Marketing For Start-ups, Emerging Managers and Smaller Hedge Funds
RAISING ASSETS is the MOST CRITICAL and DIFFICULT part of running a smaller hedge fund.
of all hedge funds fail to reach $100 million in AUM.
FACT: 81% of hedge funds with AUM less than $100 million have no marketing in place.
Research shows that the #1 reason why most hedge funds fail to raise assets is the persistent use of inappropriate, inadequate, ineffective and inconsistent marketing.
Raising assets is among the most critical and frustrating challenges, particularly for start-ups, first-time and smaller funds. The allocation decision has expanded due to fallout from the Credit Crisis, Madoff and greater regulatory intervention. As a result, the focus has shifted from investment returns and pedigree to encompass operational/organizational soundness, stability and continuity. In addition, the selection and evaluation criteria by investors, intermediaries and allocators are highly-idiosyncratic and significantly more stringent reflecting heightened sensitivity to elevated litigation risk as well as operational and headline risk. Simply, now every start-up, first-time or smaller fund must approach marketing intelligently to succeed raising assets.
The RIGHT MARKETING is now a mission critical business necessity for a hedge fund.
In a hyper-competitive climate, the clear winners will be funds using the RIGHT MARKETING: High-integrity data, quantitative/qualitative investor-centric research, marketing analytics and appropriate metrics for proactive investor base management to reach new investors, diversify AUM, solidify existing investor relationships, improve retention rates and achieve greater overall execution performance.
IT TAKES MORE THAN EXCEPTIONAL INVESTMENT RETURNS AND/OR PEDIGREE TO RAISE AUM.
small funds are operated by individuals or teams with deep investment
experience and core expertise in portfolio management, research or
trading with little familiarity marketing a hedge fund and training in
appropriate marketing skills, methodologies or strategies. Also, most don’t invest the necessary time planning and preparing their marketing effort to raise
assets. As a result, they attempt to raise assets without a well-defined, structured and focused plan.
66% of hedge funds believe an effective marketing process is critical for a successful business.
Without a documented "intelligent marketing process" and the false belief that "returns alone will attract assets", the result is often inappropriate, inadequate, ineffective and inconsistent marketing. This places the fund in a deeply compromised, under-resourced and unprepared position to meet the challenges of appropriate qualitative and quantitative investor/intermediary engagement, which is fundamental to raising assets. THE RIGHT MARKETING IS THE ULTIMATE DETERMINANT OF RESULTS RAISING ASSETS.
Marketing and fundraising are distinct but complementary processes, filled with a myriad of challenges, possible pitfalls and numerous questions, which need be addressed carefully and thoughtfully. Raising assets is VITAL but also MOST DIFFICULT in the early stages of the hedge fund lifecycle. Frankly, the ultimate success of the fund and business is often won or lost during this critical time. A quick start raising assets is essential for future continued success, as momentum in asset growth is a key metric used to qualitatively evaluate a fund.
The winning funds, who successfully raise assets, have a clear understanding that it takes more than performance and/or pedigree to raise assets. The essential component is an INTELLIGENT MARKETING PLAN, comprised of:
1. A clear and deep understanding of the marketing and fundraising environment on a fund-specific basis.
2. The RIGHT documented, customized, disciplined, structured and focused marketing processes.
3. The RIGHT resources, infrastructure, skills, tools and analytics for high-level execution.
This forms the basis to consistently reach the RIGHT investors, intermediaries and allocators to clearly and concisely articulate the idiosyncratic nature of the fund and the compelling opportunities for ALPHA the fund identifies and continually exploits.
Getting out of the marketing blocks cleanly and solidly raising assets is mandatory to obtain the RIGHT visibility and awareness to gain the confidence and trust of the RIGHT investors and intermediaries in a hyper-competitive climate. Inability to quickly and efficiently clear this first hurdle leads investors to believe there must be negative reasons why other investors are not making a commitment by investing in the fund, which compounds the difficulty raising assets.
Let's not mince words: INTELLIGENT MARKETING is mandatory to RAISE ASSETS.
As a point of fact, a solid, holistic grasp of the obstacles, options and requirements is mandatory significantly before any fund begins a dedicated effort to raise assets. Commitment, ownership, control and leadership of the marketing process is required to continually leverage mission critical assets on an enterprise-wide basis for consistent high-level execution to raise assets.
