Raising Capital From Hedge Funds

Raising Capital from Hedge Fund Managers | Tips

One of the top 5 questions I get via email now is “Can you help us raise capital from hedge fund managers for our _________.” I have received inquiries asking for help raising capital for patent portfolios, real estate, land development, new hedge funds, software products, nanotechnology, wind farms and even a small airline company.

Why is this happening? I believe it is because banks are drying up as a source of capital, hedge funds are being seen in the news more and more each day and HedgeFundBlogger.com has recently gained enough traffic to one of the top 3 sources of hedge fund information online.

I will write more on this topic in the future but for now here are my top 3 tips for those looking to raise capital from hedge funds:

1. Don’t start trying unless you are going to keep at it for at least 18-24 months. Anything less will be a waste of time, 80% of transactions are done based on trust of the management team and product and that takes time.
2. Kiss a lot of screened frogs. Buy the $2k database or directory of managers, screen for those which you could meet with locally, those you have connections with or those which specifically invest within some related area to the investment you are pitching. Thousands of people have emailed me looking for a free database or directory, there are free lists of hedge funds which you can see on my site here, here and here, but to update contact details, organize these lists and keep track of each funds investment mandate is a large task. You get what you pay for you and if you are running a business time is money - $2k is not much to spend if this is an important initiative for your fund. Here are some databases which I have used and point to often. Here is my article on choosing a hedge fund database.
3. Think like a hedge fund. Before you spend 100 hours trying to sell hedge funds on your investment read 3-4 books on the industry or download my free e-book on hedge funds. You need to think somewhat like a hedge fund to even catch their attention. How liquid would an investment in your firm be? How volatile are the potential returns or valuation of the investment? What risks are involved and how could those be mitigated using other offsetting investments or insurance policies? It will pay dividends if you first invest your own time in learning who you are trying to sell to and it makes the whole process more efficient from both parties perspectives.

Related to Raising Capital from Hedge Funds:

• Hedge Fund & Fund of Hedge Fund Databases
• Hedge Fund Tracker Tool
• Chartered Hedge Fund Associate (CHA)
• Marketing & Sales Tips
• Careers & Employment Guide

Tags: Raising Capital from Hedge Funds, Fundraising from Hedge Funds, Raising Money from Hedge Fund Managers, Getting Capital from Hedge Fund Managers, Hedge Fund Capital

Last 5 posts by Richard C. Wilson

• Hedge Fund Backers | A List of Capital Sources for Hedge Funds - December 29th, 2008
• Bernard Madoff Hedge Fund Manager Notes - December 28th, 2008
• Understanding Hedge Funds | Video Definition - December 28th, 2008
• Hedge Fund Ethics | A New Code - December 24th, 2008
• What is a Family Office? | Wealth Management - December 22nd, 2008