In impact investing, where success means more than just making money, trust is super important. But these days, people want to see proof before they trust anyone. That’s why just saying “trust me” isn’t enough anymore. People want to know why they should trust you.
We’re going to start by tackling some of the top challenges we’ve seen Fund Marketing Managers and Investor Relations Managers/Directors face in the impact investment space while attempting to attract and retain investors.
Here are the common marketing & retention obstacles fund managers face:
- Educating Investors
- Overcoming Perceived Trade-offs
- Navigating Complex Metrics
- Building Credibility and Trust
- Managing Investor Expectations
- Accessing Deal Flow
- Regulatory Compliance
We wrote this article to help you discover innovative ways to overcome these challenges through strategy so you can find and keep high-value investors.
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How to use modern digital strategies to overcome your biggest obstacles
A tailored digital strategy becomes indispensable as you navigate the digital landscape to engage investors.
From leveraging interactive tools to demonstrate the dual benefits of impact investing to providing transparent digital reports on your fund’s performance, our suggestions are designed to enhance investor trust and engagement in your mission.
We’ll break down each of the seven obstacles and share key strategies you can pursue for your fund.
1. Teach potential investors about impact investing
Many people don’t know much about impact investing or don’t think it’s an excellent way to make money. But you can show them that it is!
Let’s talk about how you can explain impact investing to people and excite them.
As a fund manager, your best bet is to help potential investors understand how your fund can make money and do good things for the world.
Sounds great, but we’ve found that many managers worry about scaring off deep-pocketed traditional investors who could invest in their fund, even if they care more about making money than doing good things.
They also fear impact investing is too complicated and potential investors won’t understand it. And they’re afraid to experiment with modern digital strategies to get the word out about their fund.
To overcome this obstacle, consider one or more of these digital strategies:
- Interview impact investors one-on-one to understand their motivations and find angles you can use to clear up confusion.
- Share resources like webinars, papers, or talks to explain impact investing and show examples of how it works.
- Explain why people want to invest in things that do good and make money.
These are some great starts! Now let’s discuss how you might implement each one.
Interview impact investors one-on-one to understand their motivations
Customer interviews are a classic way to understand your buyer (in this case, investor) and get into the mind of your market.
You want your investors to notice your fund and be drawn to it’s mission.
You do this by first understanding their needs, desires, and fears. Then you communicate to them in a way that reflects that understanding. Doing so requires you to do the deep, hard, slow work of understanding your investor’s specific context, what they care about, what motivates them, and even what scares them.
You want to know what they want, so you can give them what they want.
As an investment fund manager, you’re not new to this space. Thus, it’s super duper tempting to assume you know everything you need to know about them.
You might know a lot about them, but you probably don’t know enough. And with the speed of time, there likely something new. The best way for you to understand and get an angle is to interview them one-on-one.
Customer interviews is a widely discussed topic with many angles, nuances, and specialties. But to avoid getting too deep into the weeds, here are some questions you could use if you were to interview a current or potential investor today:
7 Investor Interview Questions to Ask
- How did you invest before us?
- What were the biggest challenges with your previous investments?
- What were the consequences of each of those challenges?
- When and why did these challenges become a priority to solve?
- What did you do about it?
- What made you trust our fund? What made you comfortable?
- Why did you ultimately choose to invest with us?
It’s more than likely that your future investors will choose you for the same reasons that appealed to your current investors (if you have them).
When you know what those reasons are specifically, you can use them in your communications to educate and build lasting trust.
Share resources like webinars, papers, or talks that reveal a unique perspective
If you’ve been around the block, you’ve probably heard the phrase: “Content is King.” You may have even heard the contrarian perspective: “Content isn’t king, relevancy is.”
The truth is that neither content or relevancy by itself is “king.” Content can be crappy and relevancy can be fleeting. Relevant content is king.
Give your investors actionable, disruptive insights
Another way of putting it is that the pinnacle of kingship is when you present unique insights to your investors in a way that makes them go, “Wait, what?!”
It’s likely that your investors will be most interested in consuming webinars, white papers, and talks that provide actionable insights, thought leadership, and practical strategies related to impact investing and social entrepreneurship.
You’ll find out what your specific investors like during any interviews you do, but here are a few things they’ll likely find interesting:
- Market Insights and Trends: Webinars, white papers, and reports that provide in-depth analysis of market dynamics, emerging sectors, and investment trends can help investors make informed decisions.
