Do This If You Want to NOT Raise Capital
- Trying to outsource all of our marketing activities to some third party firm who will "handle everything." Why this is a waste: They won't handle everything, and more importantly your firm won't learn anything. It may be wise at some point to outsource capital raising to a third party marketing firm but you still need to manage the process, constantly help improve the marketing materials, participate in due diligence calls, and review the Master DDQ.
- Paying $3k-$10k for "placement" or "promotion" on a popular website where your firms logo or bio is promoted more frequently than other managers. Why this is a waste: Most of the time investors are seraching for something very specific and with this same $3-$10k you could meet with some high potential investors in person, develop a video overview of your investment process, or reach out to hundreds of new potential investors directly instead of trying to appear in front of them passively on a website.
- Paying for a family office database or hedge fund investor directory and then blanket emailing the whole list hoping that this shotgun approach will result in a handful of promising responses that will be easy to close on investing in your fund. Why this is a waste: Nobody likes to be spammed and every family offices and investor is different. To raise capital you must approach each high potential investor individually and learn about how they work, how managers get approved by their investment comittee, what they look for in managers, and their history of investing in the space. Never spam lists of potential investors.
- Planning on the "build it and they will come" model. Many mangaers believe that if they build the track record the money will come pouring in, but in my experience this only happens in 5-7% of all fund manager businesses. Most that raise a lot of capital did so consciously through constant effort and daily action towards the cause. I was this morning in a meeting what the real secret is to raising capital for hedge funds and my answer was, "it is simple, work very hard every day." If you have read my blog than you know from past posts that I give a lot of practical advice on what to work hard at each day...but that is at the essence of success in hedge fund marketing.