Marketing Alpha: How New and Small Managers Succeed Raising Assets
Meeting the Marketing & Fundraising Needs of Sub-Institutional Alternative Managers
INTRODUCTION
Bryan K. Johnson
Founder & Managing Partner
- 25+ years experience in alternative investments as an investor, marketer/salesperson, advisor & expert witness.
- Launched Johnson & Company in 2010 as a firm singularly dedicated to delivering professional marketing advisory and execution to sub-institutional alternative asset managers. Consultation and training of 300+ sub-institutional managers.
- Prior to Johnson & Company, served as Global Head of Business Development for the Alternative Funds Group (AFG) with Moody’s Investors Service in New York City. Senior Relationship Officer actively called on investment executives, board members and decision-makers at endowments, foundations, taft-hartley (unions) plans, single and multi-family offices, public pensions, broker-dealers, RIAs and institutional consultants. Led deployment of Operational Quality (OQ) ratings for hedge funds and credit ratings for alternative investment securitizations such as Collateralized Fund Obligations (CFOs) and debt obligations of alternative asset managers. Clients included: Citadel, Fortress, King Street, Marathon, SAC, Millennium, Brevan Howard and Marshall Wace.
- Before tenure with Moody’s, served as senior lead consultant and chief expert witness for The Attorney General of Texas and The State of Texas in the evaluation of hedge funds and private equity firms involving disposition of the generation assets of Texas Genco and the multi-billion dollar true-up of Centerpoint Energy (CNP:NYSE)
- Preceding engagement with the State of Texas and The Office of the Attorney General, CEO/Founder of Gotham Bay Partners, an alternative investment firm which developed investment policy and asset allocation strategies for 60+ private wealth investors and family offices as well as evaluated single manager and pooled private equity and hedge funds. Raised and allocated $3+ billion to external managers. Principal investor/portfolio manager of a $100 million dollar internal private equity fund.
- B.A. from Washington and Lee University (Lexington, VA) 1986.
STARTING A FUND IS EASY. RAISING ASSETS IS NOT.
Success raising assets requires: MARKETING PROCESS Experience, Expertise AND Execution.
For new, first-time and smaller managers, especially those with AUM less than $100 million, the need to grow assets quickly and consistently is critical but it is overwhelming, hyper-competitive, complicated, confusing, complex and crowded.
There are currently 18,000+ U.S.-based hedge funds and 4000+ private equity firms in active fundraising and growth of AUM is a constant primary objective for each firm.
The majority of new and smaller managers believe that performance will attract assets. Research shows performance does not attract assets but only brings a degree of attention.
There are literally thousands of smaller venture capital, private equity, private credit and hedge funds that display consistent out-performance on a risk-adjusted, peer, relative or absolute return basis but they struggle to raise assets. In fact, most new, first-time and smaller managers rarely get AUM beyond personal capital along with small investments from family, friends and minor amounts from a few social and professional relationships.
To make matters more difficult, there is an enormous amount of hype, noise, wrong information, myths and fiction about raising assets for new, first-time and small managers.
The failure raising assets is a direct product of poor understanding, implementation and execution of the "correct manager-specific" MARKETING PROCESS.
Speaking plainly, success raising assets depends almost entirely on consistent execution of "THE MARKETING PROCESS".
Let's be clear: "Constantly pitching performance" is NOT marketing and is NOT a process. The truth when it comes to the marketing process: Most new, first-time and small managers don't know what to do and how to consistently execute the "right way".
An important note: Many new and smaller managers have the expectation that "commission-only/performance/transaction/success fee-compensated" third party marketing (3PM) and prime broker capital introduction (Cap Intro) will be sources of marketing and capital raising assistance. However, for managers with less than $100 million AUM, the "marketing and capital raising processes" are “Do-It-Yourself” (D-I-Y) efforts. Research shows 3PM and Cap Intro are not options until AUM reaches the minimum institutional level of $150-$200 million.
While the marketing process is entirely "D-I-Y" for new and small managers, most are often highly-skilled in research, trading or some form of investing but do not posses the knowledge, skills, experience and expertise required to execute the marketing and capital raising (sales) processes at the level required in a hyper-competitive fundraising climate filled with idiosyncratically demanding, highly-skeptical and stringently selective investors. Even managers with experience working in larger firms with significant assets under management struggle to raise assets when starting their own fund/firm.
The marketing process for new, first-time and sub-institutional managers with small AUM is completely different than for larger, more-seasoned, institutional-level funds with sizable AUM. Marketing is now more complex, time-consuming, resource intensive and expensive. The commitment, requirements, complexities, demands, skills and nuances of marketing are numerous, often misunderstood and grossly under-estimated by new and smaller managers. It now takes a data-driven, structured, disciplined, focused and consistently well-executed MARKETING PROCESS along with patience, persistence and sharp interpersonal, presentation, communication and engagement skills for new, first-time and smaller managers to consistently raise, retain and expand AUM.
There are 40,000+ institutional allocators globally and 55,000+ individuals and families of private wealth with assets exceeding $30 million in the U.S. alone. There is simply a huge universe to cover tactically. Moreover, the requirements and demands of institutional investors and private wealth are dynamic, stringent and idiosyncratic. As such, strategically understanding how to engage by knowing who to speak to, when to speak to them, and how to speak to them to build a relationship in order to achieve TRUST and ACTIONABLE CONVICTION is essential. However, most new, first-time and smaller managers do not have full clarity and granular perspective of investors nor an acute grasp of fundraising on a “manager-specific” basis. The lack of information, insight and intelligence into investors and the capital raising climate as it pertains specifically to the manager/fund is basically flying blind and leads to expensive and fatal mistakes. As a result, the vast majority of new, first-time and smaller managers experience chronic struggle and failure raising assets.
The solution: “MARKETING ALPHA”.
Since 2010, Johnson & Company has been the ONLY firm actively dedicated to the unique marketing and fundraising requirements of new, first-time and small alternative asset managers within venture capital, private equity, private credit and hedge funds.
Johnson & Company is equipped with 25+ years experience, expertise and skill marketing alternative assets to provide "MARKETING ALPHA", that:
- Delivers the critical marketing execution and fundraising advisory for sub-institutional asset managers (new, first-time and small managers with AUM less than $200 million) within venture capital, private equity, private credit and hedge funds to expediently, economically and efficiently raise, retain and expand assets.
- Optimizes efficient, economical and expedient execution of the fundraising process by identifying and appropriately engaging the most suitable and appropriate investors on a “manager-specific” basis.
- Installs commitment, focus, structure, discipline, consultative candor and accountability combined with high-integrity independent qualitative and quantitative research to quickly stops wasted time, effort and money as well as prevents mistakes that can be fatal or catastrophic to fundraising.
- Deciphers the "manager-specific" complexities and nuances of raising assets by eliminating the marketing hype, noise, wrong information, myths and fiction to prevent wasting time and making fatal mistakes. A crucial aspect of the process is addressing the strategic, tactical, operational and financial issues of marketing and raising assets on a "manager-specific" basis.
- Catalyzes data-driven execution of the marketing and fundraising processes from information, insight, intelligence and instruction derived from high-integrity independent research.
- Provides "assisted execution" of the "manager-specific" marketing process "step-by-step/day-by-day" at the high-level required to optimally-position, prepare and equip new, first-time and smaller managers to raise, retain and expand AUM consistently, faster, easier and less expensively.
For new, first-time and small managers serious about success raising assets, THE MARKETING PROCESS must be priority #1 and "MARKETING ALPHA IS VITAL".
Invest time to carefully review the resources below. They are instructional and contain immediately actionable guidance about marketing and raising assets.
Finally, if you are a new, first-time or small alternative asset manager, I welcome the opportunity for a candid, no-nonsense conversation about your marketing and fundraising efforts to determine how "MARKETING ALPHA" can help you consistently raise, retain and expand AUM faster, easier and less expensively but most importantly, successfully.
Continued success,
Bryan Johnson
Managing Partner
Interview: Three mistakes that lead to a new, first-time or small managers early death.
An Overview of MARKETING For New, First-Time and Sub-$100 Million AUM Alternative Managers
Close Encounters of the Third (Party) Kind: 3rd Party Marketing & Sub-Institutional Managers
CONTACT:
Bryan K. Johnson
Direct: (512) 786-1569
Email: bryan@Johnsn.com
Testimonial about LHG’s experience with the “MARKETING ALPHA” process, reflects the work, focus, discipline, dedication and commitment by Laurence Yang and LHG Capital Management and is not intended to guarantee any client will achieve the same or similar results; rather, the testimonial represents what is possible. As with any advisory service, results depend on the individual experience, work, focus, discipline, dedication and commitment of the client as well as conditions of the marketplace and elements beyond the control of Johnson & Company, assumption of all risk is based on a client’s own discretion and at potential expense.