How to Beat the ‘Hot Cognition’ Filter in Your Hedge Fund Pitch

An accredited investor listening to a private fund pitch can tell 𝗶𝗻 𝗮 𝗺𝗮𝘁𝘁𝗲𝗿 𝗼𝗳 𝗺𝗶𝗻𝘂𝘁𝗲𝘀, 𝗺𝗮𝘆𝗯𝗲 𝘀𝗲𝗰𝗼𝗻𝗱𝘀, if they are interested or not.

According to behavioral science, 𝗶𝘁 𝗯𝗼𝗶𝗹𝘀 𝗱𝗼𝘄𝗻 𝘁𝗼 ‘𝗛𝗼𝘁 𝗖𝗼𝗴𝗻𝗶𝘁𝗶𝗼𝗻’— deciding, based on a gut feeling, if you like or dislike something before you fully understand it.

We form a hot take with pretty much everything, whether we realize it or not. Maybe we’ll wait and see if our impression is confirmed or disproven. Maybe not.

The investment marketplace is saturated. There are 𝙒𝘼𝙔𝙔𝙔 too many funds competing for allocations.

Family offices and high-net-worth investors have said to me, “We’re looking for a quick NO.”

Every pitch goes through the ‘hot cognition’ filter that looks to code (and disqualify) as:

❌ Boring – seen this a hundred times.

❌ Complicated – no one invests in something they don’t understand.

❌ Unprofessional/amatuerish – equates to distrust.

There’s a higher level of risk in new managers, so if it’s you vs. a well-established fund doing the same thing, you don’t get to pass go.

If there’s ONE THING that always makes it through the initial hot cognition filter: it’s 𝙉𝙊𝙑𝙀𝙇𝙏𝙔

If you can say (and prove), “We have a unique approach; we are doing something truly new and different,” then the investor’s brain gives you a stay of execution.

You still need to prove that you have a successful, repeatable investment process.

Here are the 5 things to bring across (quickly):

1. 𝗪𝗵𝗼 𝗮𝗿𝗲 𝘆𝗼𝘂? — Get your experience on the table fast. Sum it up with 1 or 2 heavy hitter points.

2. 𝗪𝗵𝘆 𝗶𝘀 𝘁𝗵𝗶𝘀 𝗶𝗺𝗽𝗼𝗿𝘁𝗮𝗻𝘁? How is your offering relevant in today’s market environment?

3. 𝗪𝗵𝗮𝘁 𝗺𝗮𝗸𝗲𝘀 𝗶𝘁 𝘂𝗻𝗶𝗾𝘂𝗲? Underscore the novelty element. What makes your offering new and different?

4. 𝗛𝗼𝘄 𝗱𝗼𝗲𝘀 𝗶𝘁 𝘄𝗼𝗿𝗸? Radically summarize. Do NOT get into the weeds with a super technical explanation.

5. 𝗪𝗵𝘆 𝘆𝗼𝘂 𝘃𝘀. 𝘆𝗼𝘂𝗿 𝗽𝗲𝗲𝗿𝘀? Know your peers, how you are different, and why you are the best option.

Drive home these 5 critical elements early in your pitch.

Not only will this save you from getting cut in the ‘hot cognition’ process, but these ‘seeds’ will germinate (and hopefully grow) later while investors do their own research and due dilligence.

Whether you need help with a specific project, or if you have multiple marketing needs, Catalyst delivers solutions designed to meet your budget and timeframe.