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Capital Raising After Your Hedge Fund Launch

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AUM is the lifeblood of the investment management business and competition for assets is fierce. To grow AUM can be the single most difficult aspect of running a hedge fund business. Most small hedge funds are operated by former portfolio managers, traders or research analysts, who know how to manage money and trade for profit. A true test will be diverting enough time towards marketing activities without sacrificing any investment performance. Raising capital should be a non-stop, full-time process, which requires devoting patience, time and commitment into crafting comprehensive marketing strategies. All too often we see managers feverishly scrambling to get their initial investors in and once they start investing, the capital raising efforts come to a grinding halt. Your time is valuable, spend it wisely. Though it has not been quantified, there is a correlation of reduction in performance relative to the increase in manager activities not directly related to investment decisions. Investors and prospects want you to focus on making money. However, they want to hear from you and not just via getting their statements and returns. How do you balance the time? Managers plan to spend just as much time doing investment related and investor relation activities as they grow their funds and reduce the amount of time spent on capital raising. Managers are just like the rest of us in being of habit: responses show that they spend their time DAILY on that which they are most comfortable with and feel they add value: investing. All other roles they fill are more reactionary in nature and begrudgingly do them as they are forced to address them sporadically as needed. Why not dedicate one hour at the end of the day to investor relation and capital raising activities? Responses say that this takes them out of their comfort zone. Managers are also more than happy to push of the non-investing functions including investor relations and capital raising to someone else; either by hiring staff to do it or finding an outside firm.
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Tower Fund Services (3 years ago)

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