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I was making my way through some marketing training materials last night from Mr. Frank Kern and came across a marketing process which may seem somewhat like common sense, but helps to think about to ensure that you are presenting a complete marketing message to your potential fund investors.  Within the marketing training program Kern suggests you follow this process while moving your prospects through different phases of engaging your firm:

1. Interest and Desire:  Provide a white paper, speech, update your perspective of the markets which catches the attention of your potential investor
2. Trust:  Develop a relationship with the potential investor, build trust by providing client quotes, industry recommendations, and comparison analytics between your fund and others.
3. Proof:  Show proof that your fund has a high degree team, detailed consistent investment processes in place, and an advantage of some type which can be tangibly displayed or confirmed.
4. Sample: Allow the investor to start with a small minimum investment, provide examples of what other investors like them have done in the past, or present case studies on three different types of typical investors that you serve so they can imagine then being in that position.

The descriptions next to each bold word above is less important than the process itself. If you can grab the attention of the investor, build a relationship with them, provide proof of your abilities and performance, and then combine that with a sample you will be several steps ahead of much of your competition.

Tags: Hedge Fund Investor Sources, new Hedge fund investors, investor pipeline development, investor relationship management, developing a pipeline of investors, hedge fund, hedge funds, CTA Fund Marketing, CTA Investors, CTA Fund investors, futures fund investors, marketing a CTA Fund

My background is in marketing and I know one of the big challenges of raising capital for both emerging and medium sized hedge funds is that everyone wants their 3, 15 or 125 checkboxes to be complete. There are so many investment managers competing for capital that investors must limit who they seriously consider and complete expensive due diligence on to those which have top percentile performance, risk management tools, track records and AUM figures. This can be very frustrating and an ongoing challenge for many managers trying to grow their business and assets under management.

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I got this email earlier today from a hedge fund manager:

“It would be interesting for you to post an article on how hedge funds that are doing well in 2009 are not necessarily the ones who will get capital given stricter due diligence requirements. For example, our fund, the XXXX XXXXX Fund was up over 50% through May and is up something in the range of 65% as an estimate through June yet it is still very difficult to raise capital because nobody wants to allocate to smaller funds.”

and a follow up email from this same fund later in the day:

I have come across your page a bunch of times and I figured I would make the suggestion. When you think back to when hedge funds first became popular, having the best of the best portfolio managers manage money for the extremely wealthy was more of a status symbol than anything else. Alternative investments have obviously evolved over time. But the idea was that these investors would take some risk in order to enable their personal portfolio managers to generate outsized returns. People seem to lose sight of the fact that there is still a tremendous amount of talented, brilliant managers out there who have been through many cycles and have the capacity to do extremely in months and years to come. Now is a time when people who take risk will get richer. Yet people are so gun shy that they run the risk of overlooking the best talent and missing opportunities that may, in some cases, only be available to the 200mm or 300mm boutique shops. They lose sight of what the business is about, of what they invested with hedge funds for in the first place. Unfortunately, it has boiled down to investors being more concerned with checking boxes and analysts at institutional investment firms being more concerned with keeping their jobs than truly finding the best talent.

While I don’t agree 100% with the statement above, the manger makes a few good points and I would be interested in more feedback that other managers have about overcoming the “checkbox mentality.” If you have feedback please email me at Richard@hedgefundgroup.org.

Last week I gave a speech entitled, “Top 5 Fund Marketing Best Practices” in Boca Raton at a conference put on by Marcus Evans.

Today we are making the first 25 minutes of the speech available via MP3 Audio File Download. This file may be uploaded to your Ipod, saved to your computer or emailed to others on your team. Please always consult with expert compliance and legal advisors before putting in new marketing strategies or materials into place. To receive the download link for this resource please complete your name and email address below: