Raising capital to launch your hedge fund?
“Hedge funds launch with monies from a variety of investors such the personal funds of the general partners, friends and family, and key investor backing, said Russ Alan Prince in Forbes.
“Over the next two years, general partners will rely heavily on investments from personal and professional networks. Approximately seven of ten general partners plan to seek funds from business associates, and a similar percentage expects to turn to friends and family for investment capital.”
Mr. Prince conducted a survey of 188 general partners at startup hedge funds in early 2015. Hedge funds who participated in the survey managed, on avearge, approximately $63 million.
“Considering the focus is on leveraging professional/personal networks to raise capital, it is telling that only about one in five of them are employing a systematic process to identify and leverage these relationships.” The more common approach is less the application of a regimented goal-driven methodology and more about being opportunistic.”
Nearly two in five general partners are seeking more monies from family offices, Prince said. “The usual complication is proactively accessing these boutique money management organizations, as the family office universe, while growing by leaps and bounds, is often intentionally opaque.”
“Most fund managers are not immediately planning to seek funds from investment professionals or institutional sources,” said Mr. Prince. Start up firmscorrectly intuit that pension funds, endowments and foundations are unlikely to fund early stage funds.
The following three firms (not an endorsement) seek to provide private investors a democratic way to discover, review, and invest in alternative investments and private equity opportunities.
Artivest, a financial technology firm, provides access to vetted private equity funds and hedge funds at typically lower investment minimums, to private investors, advisors, and fund managers.
GlobalGroupFund specializes in real estate crowdfunding. According to their website, GlobalGroupFund “helps developers (1) raise nontraditional capital for acquisition, rehab or syndications, (2) source profitable and socially beneficial development projects through the crowd, and (3) increase profits via vigilante marketing, and native branding.”
ViaFolio, a product of FOLIOfn Investments, provides investors a platform to review and invest in private placements, hedge funds, and private real estate offering from their Folio account.
Alternative asset managers should also consider how marketing (not sales) efforts may impact capital raise. Inbound marketing seeks to attract and inform via remarkable content.
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