Fundraising advice: avoid 'spray and pray' technique

EisnerAmper, a US-based accounting firm has released a new report on capital raising for alternative investment funds, authored by Keith S. Miller...

For managers struggling with fundraising, Miller says having a clear-cut marketing plan based in investor research is critical. "Too many emerging managers make the mistake of adopting a "spray and pray" technique to fundraising. This is the exact opposite of a real marketing strategy because no actual plan exists," he writes. "A more sophisticated approach involves a manager profiling the specific clients or client groups he wants to target to make capital contributions into the fund. This is applicable whether a manager is targeting institutional, high net worth or any other type of investors."

When managers do go into a pitch meeting, Miller says getting out of sales mode is important. "When initially approaching each potential investor, a manager needs to get out of sales mode and first find out what the prospect actually needs. Only then can he align the client's needs with how he can help. A manager who doesn't obey this rule will only be selling his fund to himself during a pitch meeting. A common mistake made by many new managers is to go after anybody with money as a target for the fund without knowing or finding out what exactly that investor is looking for in his portfolio or from his advisor." ...

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