- Impact Measurement and Reporting: Webinars, workshops, and case studies that provide practical guidance on impact measurement frameworks, data collection techniques, and impact reporting standards would be particularly valuable.
- Investment Strategies & Due Diligence: Webinars, panel discussions, and expert interviews that explore impact investment strategies, investment vehicles, and investment models can help investors optimize their investment decisions.
- Case Studies & Success Stories: Case studies, success stories, and impact reports that showcase the financial and social returns achieved by different impact funds, enterprises, and projects can provide valuable insights and inspiration for their own investment strategies.
- Policy & Regulatory Updates: Webinars, articles, and briefings that discuss regulatory trends, policy debates, and legal considerations in impact investing can help investors navigate the regulatory environment more effectively.
- Thought Leadership & Expert Perspectives: Webinars, talks, and conferences featuring prominent speakers and thought leaders discussing cutting-edge topics, innovative solutions, and future trends in impact investing.
Explain why people really want to invest in things that do good
Let’s get real; there are many reasons why an impact investor would want to invest in your fund and “do good” beyond actually just “doing good.”
Some the reasons may be altruistic. Others may be narcisistic.
Either way, explaining why an investor can fuctionally, emotionally, and philosophically benefit from “doing good” through your fund, not just for selfless reasons but selfish ones too, will draw them in deeper what you have to offer.
Why people are motivated to invest in things that “do good”
- Alignment with Values: Impact investors are often driven to align their investments with their values and beliefs.
- Social & Environmental Impact: Impact investors are motivated to create positive social and environmental impact alongside financial returns.
- Risk Mitigation: Impact investors recognize that addressing social and environmental issues can help mitigate investment risks and enhance long-term financial performance.
- Market Opportunity: Impact investors view impact investing as a growing and lucrative market opportunity.
- Competitive Advantage: Impact investors recognize that integrating social and environmental considerations into investment decisions can provide a competitive advantage in the marketplace.
- Long-Term Value Creation: Impact investors take a long-term view of investment value creation, focusing on generating sustainable and inclusive growth over time.
- Personal Fulfillment: Impact investors find purpose and meaning in using their financial resources to drive positive social change.
As a fund marketing manager, don’t be afraid to lean-in to your investors true desires. For some of clients, we’ve found that they’re helping their investors feel like they’re offsetting their overly consumptive lifestyle—like you can offset carbon—so they feel better about themselves.
As funny as it may seem, you’re always delivering impact, no matter how tangible or intantigle it might seem.
2. Use interactive tools to show how impact investing pays off
Some think that impact investing means you won’t make as much money. That’s not true! But if you want to bring in and keep investors, you can show investors how your fund can make money while doing good things.
One way to do this is to create a tool, like a calculator, that shows investors how much money and good they can make from their investments. The tool will be different for each fund, depending on its focus.
Some managers worry that investors won’t trust them if their funds don’t make as much money as other funds. They also fear telling people they can make money while doing good things. And they’re not sure how to explain that to investors.
To overcome this obstacle, consider one or more of these digital strategies:
- Look carefully at different investment vehicles to find ones that make a lot of money and do a lot of good.
- Show examples of previous investments that made a lot of money and did a lot of good.
- Tell investors that impact investing isn’t just a trend and can help make a better future for everyone.
Showcasing your impact investment fund’s commitment to social impact and financial return is critical.
We understand that simply talking about impact isn’t enough anymore; investors want to see tangible results. That’s why we emphasize the importance of highlighting success stories that illustrate how your fund makes a difference in communities while delivering solid financial returns.
3. Share digital reports on how things are going
Telling investors about the performance of their investments can be challenging, but it’s essential to do so in a way that’s easy to understand.
Many managers worry they’ll mess up the numbers or not collect enough information about how well things are going. They also fear figuring everything out will take too much time and money. And they’re not sure how to use new ways of measuring how well things are going.
To overcome this obstacle, consider one or more of these digital strategies:
- Communicate the value of impact metrics in enhancing investment decision-making, risk management, and stakeholder engagement.
- Invest in robust impact measurement and reporting systems to ensure accuracy, transparency, and consistency in impact data.
- Collaborate with peers and partners to optimize impact measurement frameworks and methodologies.
Let’s break each of these strategies down into some more detail.
Communicate the value of impact metrics
Your impact nvestors will be interested in financial metrics that demonstrate the fund’s financial performance and sustainability, as well as impact metrics that reflect the fund’s social outcomes and contribution to community empowerment.
