What stage of the hedge fund are you in?
We have spoken to over 100 different hedge funds which included managers and sales professionals. Each and every team has identified different strategies, channels and investment asset sizes.
Established and larger funds typically went after institutional money, family offices, other funds, etc. Having a more established brand name, track record and support base gave them recognition to their prospects.
Younger, smaller and rapidly growing hedge funds relied on network and outbound reach to grow. The majority of investments came from affluent individuals and families.
The commonality underneath these funds were that they still heavily relied on outbound marketing to grow assets. They each focused on a set of questions and parameters before finding a new pipeline of assets such as…
- Is your target market growing or not?
- Determine how you build your pipeline and how much time you spend on it
- Leverage people and capital to market for you
- Allocate 2-3 hours a day strictly on prospecting
- Have a pipeline of targets delivered to your email everyday
Capture money when its moving
This was by far the most common success trait of raising assets without the managers necessarily knowing that was the underlying reason why they had the success they did.
When funds become readily available to an investor, they were 34% more likely to listen and engage with new ideas. After a successful signing of a new investor, they were 56% more likely to continue to invest when they had another financial event.
This is powerful information to know and will exponentially grow your fund as long as the message and story meshes well with their investment strategy.
How to capture money when it’s moving
Here are some example of how hedge funds are raising assets through moving money. There are many other types of potential moving assets, but these 3 will be your best options for gaining new assets.
By far the most successful and consistent flow of new assets with the least competition for it. The key is having a good process and sticking with this in your outbound strategies. 95% of these individuals are Qualified Purchasers (QP) or Qualified Investors (QI). Focusing on this type of prospect will help your fund grow until you are ready to focus on institutional money.
This can be a very difficult, but very rewarding pipeline. If you aim to focus on this, build relationships with M&A attorneys, business brokers and accountants. Small seminars or dinners can help lay the foundation. However, this is a long term play and may potentially still be a losing investment of time.
In our experience, many of these individuals that have these larger liquidity events are not prepared for it. They underestimate the time and resources that are needed to accomplish such an event. These may take years to wrap up from start to finish. Advisors also tend to avoid these types of money in motion events (such as business sale) because of the time needed to stay on top of the prospect before they are able to liquidate.
Taking a company public or expiration of a lock-up period
This is a potentially lucrative pipeline because you are able to potentially identify the companies that are on track for an acquisition or IPO. Comb through Crunchbase or Pitchbook to see who is raising large amounts of Series Funds. These companies are the most likely candidates to go public and will have a grouping of founders that may have significant stock holdings.
Get started automating the process
Depending on what stage of growth your fund is in and who your primary customer is, automation is key. The Affluensee Platform was designed for Financial Professionals that need to focus on raising assets to a qualified investor base.