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Hedge Fund Capital Raising Processes

Capital Raising Processes

I completed a live radio show interview yesterday for a business and finance show in Canada. While on the air I was asked about whether hedge fund managers need tons of personal contacts to raise capital for their fund and stay in business. The full audio MP3 of this radio interview will be available shortly but here is the direct answer:

No. While some hedge funds do have a capital raising edge by having hundreds of high net worth, seeding, or institutional investor friends already in place most hedge funds have only a small group of personal relationships when they first launch their hedge funds.  Regardless of the size of their personal network hedge funds must have marketing processes and potential investor cultivation processes in place to continually turn over new potential investors, introduce them to your fund, and move them through a 7+ touch relationship development pipeline towards a due diligence conference call, in-person meeting, or direct investment.

It is critical to have these capital raising processes in place, documented, and refined based on what you learn about how other hedge funds are raising capital and working with new investors.  If you are about to start a hedge fund pay attention to these capital raising processes upfront.  If you run a medium or large sized hedge fund you can diversify your investor pipeline and improve the effectiveness of your communications by creating a flow chart or documented process that your marketing and sales team will follow.

Next month we will be releasing our new hedge fund marketing training product - I will keep in touch as we finish completing the development of this new resource.

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