Wed, Mar 21, 2018
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
New Managers September 2017

MARKETING CHALLENGE: Diane Harrison: A Practicum for AUM, Michael H. Greenstein: Your story is the key


There's no denying that one of the biggest challenges small managers face is raising capital. To become large enough to turn a profit and expand is a common migraine that keeps emerging managers up at night. Forget fretting over last quarter's performance: most of these managers obsess over not being able to add enough LPs to their fund before they run out of cash.

A July article on the CAIA website AllAboutAlpha, Hedge Fund Gigantism is Not Necessary, offers solace for these smaller fund managers, loosely defined as those at or under $500m. A joint survey by the Alternative Investment Management Association and GPP, the financial services firm formerly known as Global Prime Partners,states that this segment of the industrynumbers 2,052 participants,accounting for 6% of the total industry AUM. A notable glimmer of hope from this study for these smaller players was the fact that the average break-even point for small funds is achievable for many, at around $86m. And for some, with certain strategies such as a quantitative focus, that figure can drop under $50m.

Where will the cash come from?

So the good news is small managers need less to make it. But they still need to secure enough funding north of $50M to consider their business viable for the long term. Beyond the obvious?putting in their own money, garnering as much as possible from family and close friends with belief in the process?where is the rest going to come from?

Not to sound overly pessimistic, but perhaps beginning with where not to look for money is a good starting point. Small managers cannot plan to rely on institutional investors falling in love with their strategy and jumping on board, even if they have prior experience as a portfolio manager managing hundreds of millions of their dollars.

Also, these managers shouldn't waste time talking with third-party marketers, who gush over the smart approach and claim they can raise that initial $100mlic......................

To view our full article please login

This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.
New Managers
New Managers
New Managers

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. John Paulson, once the industry's largest hedge fund, to return some investors' money[more]

    Komfie Manalo, Opalesque Asia: John Paulson is reported to be retuning some of his investors' money as a number of his hedge funds continue to suffer setbacks, reports

  2. DoubleLine's Gundlach sees U.S. 10-year Treasury yield rising, weighing on stocks[more]

    From Reuters/ Jeffrey Gundlach, the chief executive of DoubleLine Capital and known on Wall Street as the "Bond King," said on Tuesday the yield on the U.S. 10-year Treasury note will likely move higher and pressure riskier assets including equities and junk bonds. Gundlach, on an

  3. SEC charges Theranos CEO Holmes with fraud[more]

    Bailey McCann, Opalesque New York: The SEC has charged Elizabeth Holmes, founder and CEO of Theranos and its former President Ramesh "Sunny" Balwani with raising more than $700 million from investors through an elaborate, years-long fraud in which they exaggerated or made false statements about t

  4. Institutional Investors - Overdrawn pension fund scores gains[more]

    From Investments in big banks, pawn shops and rolling papers helped boost public safety workers' underfunded pensions this past calendar years, according to newly released figures. After recording middling returns in recent years, the Police & Fire Pension Fund (P&F) notched

  5. Hot hedge fund loses 21% after bet on volatility goes wrong[more]

    From In December, Shahraab Ahmad shared with his hedge fund clients the principle that helped him trounce peers for two turbulent decades: steer clear of the crowd. He'd turned $50 million into an operation with more than $700 million over three years and delivered market-beating retu