Financial Metrics & Results
Here’s a breakdown of some key financial metrics that investors will likely care most about:
- Return on Investment (ROI): Investors will be interested in tracking the fund’s ROI, which measures the profitability of their investments over time. This metric provides insight into the financial returns generated by the fund’s portfolio of investments, including dividends, capital gains, and distributions.
- Cash Flow Analysis: Investors will analyze the fund’s cash flow statements to assess its liquidity, solvency, and ability to meet financial obligations. Positive cash flows indicate healthy financial performance and the fund’s capacity to distribute returns to investors.
- Net Asset Value (NAV): NAV reflects the total value of the fund’s assets minus its liabilities. Investors often monitor changes in NAV to gauge the overall performance and value of their investments in the fund.
- Operating Expenses Ratio: Investors would be interested in understanding the fund’s operating expenses ratio, which measures the proportion of total assets consumed by operating expenses. A lower ratio indicates efficient fund management and maximizes returns for investors.
Impact Metrics & Results
The impact metrics that your investors will want to see will likely be dependent on the type of impact you’re having.
To illustrate the idea, let’s explore a fictional example related to the ESG Investing space called the “GreenTech Impact Fund.” Let’s say this fund is dedicated to driving positive environmental change through strategic investments in innovative green technologies.
For the GreenTech Impact Fund, investors would be most interested in knowing metrics or results related to:
- Carbon Emissions Reduction: This could include quantifying the CO2 emissions avoided or mitigated by portfolio companies’ products or services.
- Renewable Energy Generation: Metrics tracking the amount of renewable energy generated or installed by portfolio companies can provide tangible evidence of the fund’s contribution to the transition to clean energy sources.
- Resource Efficiency: Investors may also value impact metrics related to resource efficiency, such as the reduction in water consumption, waste generation, or raw material usage achieved by portfolio companies’ technologies.
- Job Creation: Impact investors often seek to support companies that create positive social outcomes, including job creation and economic empowerment. Metrics measuring the number of jobs created or supported by portfolio companies can demonstrate the fund’s contribution to inclusive growth and employment generation.
- Community Engagement: Investors may appreciate impact metrics that reflect portfolio companies’ engagement with local communities and stakeholders.
let’s shift to Social Good Investing metrics.
Imagine we’re looking to report on impact metrics for a Community Empowerment Impact Fund that exists to empower individuals and families to thrive by addressing systemic barriers and promoting social inclusion.
While many of the financial metrics are the same as any other fund, the impact metrics you report might look more like the following:
- Affordable Housing Units Created or Preserved
- Jobs Created and Unemployment Reduction
- Educational Outcomes: Metrics related to educational attainment, such as graduation rates, academic achievement, and access to quality education, can showcase the fund’s contribution to enhancing educational opportunities and fostering lifelong learning.
- Healthcare Access and Wellness: The number of individuals served by healthcare services, such as reduced rates of chronic disease.
- Community Engagement and Participation: Metrics related to community involvement, such as volunteer hours, civic participation, and resident satisfaction.
What impact metrics should you use for your fund?
The B Impact Assessment by B Lab, the nonprofit behind the B Corporation certification, allows companies like yours to assess their social and environmental performance based on a comprehensive set of criteria, including governance, workers, community, and environment.
The assessment generates a score that can be used for benchmarking and reporting purposes. This impact management tool is free and confidential, and will give you a jumpstart at defining and communicating your impact metrics.
Invest in robust impact measurement and reporting systems
Here’s why: “If a tree falls in a forest and no one is around to hear it, does it make a sound?”
While this is a highly debated philosophical topic, let’s set that aside for a minute and look at the practical application of this idea.
Yes, the tree made a sound. Except there are no witnesses to prove it. Going back to the excerpt in our article, people want to see proof. “Trust me” isn’t enough anymore. Investors want to know why…
Don’t let your impact to fall like a tree in a forest with no one around to hear it. Do good and do well, my friend!
What financial and impact reporting options should you consider?
There is always more tech than time.
The key is to identify an experimental and step-by-step approach for investing in robust impact measurement and reporting systems. Just insure they align with your specific fund’s goals, resources, and priorities.
Most funds should implement these solutions:
- Data Management and Analytics Tools: Streamline impact data collection, organization, and analysis. Automate data processing tasks, identify trends and patterns, and generate actionable insights for decision-making.
- Third-Party Impact Measurement & Reporting Platforms: Leverage third-party impact measurement platforms that offer standardized frameworks and methodologies for assessing social and environmental impact. These platforms often provide pre-built templates, tools, and dashboards for streamlined impact reporting.
