CAPITAL REPUTATION: Yours Matters!
| “Capital Won’t Invest in My Opportunity Because… They Can Invest Into [Larger, More Established Org] and Will Not Lose Their Job” |
While this thought process may feel good to the Capital Seeker in that it can absolve the Capital Seeker from examining their own capital opportunity from the perspective of a Capital Provider which has many investment opportunities – this statement is not the whole (or often even part of) the story. This kind of statement allows the Capital Seeker to not think about the qualitative items that are important to the Capital Provider and if the Capital Seeker does not undertake a hard self-analysis, it often, reduces the likelihood of capital success since important Capital Provider concerns are not being addressed.
When a Capital Provider makes a private investment into an organization, they are making a long-term decision where, even if the Capital Provider changes their mind about the opportunity, there is limited expectation to be able to exit for multiple years. In this scenario, a Capital Provider must make a judgement call for not just today but also what might happen over the whole timeframe of the investment opportunity. One aspect of the past that can contribute to an understanding of the future is reputation which when it is more broadly known translates into brand (brand is integrated with and linked to reputation) even though the past is not necessarily a good indicator of the future,
A “good” or “bad” reputation or brand usually aggregates over long time periods and reflects upon fundamental qualities such as character which are attributes that can be a good guidepost for future behavior. Since reputation or brand typically consists of fundamental qualities rather than qualities that are affected by external conditions such as market cycles, they can be an indicator of future behavior and are used by Capital Providers who need to think about long term outcomes.
The longer and more time-tested a reputation or brand – either in person or virtually; (hopefully!) the better the reputation and therefore, the more likely a Capital Provider will be to make a positive long-term investment decision.
There are multiple ways to demonstrate, build and develop a good reputation or brand – below are some techniques to accelerate your reputation and brand for capital markets purposes:
| Reputation Technique | Description |
| Consistent, Effective, Value-Add Communications | Reputations develop over time. In a business setting, it is hard to have enough time with every potential counterparty to develop your reputation or brand. Therefore, it is important to use consistent, effective and value-add communications to develop engagement, and connectivity which will help build a valuable branded reputation. |
| Clearly Articulated Value | Reputation is enhanced when value is high. Therefore, it is important to clearly articulate value for your counterparty. No one wants their time wasted. |
| Brand Transfer | Reputation is often based upon your network. Do you have people, places, service providers whose reputation or brand you can leverage. Your network hopefully has developed either a specific reputation / brand built upon individual engagement or has spent time and money developing a more general reputation or brand such that your association with them can indicate that you also have a good reputation or brand. |
| Strong References | Strong references can quickly enhance a reputation especially if they come from a “branded” source or have their own recognized reputation. References essentially provide third party reputation verification. |
| Quality, Organized Materials | Building a reputation / brand often incorporates little things such as impressions. Just like the clothes that are worn give an impression, the look and feel of materials can enhance or detract from a reputation/brand. Do not overlook the small details that build a reputation – all the details matter. |
If you would like to discuss this further, or, if you or one of your clients is thinking about or has a capital opportunity – we advise on creating successful outcomes – Contact us!
