Marketing Your Hedge Fund – Communication Primer

January 6th, 2010
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Contributed by: Quoin Partners
When emerging hedge fund managers consider the steps involved with marketing their fund to prospective investors many items cross their minds: type of investors to target, relationships to be leveraged, marketing materials design, presentation structure/format, relationship management, sourcing strategy, investor requirements, and so on. All of these considerations require a concentrated, coordinated effort involving managers and their advisors alike…countless hours are inevitably spent creating materials, running statistical performance calculations, sourcing investors, following-up, and so on.

As an emerging hedge fund manager, a phenomenal amount of intellectual capacity is put forth to convey your strategy, team, and process on paper…but how much consideration is giving to how to communicate what it is you are trying to do? I am willing to bet that a mere fraction of the time that is spent on building the marketing materials is actually spent on verbal communication strategy to prospective investors. A verbal exchange between a manager and a prospect typically starts with fund manager immediately launching into an overview of the firm’s historical returns in the oft misguided hope that this information will instantly resonate and the wallet will be immediately opened on the spot. Every startup fund manager should honestly ask themselves: How often is this the case? Now turn around and ask yourself, what percentage of my conversations with prospects have stalled or reached a plateau that I can’t seem to get beyond? Compare the two answers…chances are that it has to do with how you verbally presented your fund…in other words, communications skills. Let’s start with some basic facts about any audience, let alone prospective investors: 1) No one wants to feel stupid; 2) Confidence, articulateness, and organization inspires trust; 3) If the audience cannot sense a connection at some level they are lost; and 4) Listening is the greatest skill of all.

As an emerging hedge fund manager and entrepreneur, you must bathe yourself in general business best practices and brush up on or add skill sets that you previously did not have. Chances are that you ‘grew up’ on a trading floor and having worked on several trading floors myself, often times communication is no more than a series of barks, grunts, and quickened hand signals. Anyone who has sat next to a trader on a desk to have a conversation quickly comes to understand that they can only expect one to two sentence answers, mid-sentence conversation gaps to answer phones or field an IM, and in some cases the speaker literally getting up and walking away altogether.

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