How startup hedge funds can get an edge with branding

A new hedge fund needs the best start in life.

By some accounts there are around 10,000 hedge funds blinking in and out of existence worldwide. Why does an investor choose one hedge fund over another? This is a question of consequence to anyone launching a startup hedge fund. The investor may choose a fund to target a certain strategy, asset class or region. Or perhaps to spread risk across management firms of various sizes. Firms are identified by brand. Startup funds with effective branding are more likely to pass the investors’ selection process because it’s clear what they stand for.

Brand is another word for reputation.

Blackrock, Bridgewater, Renaissance.... These names evoke instant associations in the minds of people in the financial sector. Those memories and impressions reflect the reputation of the company – this is the essence of branding. 

When we hear the name Bridgewater, see their logo, visit their website, view their deck, we perceive the firm in a distinctive way. That perception has been shaped over many years and through many activities. Their firm’s name represents its AUM, its people, its HQ and offices. It stands for all the value it has created for its many stakeholders. 

How startup hedge funds leverage brand   

A new hedge fund by definition has no history. But it doesn’t launch with zero reputation. Instead it leans on the reputations the founders built before the new venture. 

Prominent in their biographies will be the names – brands – of the firms where they developed their experience. This is one way a startup hedge fund applies branding to obtain advantage.

Yet developing their own brand with clearly articulated positioning and a professionally-presented identity seems a low priority for many startup fund founders.

Brand is more than a logo

Brand is a public expression of business strategy communicated effectively at every touch point.

Effective branding is laser-focused on the audience, simple, consistent and memorable. 

It’s expressed through key messages relevant images in a manner uniquely distinctive to the concepts it represents.

Brand building? We don’t have time for that

An emerging manager establishing a new business has a lot to think about. Compliance, recruiting, operations, sales and marketing.... These things are of existential importance. 

Branding is often sidelined as a soft attribute with low impact. The logo and brand identity is hurriedly produced by a handy designer, or even by a founder. 

A company website is launched that lacks emotional impact and fails to articulate a distinctive positioning for the firm. In the rush, design inconsistencies crop up between website, presentation deck, stationery and other items. The disorder projects a perception of sloppiness. Managers will claim great numbers will defeat an emotional response. Psychologists would disagree – and produce studies to prove it.

A new hedge fund by definition has no history. But it doesn’t launch with zero reputation.

Thoughtful branding sets the stage for success 

In the big scheme of things branding looks like one of those things that can be cleaned up later. Something to do after operations are established and the business gets traction.

Of course it’s vital for a startup fund to create a high quality product offering. It’s equally important to communicate that quality. 

Investors proactively screen hundreds of funds and also evaluate many cold callers. Those unable to quickly articulate their strengths, focus and uniqueness are eliminated.

There’s no better time to focus on branding than early in the game. Here’s why:

Why does your fund exist? – What does your firm promise investors? How will you keep that promise? What’s your investment philosophy? Investment strategy and approach? What are your principles and values? What strengths does your firm have over others? 

Answering questions like these focus your business strategy and inform your brand strategy. You can hone your key messages, and position your company through a methodical approach to brand building. 

Get it right and your team will all be on the same page, better equipped to close deals and better able to persuade potential investors of your value. 

Commitment signalling – A consistent modern brand identity and clear impactful messages communicate attention to detail and determination to get things right. 

Effective branding tells investors you understand your business, have confidence in it, and are committing to a shared long-term relationship.

Positioned for growth – After completing the process of brand development, your firm and its stakeholders should have a clear idea of what you stand for and where you’re going. 

An effective brand building process will give your business a professional image, and the tools for colleagues to reproduce and amplify it going forward.   

Highest ROI – Multinationals spend a lot to achieve global brand consistency because it’s the cognitive glue that holds their business together. 

Brand consistency is a worthwhile investment even for a startup hedge fund because remedial work often carries far higher costs than getting it right in the first place, not to mention the lost opportunity costs.

Earned respect – You wouldn’t turn up to an investor presentation in pyjamas. Showcasing your business in the best possible light shows respect for yourself, your team and your backers. Clear messaging is also respectful of people’s time. And the confidence a professional brand identity projects gives confidence to your investors.

The challenges of brand building

Because a successful brand looks simple, it’s natural to assume the development process is easy. Actually that strong, uniform facade is likely built with a surprising amount of sweat, discussion, expense and experimentation. 

The leader responsible for a new fund may be involved in a branding project for the first time. A professional life spent mastering facts may not equip an individual to usefully judge and direct aspects of branding.

To reduce the risk, select your branding partners with care. Look at their track record in your sector and relevant portfolio of work, whose artistry you can appreciate, and who is able to explain the decisions they made and how it benefited the hedge fund brand owner.   

It’s important to establish frank, open relationships with the experts building your brand.

Nuts and bolts

Startup hedge fund founders may find these brand building articles and tools useful:

Brand builders start with a creative brief. Usually this document is produced through research and founder interviews. This tool helps you develop a creative brief. 

Here are many articles about proven approaches to brand building methodologies. Startup fund managers may find these three especially relevant: 

A discussion about brand model development – a document that summarises key aspects of your brand. 

An article about brand positioning, the key to competitive advantage.

A look at how to translate a brand strategy into a brand identity.

Key takeaway: Effective branding gives startup hedge funds an edge

Launching a hedge fund brand? Have a chat with experienced professionals to know more.

Launching a hedge fund brand? Have a chat with experienced professionals to know more.