Most private equity funds (and the equipment finance industry) are well behind the VC industry with regard to their use of social media. Jeff Bussgang, General Partner, Flybridge Capital Partners, calculates that of the approximately 1,000 venture capitalists in the US actively seeking deals, 10-15% blog. Sarah Tavel, Senior Associate, Bessemer Venture Partners, calls this blogging and posting of internal analyses "venture capital’s freemium model."
We think that increasing numbers of private equity investors will devote more energy to their social media efforts. Private equity investing is a relationship business, and the only relationships that really matter are with the relatively small number of LPs, entrepreneurs, executives, and intermediaries. As more of our personal relationships move online, social media becomes a very cost-effective way to strengthen a firm’s corporate relationships.
Among the few PE funds with an outreach in social media I would include Duane Street Capital, 2xPartners, Healthpoint Capital , and Riverside Company. Another I recently learned about is MCM Capital. Bobby Kingsbury, Business Development Officer, MCM Capital Partners, was kind enough to provide a case study of his efforts in this area. I interviewed him via email:
Q. What is your social media strategy?
At MCM Capital Partners we have implemented Facebook, LinkedIn, an RSS feed, and a weekly blog into our website in order to promote our brand, increase search engine friendliness, expand our deal referral network, and enhance relationships with those already in our network. Additionally, we are tactically using social media tools to augment our communications to our current LP’s, prospective investors, entrepreneurs operating businesses within targeted industries, investment banks and intermediaries. Each communication method employed and its content is viewed through the lens of "how does this help our firm" and "how does this improve the likelihood someone will find us?"
Although we are still learning the intricacies of social media, we have been making extensive use of social networking sites to announce LBO transactions, promote our blog and email newsletter, recruit and evaluate potential CEOs for portfolio companies, as well as develop and create new relationships within the M&A community. Concurrently, we are using our blog to help with search engine optimization, place new contacts into our CRM (Goldmine), and to differentiate ourselves from other firms in our industry by providing value added content to our website.
For SEO purposes, we chose to focus on searches on the following terms: micro-cap private equity fund, leverage buyout, Cleveland based private equity, lower middle market, leverage buyout firm, management buyout, etc. We chose these terms based on relevance and by researching our SEO rank on each search engine, then targeted those keywords in which we ranked in the top 100.
We chose to use the top 100 because it was an achievable goal. Given our time budget of 1 blog post per week, and given that it’s most important to be on page 1 of Google (slots 1-10), we thought that moving from slots 100 and below to slots 1-10 was much more doable than moving from slots 101 and above. The largest behavioral jump, measured as a percentage-change, is from the top of page 2 to the bottom of page 1. According to Chitika, a search based online advertising network, going from the 11th spot to the 10th generates a 143% jump in traffic, proving a very small percentage of users click through to the second page while searching online. Ultimately, we want our website to be ranked in the top four for these terms, as the top four terms in a Google search account for 70% of all web traffic.
Here are a few of the steps we have taken:
Embedded in our website through WordPress, we started a weekly blog about four months ago. We use our blog to help with our search engine optimization, automating the addition of new contact information into our CRM, as well as providing value-added content to our readers (LP’s, entrepreneurs, investment bankers, intermediaries, etc.). In regards to search engine optimization, we created 5 blog categories (Best Business Practices, Private Equity Related News, MCM Perspective on Macro Economic Conditions, Investment Perspectives, and MCM Specific News) relevant to our target audiences, as well as a list of at least 20 keyword phrases to be incorporated into our posts. After a blog is written, we use Friendfeed to automatically post the new blog to our company Facebook, Twitter, and LinkedIn pages. The RSS feed helps track new readers and automatically places them into our CRM after readers fill out the required information. In addition, in order to comment on a particular blog we have implemented a form. Visitors fill out the form and their information is again directly placed in our CRM, helping us manage new contacts and track new visitors to our blog.
We are in a relationship based business, and we need to leverage those relationships. Each of us have our own LinkedIn profile and MCM also has a company profile page. I have encouraged each of my colleagues to spend 5 minutes a week building up their network with value added contacts. In five minutes they can add 10 to 15 new connections, which increase our reach and will enhance current relationships. We have added a WordPress blog widget to each of our profile pages and our company profile page in order for our contacts to easily view each new post creating more top of mind awareness for MCM. Any updates or deal closings within our firm are also sent out to each individual and each group in our network through LinkedIn’s own weekly update email. Additionally, LinkedIn has become a great resource to grow our list of C-level talent for our future and current portfolio companies.