The three 3 fundamental execution aspects of successful marketing to raise assets:
CONTROL: A start-up, first-time or smaller fund must take COMPLETE OWNERSHIP and LEADERSHIP of ALL marketing and fundraising. Marketing and raising assets are ALWAYS the responsibility of the fund despite any external sources it may attempt to engage such as prime broker cap intro, 3rd party marketing (TPM) or registered finders. TPM/External sales professionals or other organizations are not realistic marketing and sales options until a fund reaches the minimum institutional level of AUM (typically $200 Million) along with solid operational infrastructure. NOTE: research reveals that only 1 out of every 275 sub $250 million AUM hedge fund obtains a TPM/external sales relationship.
COMPETENCE: A start-up, first-time or smaller fund must have or acquire MARKETING ACUITY. A deep level of marketing and fundraising knowledge, experience, skills, relationships, resources, insight, information and intelligence.
CONVICTION: A start-up, first-time or smaller fund must have proactive execution consistency from a deep factual belief that when marketing and fundraising, it is doing the RIGHT things RIGHT, reaching the RIGHT investors, intermediaries, allocators and distribution channels given its profile.
Johnson & Company: What Do We REALLY Do.
No theory, No fluff, No bull and No "wasted TIME, MONEY and EFFORT".
A critical component in our ability to help a start-up, first-time or smaller fund meet the challenges of marketing and fundraising in the current climate and beyond is consultative candor. Candor, in the form of accurate information, direct answers and clear solutions, is the catalyst for fast action. With candor we all can get to the source of problems quicker, solve them faster and operate better. Lack of candor is a killer to success. We do not operate without it nor should you. Candor fosters clear communication, accountability and creative conflict, which leads to consistent high-level performance and exceptional results.
Our 20+ years experience, unique proprietary resources and solid relationships uniquely qualify us to help start-up, first-time or smaller funds meet the challenges, requirements and cost of marketing and raising assets by development, implementation and execution of "intelligent marketing", which is now essential to raise assets.
The Bottom-line: What we REALLY do is simple.
Johnson & Company is the primary resource of "intelligent marketing" for new, early-stage and smaller hedge funds and the only specialist firm offering strategic and tactical marketing for new, emerging managers, sub $150 million AUM funds and CTAs. Since 2010, we have assisted 200+ funds with the challenges of marketing and raising assets. We help each client maximize their fund's potential to succeed raising assets.
Marketing and raising assets for a start-up, first-time or smaller hedge fund is completely different than for a larger or more seasoned fund. Candidly, the vast majority of small funds do not engage the RIGHT investors and intermediaries given their fund profile and fail to execute the RIGHT strategic and tactical actions the RIGHT way, which leads to chronic failure raising assets. It takes the RIGHT customized marketing plan for a start-up, first-time fund or smaller manager to raise assets and that's what we provide: A "no-nonsense", focused, structured and disciplined research-based process to optimize marketing and get results raising assets. We deliver experienced, fund-specific marketing answers, strategies and solutions, that decipher the nuances and complexities of fundraising, which saves TIME, MONEY and EFFORT and optimally prepares and positions the fund for efficient, effective, expedient and economic step-by-step execution to meet the challenges and requirements of raising assets in a hyper-competitive, highly-selective climate. We refer to this approach as "Intelligent Marketing" - The RIGHT infrastructure, resources and skills to efficiently identify the RIGHT investors given the fund profile along with effective communication, appropriate qualitative/quantitative engagement with select investors, intermediaries, allocators and distribution channels to achieve optimum visibility, increased awareness to form and nurture the RIGHT relationships, which are the catalysts to raise assets.
Plainly, "Intelligent Marketing" is common sense and now a business necessity, particularly for start-ups, first-time funds and sub $150 million AUM managers but clearly the "RIGHT MARKETING" is not common practice among smaller hedge funds. The vast majority of new and smaller hedge funds have the false belief that raising assets is simply a matter of producing investment performance. This thought leads to chronic frustration and failure raising assets.
The truth is investment performance and returns only bring a level of attention, which rarely results in allocations. In the post-credit crisis/Madoff climate investors are more skeptical, better informed and idiosyncratically demanding. As such, raising assets for a start-up, first-time or smaller fund demands a commitment to "Intelligent Marketing".
IT'S SIMPLE: IF YOUR PRIORITY IS TO RAISE ASSETS, IT TAKES THE "RIGHT MARKETING".
WE DELIVER "MARKETING ALPHA" FOR NEW, EARLY-STAGE & SUB-$150 MILLION AUM HEDGE FUNDS