- Custom Impact Measurement & Reporting Software: Once you exhaust third-party options, you can explore custom software solutions designed specifically for your unique impact measurement and reporting needs.
Just don’t forget about training and coaching for internal impact!
It’s important to invest time and money into training and capacity building. This will ensure that your fund staff are equipped to measure and report on your impact.
This may include a number of things like workshops, seminars, and certification programs. The key is to avoid failing to sustain or communicate the impact that you’ve achieved—no matter how small or large.
Optimize impact measurement frameworks and methodologies
Engage with digital consulting firms like Structure, or impact measurement experts in peer groups. They will help you stabilize or optimize your impact measurement and reporting systems.
These experts can offer strategic advice, conduct impact assessments, and assist in developing customized reporting frameworks tailored to your fund’s needs.
Don’t let poor execution be the cause of your downfall. Too often, fund managers focus on the activities surrounding the fund operation, rather than being laser-focused on the outcomes of the operation.
4. Visualize how well you’ve done before
Investors need to trust you. They want to know that you’ve done an excellent job with their money and are honest with them.
Many managers worry they’ll mess up and lose investors’ trust. They’re also afraid to admit when they make mistakes. And they’re not sure how to tell people about all the good things they’ve done.
To fix this:
- Be honest with investors about how well things are going, even when they’re not going well.
- Talk with investors about what they want and how you can ensure they get it.
- Tell investors about all the good things you’ve done and how you will do even better in the future.
5. Be open about what could go wrong
It’s hard to please everyone. Sometimes, what investors want and what the world needs are different.
Many managers worry they won’t be able to please investors. They’re also afraid to discuss what might go wrong and don’t know how to ensure that investors know what’s going on in the world.
To fix this:
- Be clear with investors about what might go wrong and how you’ll fix it.
- Talk with investors about what they want and what you can do to ensure they’re happy.
- Tell investors you’re always there to help them, no matter what happens.
Our suggestions address your need for customized communication approaches that resonate with diverse investor preferences and values.
By segmenting investors based on their interests and tailoring messaging accordingly, you can foster deeper connections and drive greater investor participation in your fund.
6. Display how you find reputable investments
It can be hard for impact-focused investors to find investments that make money and do good. As a fund, you need to have good connections and know where to look to find reputable opportunities for your investors.
Many managers worry they won’t be able to find suitable investments. Also, they’re often afraid to try new ways of finding investments. And they’re unsure how to tell investors where their money is going.
To fix this:
- Cultivate diverse networks and partnerships to access various impact investment opportunities across sectors and geographies.
- Leverage technology and data analytics to identify emerging trends, assess market opportunities, and evaluate potential investments.
- Collaborate with industry associations, development agencies, and impact investors to share deal flow insights and best practices.
Stay ahead of the curve by embracing digital innovation in your marketing efforts.
Whether it’s leveraging technology to identify new investment opportunities or partnering with private equity firms to scale social impact initiatives, our suggestions are aimed at helping you position your fund for long-term success in driving positive change.
7. Follow compliance and invest in security
You know this already, but compliance is really important… especially when it comes to investing. You need to make sure that you’re doing everything correctly and that you’re keeping everyone safe.
Many managers worry that they’ll break the rules or do something wrong. Often, they’re afraid that following the rules will cost too much, and they’re not sure how to keep your data safe and secure.
To fix this:
- Stay informed about regulatory developments and industry standards related to impact investing to ensure compliance and mitigate legal risks.
- Invest in robust compliance management systems and staff training programs to uphold regulatory requirements and reporting obligations.
- Engage with regulators, policymakers, and industry associations to advocate for precise, consistent, and proportionate regulatory frameworks that support responsible impact investing practices.
I’m sure compliance and regulations are undoubtedly top of mind for you—you might just not know what to do about it. That’s why we’ve emphasized the importance of investing in robust compliance management systems and staying informed about regulatory developments.
By prioritizing compliance, you can maintain a secure operating environment for your investors and uphold the integrity of your impact investment fund.
Elevate investor engagement with a Digital Growth System
Overcoming the challenges of attracting and retaining high-value investors is crucial. To build trust and demonstrate the value of your fund, a strategic approach is essential.
At Structure, our Digital Growth System services are here to support you through this journey. We help you integrate your marketing, customer service, and operations efforts to address key obstacles like educating investors, managing expectations, and ensuring compliance.
Explore how we can assist you in achieving your goals by visiting Structure’s Digital Growth Systems. Let’s drive your fund’s success.
