Capital Raising For Emerging Managers. By Richard C. Wilson

Transcription

1 Capital Raising For Emerging Managers By Richard C. Wilson

2 Disclaimer & Limitations Please do not use any advice within this or any other presentation without first consulting your compliance officer or legal counsel. 2

3 Capital Raising Perspective Years of experience 2. Raised capital for $10M hedge fund, to $20B+ asset managers, & currently working on a $1.5B family mandate 3. Heavy in third party marketing/capital raising past for fund managers, currently hands-on in merchant banking and investment banking as well. 4. Large family office focus, single family offices, $1B+ ultra-wealthy families 5. Consistent failures upfront, limited resources, (Oregon), non-ivy league entry. Challenges

4 The Industry Today 1. Hedge Funds 1. $2.2 trillion in AUM* 2. Fund of Funds: $439.8 billion in AUM* 3. In recent years, the number of new hedge funds have declined from a peak in 2005 when 2,073 launched. 1,060 launched in 2013.** 2. Private Equity 1. Emergence of Fundless Sponsors 2. $3 trillion in AUM 3. Real Estate 1. Coming back from housing bubble and crash 2. Real estate fund managers managed $811 billion in 2012, not including family offices, individual owners, and other traditional real estate investors. *** *BarclayHedge, LTD 2014 Hedge Fund Money under Management **HFR Market Microstructure Hedge Fund Industry Report - Q *** Pensions and Investments 2012 Annual Survey

5 Bad News No magic bullet If you want to have what others don t you must do what other s won t. Capital raising takes planning, hard work, longterm strategy, and time. That is also the good news. I hated every minute of training, but I said, Don t quit. Suffer now and live the rest of your life as a champion. Muhammad Ali

6 Part 1: Capital Raising Basics

7 Fundamentals of Capital Raising 1) Meet in person as often as possible. Jeffrey Gitomer lesson life is unfair and that is great news to those with friends. It is also said that in 2 years you will be the result of the 5 closest friends and business friends around you. What 2-3 key investor friends would push both your personal development and capital raising to the next level? 2) Most marketers and capital raisers give up after 2-4 attempts at reaching or selling an investor. Most investments are made after at least 9-12 follow up attempts. Robert Cialdini s work on influence and persuasion shows that after 5-7 attempts you become familiar and more influential. Interesting that psychology shows we can only hold 5-9 pieces of information at a time, could be that we have to form an overall opinion after the first 5-9 touches because we can t store every individual time that we have engaged with that person? 3) Constant improvement Constantly pushing to the next level of evolution within your marketing materials, marketing knowledge, CRM system, your authority status, and connections.

8 Multi-Modal Capital Raising Definition: Capital raising that leverages the combined effectiveness of , web, phone, and traditional mail-based avenues to maximize the impact on the potential investor. To execute this effectively requires: Template s to be sent out immediately before phone calls Educational folders with valuable white papers, studies, surveys, etc. Trained professionals who can reach out via the phone to investors a day A CRM system which tracks the # and timing of touches Bulk purchasing of mailing materials, return labels, business cards, and printed promotional materials Goal: Create a highly documented, repeatable system that can be duplicated, replicated, and followed. The system is the asset, not the marketer

9 Capital Raising Trifecta 1. Components 1. Writing: Whitepapers, reports, surveys, interview transcripts, Books, Columns 2. Speaking/Video: Panels, whiteboard videos, recorded webinars, full day workshops 3. Proactive Selling: Foundation of Authority, Credibility, Thought Leader, Niche Focus, Advisor Positioning 2. Who has the time?

10 Capital Raising Basics Checklist PowerPoint Pitch Book (20-40 pages) Single One Pager Promotional Piece 1 Page Case Studies of various investors within your fund (3-5) 10+ FAQ Pages with complete research, diagrams, charts, disclosures, sign-off by compliance, etc. Educational Marketing Folder. Marketing materials on one side and whitepapers and educational pieces written by your team or others (Arthur Bell, etc.) include inside. Master DDQ: Should be at least 40 pages long with complete, reviewed, 5 th draft answers for each question including charts, pie graphs, diagrams, etc. It can be tempting to blow through these and check it as done. That is a mistake. One Page Marketing Plan: Top 5 priorities & Top 1 in 5; investor channel focus; daily goals and schedule; strategic initiatives; monthly, quarterly and annual goals Database Updates: Important to update all databases with your performance as some investors will rely on these to learn more after a phone conversation. I recommend completing your data within at least the HedgeFund.net, HedgeFundResearch, EurekaHedge, HedgeCo, and CogentHedge databases. May want to outsource this to maximize your with investor time

11 Blocking & Tackling 1. Update your CRM Daily 2. Tell Stories/Pictures (78% statistic) 3. Leverage Direct Mail, , and Phone Calls Face-to-Face 1 st Name Basis Relationships 5. Don t Like the Harvest? Talk to the Farmer. Wood First.

