Global Fund Advisors give a little help to hedge fund start-ups

Lauralouise and Anric Blatt, one of the power-couples of the fund management industry, have decided to fulfil a role that is dearly needed: help startups get over the $100m mark through a coaching programme (see the chance to get a free consultation with them at the bottom of this article).

Indeed, the scary billion-club statistics are a call to arms:

• 88% of AuM is held by 668 One-Billion-Club managers (managers with more than $1bn in Aum),

• 89% of all hedge funds fail to reach $100m,

• more than 2,000 have shut down in the last two years, and

• 93% of small funds fail in the first five years. The competition between small managers has gotten a lot worse of late, they say: 96 cents of every dollar raised in the last five years went to the five-billion+ managers. The other funds, about 12,000 of them, are fighting for the remaining 4 cents.

"That is the fundamental reason why we got into this," says Anric Blatt to Matthias Knab during a recent Opalesque TV interview. "As allocators on the receiving end of wonderfully talented managers who have come to see us to pitch their investment products... and we have seen so many of them just fail. And they're some of the smartest people that we know." The team, who co-head Global Fund Advisors, have first-hand experience, having built their own funds and businesses and having been at the receiving side of investor proposals.

They list the five main reasons why 98% of emerging managers fail to reach $100m in AuM:

1. Barking up the wrong tree: not knowing which business they are really in,

2. Just starting to pitch: neglecting the first 65% of the sale (forget to establish a rapport for example),

3. No disciplined, automated, scalable sales process,

4. Failing to make due diligence an integral part of the sales process ("trust is everything"),

5. ......................

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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.