Bad News

The bad news is there is no magic bullet to raising capital. I spoke with at least a dozen managers this past week at our Hedge Fund Premium networking event in Chicago. Most were looking for capital raising help of some type and we discussed many roadblocks that managers are seeing between them and the AUM levels they are trying to achieve.

Our firm provides some capital raising tools, but I believe that daily action and discipline is the best thing that a fund can do to raise capital. They must take responsibility for marketing their fund and have someone reaching out to new investors on a daily basis, if they do not they will forever remain in the bottom 20% of the industry in terms of assets. Very few funds gain their initial assets through a super powerful third party marketing firms, third party marketers like to typically work with managers which have some AUM momentum or foundation underneath them.

To raise capital I believe that managers need to have superior tools and processes when compared to their competitors. This means superior investor cultivation processes in place, superior investor relationships management, superior marketing materials, superior outreach efforts, superior email marketing, and superior focus on investors which actually have the potential of making an investment. Each of those topics mentioned above could be discussed for a whole conference and all of these moving parts need to be in place to compete in today’s industry. While this does not mean you need to out-spend others you do need to strategically plan your marketing campaign.

There is a good quote that I heard which goes something like “If you want to have what others don’t you have to do what others won’t” In other words if you want to grow assets you must put in the extra work, planning, and strategy that others skip over.

Every morning I try to listen to a 45 minute custom MP3 audio session of business lessons, marketing tips and positive thinking notes. One great quote I hear every morning by our friend Brian Tracy, “Successful people dislike to do the same things that unsuccessful people dislike to do, but successful people get them done anyways because that is what they know is the price of success.” This is connected to an interview Brian conducts in which a multi-millionaire says that success is easy, “you must decide exactly what it is you want, and then pay the price to get to that point.”

All of this may sound wishy washy or non-exact but I think it is very important to realize that there is no one single magic bullet for raising capital. It takes hard work, trial and a superior effort on all fronts to stand out from your competition.

- Richard

Tags:  CTA Manager Marketing, Capital Raising services for CTA Funds, Third Party Marketing for CTA Funds, third paty marketers that work with CTA Funds, CTA Fund AUM Growth, How to raise capital for an emerging CTA Fund

I was making my way through some marketing training materials last night from Mr. Frank Kern and came across a marketing process which may seem somewhat like common sense, but helps to think about to ensure that you are presenting a complete marketing message to your potential fund investors.  Within the marketing training program Kern suggests you follow this process while moving your prospects through different phases of engaging your firm:

1. Interest and Desire:  Provide a white paper, speech, update your perspective of the markets which catches the attention of your potential investor
2. Trust:  Develop a relationship with the potential investor, build trust by providing client quotes, industry recommendations, and comparison analytics between your fund and others.
3. Proof:  Show proof that your fund has a high degree team, detailed consistent investment processes in place, and an advantage of some type which can be tangibly displayed or confirmed.
4. Sample: Allow the investor to start with a small minimum investment, provide examples of what other investors like them have done in the past, or present case studies on three different types of typical investors that you serve so they can imagine then being in that position.

The descriptions next to each bold word above is less important than the process itself. If you can grab the attention of the investor, build a relationship with them, provide proof of your abilities and performance, and then combine that with a sample you will be several steps ahead of much of your competition.

Tags: Hedge Fund Investor Sources, new Hedge fund investors, investor pipeline development, investor relationship management, developing a pipeline of investors, hedge fund, hedge funds, CTA Fund Marketing, CTA Investors, CTA Fund investors, futures fund investors, marketing a CTA Fund

Hello, This is Richard Wilson, below is a paragraph excerpt from a book I am writing on hedge funds, which will be published through Wiley in 2010.  It shares some advice on targeting different types of investors.  While other consultants in the industry charge $250-$400/hr to provide this advice to hedge fund managers I give it away here on my blog for free and soon in my book because my business is based on being a source of genuine education and valuable resources instead of just press releases and news re-runs.

The method by which Tassini Capital Management was raising capital was not effective. In addition to not using an Investor Relationship Management System the team had somewhat randomly been approaching many different types of investors from large European banks to small seed capital providers. The third party marketing firm consulted Chris and Brian Tassini and found that they were both un-willing to part with equity ownership in the management company of the fund in exchange for capital. They also reviewed past notes and confirmed that all efforts to work through institutional investment consultants had been stalled due to sub $100M AUM levels.


The result was a much more focused method of systematically approaching a mix of investors which included 10% institutional investment consultants, 50% wealth management firms, 20% multi-family offices, and 20% high net worth individuals. While institutional investment consultants were not going to invest any time soon they were kept in the mix so that the team could continue to receive valuable institutionalization feedback from the consultants.

Tags: Hedge Fund, Hedge Funds, Alternative Investment Marketing, CTA Marketing, Capital raising methods, hedge fund investors, types of hedge fund investors, how to raise capital from investors or hedge funds

Seminar Networking Event: Hedge Fund Premium and the Hedge Fund Group are offering a seminar networking event for hedge fund managers and CTA funds on September 16th, 2009. The event will run from 5PM – 8PM EST in the Blue Room at the W Hotel in Chicago, IL.

At this networking event Bilal Malik from the Malik Law Group and Richard Wilson from the Hedge Fund Group will be speaking on industry regulations and capital raising best practices. The 2 educational talks will last 20 minutes and will be followed by 2 hours of open networking time where fund managers may meet with others in the industry.

Admission is $25 at the door, or free if you are a registered member of Hedge Fund Premium.com. The W Hotel is located at: 172 West Adam Street Chicago, IL 60603 (Please see the RSVP form below for a local area Google Map of the location).