Fund Managers & the operational struggle to raise capital for their funds

Here at BaseVenture we talk to fund managers regularly about the areas that they struggle with as they go about their daily jobs.  Our platform is targeted at the small to medium-size fund manager, typically with Assets Under Management (AUM) of less than $1B.  These could be hedge funds, private equity funds, real estate funds, and more.

One of the most frequent complaints that we hear about relates to how a fund manager can raise capital.  Attracting and “closing” new investors is the lifeblood of any fund, and it is one of the most consistent activities that fund managers have to practice and master in order to succeed.  In fact, according to an article from DarcMatter, “For new funds, the biggest challenge is getting off the ground and raising capital.”*

There is a lot that a fund manager needs to do in today’s environment to attract new investors to his/her fund.  According to a 2015 Preqin study, the majority of fund managers cited an increase in the level of competition over the previous 12 months.**  Thanks to the easy availability of information on the Internet, and in part as an after effect of the financial crisis, investors are both more informed and anxious as ever about investing money in new funds.  Beyond any potentially strong relationship skills that a fund manager may have, any fund manager looking to attract new investors needs to have a well-articulated market plan, a smart sales strategy, effective marketing materials, and more.

Fund managers that we talk to often don’t mind this part of the job, and in fact several say that attracting new investors gives them their biggest sense of satisfaction.  However, the complaints generally begin when we start to delve into the operational process that the fund manager follows to get a new investor.

Most small to medium-sized fund managers use a hodge podge of tools to “manage” their pipeline of new investor prospects.  These tools range from spreadsheets to keep names and calculate probabilities, to email Inboxes or over-priced CRM solutions to keep notes & contact information, to their own memory to recall where things stand with a given prospect.

Most of these tools are not really connected to each other, and there is a significant amount of re-work that happens each time a new investor prospect is added, or even each time some important fact about an existing investor changes.  This translates to the average fund manager spending a significant amount of time on operational activities that can often become a major time suck, as well as a big source of frustration.

Unfortunately, getting the operational side working well is a major determinant in the overall success of raising capital.  So fund managers literally can’t afford to neglect this important area.

A fund manager that uses BaseVenture’s platform can tackle the operational needs of raising capital much more simply and effectively.  Our fund manager clients maintain their list of investor prospects in the Cloud, where it is safe, secure, and is available to them whenever and wherever they need it.  All of the important information that the fund manager meticulously gathers about their investor prospects during the sales process is added to robust profiles, and is reusable for any business need that the fund manager may have.  The fund manager can make changes anytime on anything from a simple address change to a more sophisticated pipeline probability report, and much more.

One of our most important missions here at BaseVenture is to help give back the gift of time to fund managers, by letting them spend less time worrying about their operations, and more time focused on attracting new capital and driving higher returns for their investors.

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* DarcMatter: “Challenges Hedge Funds Face WHne Raising Capital” May 12, 2015.

** ValueWalk: “Hedge Fund Managers Find Fund Riasing Challenging: Preqin” Aug 27, 2015