How to Influence and Win Investors – Cool Hacks to Expand your Investor Base Alternative Asset Management Redefined!
Redefine Alternative Asset Management
The key pillars on which this business is built are (a) Investors, (b) Deals & (c) Effective Fund management over the life of the fund. The expertise of the Alternative asset managers lies in managing these three fundamental constituents of the business and his success depends on how well he copes and competes to get these key drivers of the business right. He weaves all his strategies and the various functions around these three fundamental pillars. This central theme and these fundamental drivers are the fuel for any alternative asset manager’s growth engine in his business!
Easily the most important aspect of the business is to have the right long
term investors who believe in your business.
For early stage managers it is often difficult to establish trust with Investors. Fund
allocators across the globe have shown lesser confidence in the alternative
asset class and even less so with a new alt asset manager. Some large
allocators are still not comfortable with mid-market alternative asset
management firms!
This is evident from the fact that family offices or High net-worth individuals take very little exposure to alt investments when compared to the other asset class where the allocation is as high as 90% and alternative assets get to see sometimes investments as low as 10% on the investment portfolios of family offices and high net-worth individuals! However if you see Princeton or Yale their portfolios have allocations for alternative assets at up to staggering 70% to 90%.
There are many reasons to it but the core issue remains the opacity in the operations and the way business is transacted.
On the other hand, what this points to, is a huge potential & opportunity
for alt asset managers. They have this massive pool of capital to exploit and
go after! This promises a bright future and indicates that the industry is
poised to grow at a rapid pace over the next decade. What this also points to
is ample space for growth for early stage managers, despite the competition
from the larger firms. It indicates that there are enough resources for the business to thrive and bloom!
All this drives us to few obvious questions and the answers to them become your cool hacks to expand your investor base!
All this drives us to few obvious questions and the answers to them become your cool hacks to expand your investor base!
What should be done to break this vicious circle of trust?
How does one convinces his LP’s of his ability to take good care of the allocated capital and make him see the ROI’s?
How to pitch so your perceived weakness works for you as your strengths for the investors and turn the tables in your favor?
You need to break this vicious circle of trust. You need to be able to make them comfortable with the facts that you have comprehensive
infrastructure and a thought out strategy to manage his capital for the long
term. You are not just ready to get him the returns; but are planning to build the
business on solid fundamentals. You have the required resources to manage the fund
effectively in real time with transparency.
Small is Beautiful! as a matter of fact, there is a silver lining in being small which you should bring out in the discussions. There is a well-founded belief known to investors in alternative assets – new and smaller funds have outperformed all other types of manager. This is due to the management structure of such firms themselves. The teams at smaller firms are much leaner than their rivals, decisions are faster, and response times to emerging situations are immediate.
To
emphasize “trust” you should build on processes in place, back up your work
with “data stories”. Sell the efficiency of technology, to make your
reporting real time, accurate and transparent. This helps to get the edge over
the larger Managers where “trust” is often more to do with their size and period
of time that they have existed then their systems and processes.
Small is Beautiful! as a matter of fact, there is a silver lining in being small which you should bring out in the discussions. There is a well-founded belief known to investors in alternative assets – new and smaller funds have outperformed all other types of manager. This is due to the management structure of such firms themselves. The teams at smaller firms are much leaner than their rivals, decisions are faster, and response times to emerging situations are immediate.
A strong thought about web strategy has to be the part of the organisation. Researching the web for anything has become our second nature- a way of life! Put together your strong web strategy so that it is inline with the regulatory guidelines for the Alt Asset Managers
Essentially an emerging manager needs to emphasize and get investor mind-share that being a leaner organization, and investing in smart digital
technology is the strategic way. These hacks would set you aside from the rest of the bunch and give you the competitive edge in the market which is getting more and more complex!
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