4 Capital Raising Secrets
There are many aspects of capital raising which are counter-intuitive. These tend to involved lessons learned the hard way, over time that eventually gives managers who have moved up the learning curve of raising capital a distinct advantage.
Here are the Top 4 Capital Raising Secrets I have experienced and noticed first hand that many $100M-$300M hedge funds are still picking up as they grow.
- Daily Action is How Capital is Raised: It may seem overly simplistic but many capital raisers or fund principals focus either on very short-term results or only on capital raised and not on daily progress. Your CRM system can easily produce tangible investor pipeline development reports which can track exactly how many tangible physical actions were taken every day towards raising capital. This has to be part of what you consider evidence that capital raising efforts are well underway. Focusing only on capital brought in leads to un-managed expectations and hire turnover with both third party marketers and in-house marketers.
- Moving up the Capital Raising Learning Curve Quickly is a Competitive Advantage: How well trained is your team? The average hedge fund spends less than 2 days a year, or less than $1,000 per employee on training, yet a huge multiple of this sum of money on marketing materials, overhead and infrastructure. What if your team was trained to raise capital 3x more than your competition? What if you could work 20% more efficiently and got 20% more accomplished every single day? That would lead your firm on a path to raising an exponentially higher amount of capital than others because you would more quickly be able to experiment and move up the learning curve on how to raise a lot of capital for your fund. Which leads to the next secret of capital raising:
- Speed of Implementation: This is something I covered in details during my last in-depth hedge fund marketing seminar called Hedge Fund Marketing Mechanics. The faster you move forward, experiment, test, learn, re-adjust and try more capital raising plans the faster you can adapt. The saying goes the most successful plants and animals on earth long-term are not the fastest or strongest, they are the most adaptive. This is something I remind myself of every day in our own business and when consulting with hedge funds on capital raising plans.
- Choosing the right investor channel is key and 5 minutes of planning can save you 5 weeks of experimentation and painful cold calling to the wrong investors. I have learned this the hard way, trust me it is always best to research exactly which channels of investors and in which geographical regions are going to be most interested before trying to reach out to everyone you can. This may seem obvious to $10M+ hedge funds but as you hire third party marketers, train new professionals on your team, and delegate it needs to be passed on to everyone. Every team has limited resources so where you spend those each and every day is one of the most important decisions you can make.
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