Successful Asset Raising: The Value of a Clean and Current Database
To successfully fund-raise, you must have an understanding of two key points. The first-and make no mistake about it-is raising assets for your fund requires a fresh, up-to-date database.
Databases typically come in two states: out-of-date and very out-of-date, and therein lies the conundrum for fund marketers. It is often a frivolous and cavalier exercise to launch an asset-raising campaign using old, inaccurate data, and yet, marketers must run fund-raising campaigns.
During the past 24 months, we’ve seen unprecedented changes in the alternative fund arena. Some prominent investors have laid off as much as a third of their staffs and pretty much all have been forced to consider some sort of staff downsizing. In addition, some investors are no longer allocating to certain asset classes. One of the repercussions is that most in-house databases are out of date; if they were old to begin with, they are now obsolete. To wage a successful campaign, you absolutely have to have fresh and accurate data in order to reach prospective investors with interest in your product.
The second key point is, marketing and selling your fund is a numbers game. Indeed, marketing and selling anything is a numbers game. That is why marketing and sales gurus have boiled down the art of selling to the art of understanding the process through metrics. A typical fund-raising campaign starts with identifying a list of investor targets and canvassing them to set up introductory meetings.
The success metrics are similar to any direct marketing campaign. Theoretically, 1,000 targets will reap 100 responses, which will garner approximately 10 conference calls or introductory meetings, leading eventually to 1 to 2 allocations within a 6 to 9 month period. To some extent, the success rate depends on a plethora of other variables, such as your funds track record, volatility level, the amount of transparency you are willing to offer, the liquidity opportunities for investors, as well the background of the executive team. But by and large, finding new investors is a numbers game. Successfully marketing and selling your fund requires extensive canvassing to find good alternative investor fits. By “fits” I mean investors with mandates that match your funds’ strategies.
Canvassing the market for new alternative investors via e-mail and phone is hard, tedious work. It becomes much easier when you have fresh, accurate investor profiles and an understanding that a marketing campaign is a numbers game.