We created a Facebo
ok page for our firm where we post our acquisition criteria, MCM updates, current ongoing searches, recent blog posts, a calendar for visitors to keep track of important dates such as our annual CEO summit and shareholder meeting, pictures of portfolio companies, and we have also added a tab which allows visitors to sign up for our email newsletter under ‘Join My List’. Posting regular updates relating to our business and activities reminds our friends or followers who MCM is, what we do and either to use our services or refer one of their friends or colleagues who might be looking for an equity partner.
We send out a monthly email newsletter using Constant Contact to over six thousand investment bankers, lenders, intermediaries, and current and potential LPs every month, keeping them apprised as to types of businesses we are looking for as well as any deal announcements or updates within our firm. We have placed links to Facebook, LinkedIn, and an RSS feed in our newsletter along with a link to each of our personal LinkedIn pages next to our name and email address. We also added a section at the bottom of the newsletter for blog post of the month to help promote our blog. After a newsletter is sent, we click on the LinkedIn, Facebook, and Twitter widgets on the top banner of the email and tweet it, Facebook Like it, and add it to our LinkedIn page in order to reach our contacts that may not have received the newsletter via email. Using Google Analytics, we have seen a dramatic spike in traffic to our site each month the day of and a few days after our email is sent, demonstrating the efficacy of the newsletter.
Everyone at the firm has links to our RSS feed, LinkedIn, and Facebook accounts embedded in their email signature to help create more awareness and again drive traffic to the blog and our social networking sites.
We have placed Google analytics into our website in order to monitor traffic, referral sites, keyword searches, unique visits, etc. I go over the statistics every month to see where traffic is coming from, where we rank with certain key terms, how long visitors spend on certain pages, and who exactly is coming to the website, in order to adjust our SEO campaign, write relevant blog posts, and provide value added content to our website.
What results have you seen so far?
While neither traffic nor time spent on our site is the true measure of efficacy of our social media campaign, it indicates we are increasing brand recognition and awareness. The real measure of success while we continue to develop our campaign will be transforming our brand recognition and awareness into an increase in deal flow, attracting new investors and talent to our firm, developing relationships with entrepreneurs in our target markets, and helping separate our firm from our private equity brethren. It is too early to provide definitive metrics on increased deal flow or inbound inquires from LP’s attributed to our social media campaign, but we are confident that social media will continue to play a huge part in the marketing success of our firm.
That being said, I will provide a few metrics we have been tracking since the inception of our social media efforts in July of 2010. Our deal flow increased by 150% in total from July to October, but we cannot say it was solely attributed to social media. Clearly there was pent up demand over the prior two years making it difficult to measure the efficacy of our campaign thus far. Further, we have only had two inquires from LP’s, but coming from a base of zero any number is a huge jump. Overall traffic to our site has increased 14% on average each month. Referral traffic, (traffic coming from other websites including our blog, LinkedIn, Facebook, and email newsletter) has increased 119% over the last three months, and visitor’s average time on our site has increased from 1 minute and 32 seconds to 3 minutes and 5 seconds.
Some other quick stats over the last 30 days derived from Google Analytics: we have averaged over 51 absolute unique visitors to our site per day (80% of our total traffic came from new visitors who have previously never been to our site), visitors averaged 3.75 pages per visit, and 69% of our visitors came from search engines (Google, Yahoo, and Bing), 18% came directly and 13% came to our site through our blog or social networking sites.
Most of our traffic is from new visitors:
Search engines are critical for our traffic:
Q. What are MCM’s professionals’ policies on inbound LinkedIn inquires from:
1. people you don’t know at all
A. If we do not know a person, but are familiar with their firm and they are currently an employee we will accept their invitation. If we do not know the person or their firm we will check their profile and company’s website to see if we would have a mutually beneficial relationship and accept or decline the invitation accordingly. Complete strangers, when we do not know them and have not heard of their firm will always be ignored.
2. people you don’t know but want to know (e.g. potential LPs)
A. LPs or people we want to know who contact us will almost certainly be accepted. We will follow up with a note and try to schedule an introductory call in order to provide more information on our firm.
3. people you barely know (met once for 2 minutes) –
A. Same principle as with people we don’t know; we will see how much utility the relationship will have for our firm and accept or ignore the request accordingly.
We generally will accept invitations from most firms, as the contact or their network will most likely be beneficial for MCM. What most people do not know is that anyone can look at your network (with the default LinkedIn privacy settings) and then inundate your contact list, with inbound inquires unless you change your privacy settings. At MCM we try and protect our network contacts, and have changed our privacy settings so our con
tacts cannot view the rest of our connections list. We continually manage the privacy settings on our LinkedIn pages to prevent any leakage of personal information and limit access to LinkedIn users not in our network.
