most pitch books end up with an overly-dense layout or too-small fonts.

Hedge funds should embrace the paradox:  say less to be heard more.

Facing Headwinds, What Can Hedge Funds Do?

Posted by Mike McLaughlin on Oct 04, 2010, in Thoughts , tagged with

How hard is it going to be for small and midsize hedge funds to survive, much less thrive?  According to two recent news items, very hard.

If a fund is preparing to launch, in startup mode, or somewhere south of $500M, this is gloomy stuff.  What do small/midsize funds do in this environment?

One option, of course, is improving performance.  But everybody is working tirelessly at that.  And for those funds below their high-water marks, it can be a long road back to attracting investors (and collecting performance fees).

A second option is to invest heavily in distribution, specifically via third-party marketers or by increasing in-house staff.  Under the right circumstances this is appealing.  But most small funds either hesitate or are incapable of investing heavily here.

The last option is the one with the best risk/reward profile.  It’s professional branding and communications.

Most small funds spend on a logo and other rudimentary branding.  Fewer spend on designers to help with materials (pitch books, fact sheets).  And fewer still use professional copywriters to refine their messages.

As a result, most hedge funds miss the best opportunity they have to stand out.  The hook, the story, the “what makes you different and interesting” is critical.  Small and midsize funds need to consider an investment in professional communications for three reasons:

  • Developing communications is not a core competency.  Investment experts are not necessarily experts at telling their own stories, nor do they always understand what prospective investors value most.
  • Very few hedge funds do it.  There’s contrarian value in using a tool most ignore.
  • It’s affordable. One year’s worth of management fees on $1M in assets (or less) is a worthwhile price to pay to improve a fund’s chances of standing out.

There are many reasons why hedge funds fail to attract assets.  A common one is that the fund’s story simply isn’t working.  Given some of the dire projections for the industry, it’ll be interesting to see if more funds invest in their communications.