12 Doctor Approach Laser Focus, Niche Expert 60% Questions Develop Your Authority Based on everything you have told me Influenceable to Influence (Covey)

13 Capital Raising Productivity No matter how much you prioritize it is easy to be reactive while raising capital. Structure your day so that you can maximize productivity: Protect Your Attention: Limit interruptions Do not check your more than 4 times a day. Tim Ferris noted that multi-tasking lowers your IQ more than smoking pot. Do not work on an educational marketing piece or Master DDQ document while also talking on the phone, checking , etc. You will miss connections, details, and opportunities. Direct Your Attention: Top 5 and Top 1 in 5 Daily ritual list for structuring your workday CRM follow up system in place for top priority potential investors Associate and invest time with professionals or investors you want to become more like yourself

14 Capital Raising Feedback & Monitoring Edward Demming: What gets measured gets improved If you can t write a system or process of what is happening you don t know what is going on. 3 Critical Numbers to Track for Capital Raising 1) Measure daily actions that are key to raising capital for your fund (40 Phone Calls & s a Day) 2) Measure due diligence phone calls or on-site visits completed in a month (Mid-Stage Result) 3) Measure assets raised and capital invested (End Result) Note on Role of CRM Sales Reporting: Forcing monthly and quarterly prioritizing, allows you to analyze responses and warm leads between channels of investors, provides tangible evidence of your actions taken to fund principals or stakeholders who are eager to see the $ s come in from new investors

15 More Capital Raising Mistakes 1. Out of the gates 3 month capital raising goal (4-14 months realistic sales cycle) 2. If you build the track record they will come. (They will most likely not come) 3. Not dedicating enough personnel or funds to capital raising resources 4. Speaking at conferences full of competitors instead of investors 5. Under-estimating the power of real business friend relationships with potential investors or institutional consultants 6. Lack of marketing training: a little can go a long ways, even 2-3 days/year can be enough in addition to training via reading 7. Thinking they don t have time for educational marketing or authority building work 8. Writing off PR completely hedge funds can t do that (but they do) 9. Boring run of the mill USP (or none at all) ( Our portfolio is uncorrelated with the broader markets, our team is experienced, and we actually may do best in down markets it sounds all the same to investors)

16 Speed of Implementation Definition: The focus on instantly applying new ideas, lessons, methods, and tools to gain real life feedback as fast as possible. Benefits: Leapfrog those waiting to conduct more research, stuck in compliance approvals, bogged down in bureaucracy, stopped in their tracks by politics, or lack of hunger for growth. Applied to marketing it means you move up the learning curve 3x faster than your competition and waste less money while doing so Conference: 10 speakers all with businesses of $5M only 1 piece of advice in common

17 Speed of Implementation A B CDT (Huge Progress) Example #1: White paper RIA Network Partnership Educational Resources for RIA Network $500k/week in AUM Example #2: Hedge Fund Blog Book CHP Designation Wiley Book CHP Expanded Hedge Fund Marketing Materials.com + Hedge Fund Marketing Mechanics

18 How to Run Circles Around the Competition If you are not pissing someone off by lunch each day you aren t doing very much. Dan Kennedy How to Apply Speed of Implementation To Your Marketing 1. 4 Tangible Projects / Day 28 Projects/Week 112/month 1,000 strategic projects a year. These could be white papers, new website pages, FAQ documents, Master DDQ pages, speeches, newsletter articles, etc. 2. Invest 20% of your time in reading, completing training, being mentored and implement a new idea or marketing strategy every week 3. Runs mall tests and pilot studies to gauge reactions instead of asking others for opinions 4. Define THE Big Hairy Audacious Goal (BHAG) that would set yourself or your fund (or both) ahead of the competition and work backwards breaking it up into 5-7 projects 5. Keep single page laminated page of what you need to be doing to raise more capital in front of you at all times. Desk, Kitchen, Bathroom Brainwash yourself 6. Create a best of MP3 of marketing and business principles or summaries you record of your one pager mentioned above, listen to this every day for minutes while working out, commuting, eating lunch, etc.

19 Capital Raising FAQ 1. How Do I Raise Capital When I don t have a team? 2. How long does it take to raise the first $10M or $30M? 3. How should I compensate internal capital raisers? 4. What does it cost to launch a fund and create marketing materials? 5. When should I start raising capital?

20 Working Together to Raise Capital 1. Investor Databases (6 Free Updates for Packages Purchased This Week): 2. $1,000/month Advisory Board Positions (Includes access to investor databases, all live events, training programs for your entire team, etc.) 3. Permanent Marketing Director/Board Member Equity: Our team is looking for 2-4 funds where we take % equity in exchange for permanent marketing and capital raising advisory assistance and access to all of our capital raising training, events, investor databases, and family office resources. Interested? me directly at about working together.

21 Questions & Follow Up Richard C. Wilson CEO/Founder Family Offices Group Portland, Oregon New York Singapore London United Airlines 1 Million+ Miles Sao Paulo, Brazil