Q. Similarly, what are MCM’s professionals’ policies on inbound Facebook inquiries from people in the categories above?
A. I would say it is pretty similar to LinkedIn, but at the same time anyone can Facebook-Like our page so it is a little more difficult to manage the contact list on Facebook. I monitor the page a few times a week and receive a weekly email from Facebook updating me on our page activity. Here is an example of the weekly update from Facebook:
Q. What tool(s) are you using to pull data in from your social media system into your CRM?
A. Each CRM has its own code for forms in order for contact information to be transferred into the database. Sometimes you can manip
ulate the form and other times you are stuck using what your CRM provides which possibly will not encapsulate all the data you are looking to obtain. We use Goldmine, and it was a challenging process to say the least.
Q. What is your policy on adding emails to your email database; do you add the emails of everyone you meet/who emails you, or wait for people to proactively register on your site?
A. We do not add everyone we meet or everyone who emails us, but we certainly do not wait for people to proactively register on our site. At the end of the day it’s a numbers game, and if we feel the person has an opportunity to add value to our fund they will be added to our database and sent our monthly correspondence, unless they unsubscribe.
Q. Who built your website?
A. Point to Point Inc., a Cleveland based interactive marketing firm has implemented our blog into our website and is in the process of transferring our entire site into WordPress. This will allow us to make changes ourselves in real time and also will allow me to control and adjust our SEO campaign as needed without having to understand or learn how to write HTML. The changes made are instantaneous and can also be undone if a mistake is made.
Q. What other tools/technologies are you using?
A. I have created an email archive page using Constant Contact in order for people to view previous communications we have sent. It’s also another way for someone to ‘Join our List’ if they receive the communication thru a social networking site.
Q. What steps are you taking for proactive marketing, as opposed to reactive marketing? Are you proactively reaching out to your viewers on a targeted basis?
A. Everything we are doing right now with our e-marketing campaign is proactive and we are reaching out to our viewers on a very targeted basis. We know our prospective audience uses search engines and social media sites to find relevant information, so we develop content (onsite and off) that is relevant to both the engines and the users. For example, we have a blog category entitled ‘Investment Perspectives’ in which we share our investment theses around certain industries of interest. The investment thesis gives MCM credibility and resonates with entrepreneurs and the intermediary community, as it illustrates forethought as to the types of businesses we are searching for in a particular industry. We realize with our e-marketing initiatives we are currently thinking a little outside the box given the dynamics of our industry, but I believe we will see a paradigm shift in the not too distant future in the ways in which PE firms market to the deal community.
Q. Are you soliciting directly to potential investors and targets who didn’t approach you? If so, how if at all do you use social media to make the cold call easier?
A. That is a very good question and one we have talked about internally as we prepare to raise our third fund in the coming months. We are planning to reach out to a number of potential investors and targets using LinkedIn. Sending InMail to potential LP’s with a brief introduction of our firm will break a lot of the ice and also help alleviate some of the awkwardness and unfamiliarity of a cold call. During the exchange of InMail we will be able to determine if our interests align with the prospective LP and proceed accordingly. Going forward social media will hopefully turn what used to be a cold call into a warm lead.
Q. How much time (launch and ongoing) and money has the social media initiative cost you?
A. We do not track time like a law firm, but the efforts spent to continue our e-marketing initiatives have been significant and are shared throughout our firm. It takes a total team effort to create, edit, post and continually update and monitor our blog, SEO campaign, and social media sites. I have been very fortunate to work with colleagues who understand the importance of our e-marketing campaign and have given it their full support. It has taken a lot of time and we had to learn how to walk before we ran, but I believe it will continue to be beneficial and pay huge dividends on a go forward basis. In the future I could see hiring someone full time solely to work on our e-marketing campaign, as four of our professionals collectively spend on average 15 to 20 hours a week on our social media outreach, depending on the time of the month.
Q. Some funds are concerned that increasing visibility will attract inappropriate deal flow, a deluge of job-seekers, and other people who want to suck up your bandwidth. How do you mitigate that cost of being more visible?
If we felt that the attention we were receiving was irrelevant or hampering our day to day initiatives, we would take steps to improve our process to make it more relevant to our desired audience. We have not had to deal with an influx of spam-like inquiries thus far, and truly do not anticipate it as we control our connections. Our goal through our entire e-marketing campaign is to gain relevant visibility, but I would be more than happy to spend a few extra minutes a day reviewing the inappropriate deal flow and deluge of job seekers as it means MCM is becoming more visible. It doesn’t hurt to spend a little time answering a few questions or sending an email with our acquisition criteria in order to prevent inappropriate deal flow in the future. You never know where that person may end up that is seeking a job or what deal that intermediary may show you next.