Top 10 Hedge Fund Marketing Mistakes

Top 10 Hedge Fund Marketing Mistakes

Our team provides over 1,600 hedge funds a year with capital raising advice, resources and products. Our team has also helped raise hundreds of millions of dollars in capital as well. Through these two sources of experience we see many of the same fund marketing mistakes made over and over again.

If you can avoid these mistakes you will be more effective than 80% of your competitors in the marketplace.

Top 10 Fund Marketing Mistakes:

  1. Mistake #1:  You have a 3 month capital raising goal.  This is un-realistic and the wrong mindset to go out of the gates with. You need to plan, build relationships, educate potential clients, and design high quality marketing strategies and materials for the long term. It takes time to raise lots of capital and usually the more valuable the investor, the longer the sales cycle. Don't try to cram everything into a 1-3 month capital raise.
  2. Mistake #2:  Counting on simply building a track record and then hoping to outsource all marketing to a great third party marketing firm down the road.  This puts all of your eggs into the third party marketing basket. Third party marketers have hundreds of potential clients approach them each year, it is risky to assume one will not only take you on as a client but actually raise a sustainable level of capital for you.
  3. Mistake #3: Spending $8,000 on graphic design and website design but $0 on hiring someone who is an expert at sales letter construction, writing copy, and creating headlines and taglines for your positioning in the marketplace that will be effective.  Many times I see fund managers that want to look very professional but there is no meat in what they are saying, or hook to draw in the reader.
  4. Mistake #4:  Not dedicating resources to capital raising is the most obvious mistake that I see in the industry. Many fund managers will act as the CIO, make 2-3 phone calls a week or sometimes per month and then wonder why they have not raised more capital.  Performance does NOT market itself, pedigree does NOT swing all doors wide open.  You need to have dedicated resources, an internal marketing resource working at least 20 hours/week, investor databases so you can spend your time calling on real prospects instead of always having to qualify them, and have a growing internal CRM or IRM system in place to track this investment in investor relationships.  
  5. Mistake #5:  Speaking at conferences full of your closest competitors instead of your highest value potential investors.
  6. Mistake #6: Under-estimating the value of a first name basis relationship with your top investor prospects.  Some professionals, especially those with technical backgrounds think that marketing is a numbers game. Yes, you have to sometimes reach out to many to develop relationships with few but relationships is at the core of everything that gets done.  Like Gitomer says, "all things equal people like to do business with friends, all things being unequal people still like to do business with friends."
  7. Mistake #7: Another mistake I see in the hedge fund space is a lack of capital raising training or fund marketing instruction.  You do not have to pay to have your marketing staff trained but at the very least you should document your own best practices, processes, investor pipeline development plans so they can be easily communicated to team members, board members and then constantly improved each quarter.  
  8. Mistake #8:  Missing the boat on authority positioning, educational forms of marketing, and improving their own pedigree standing within the industry.
  9. Mistake #9: Writing off PR: Most managers shy away from or completely ignore public relations as an avenue for helping create interest and positioning for experts on their team.  Many funds have now successfully employed the media to spread messages about their fund.
  10. Mistake #10:  A mistake that I see 90%+ funds doing today is using a boring, run of the milll Unique Selling Proposition (USP), or worse yet, not having one at all.

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