Whether you’re a hedge fund or an asset manager, raising capital and attracting clients is usually priority no. 1, particularly for newly launched funds. Sometimes, how a firm manages the fundraising process can be as important as the quality of the “product” being offered. According to wealth expert Russ Alan Prince, only about one in five startup hedge funds are employing a systematic process to identify and leverage these relationships.
Considering the importance of fundraising, having an organized and efficient approach may be a make-or-break success factor for funds. And as with most business processes, especially those with as many moving parts and data elements as raising capital, technology can help organize, guide, and increase success rates.
One technology to consider might be Investor Relationship Management (IRM) systems, which have evolved to be a key factor of success in raising and retaining client assets. With streamlined IRM, everyone involved in the sales, relationship management, and client servicing processes can share information and collaborate to strengthen prospects and client relationships.
The relationship between investor and fund is oftentimes quite delicate, especially as many relationships evolve from personal connections and referrals. New funds in particular can’t afford to lose any major capital opportunities because of bungled outreach, crossed wires or lack of understanding of a potential investor’s preferences. The ability to profile investors – who they are related to and what type of investments they prefer – is fundamental to building great relationships. As such, funds need robust technology to manage these relationships successfully.
Using a generic system to manage this process would be as inefficient as reverting back to notecards. A fully featured relationship management tool increases a firm’s chance of success in growing positive relationships and complying with regulations.
Here are three main ways the right technology can help your growing hedge fund:
1. Enabling an evolution of your investor base. While raising capital for a new fund, you’ll find investors want to see a three-year track record before agreeing to invest. Through an industry specific CRM, it’s easy to track your investment record and show a history of the investor relationships you maintained over that time.
2. Providing speed and efficiency. Because an IRM is built around selling, monitoring the performance of your sales team will enable your fund to set realistic goals. Fundraising essentially becomes an extension of sales and operates more efficiently because of it.
3. Plan smarter fundraising trips. Traveling? IRMs can help organize your fundraising trips. Wherever you plan to travel, an IRM system can locate other firms in your destination city so you can optimize your time with potential investors.
So why invest in technology? Given most hedge funds fail, newly launched funds need to optimize their chances of success. Technology plays a critical role in a fund’s growth trajectory and could prove to be the differentiating factor between funds that succeed and funds with short lifespans.
As originally published on TABBForum: http://tabbforum.com/opinions/3-ways-the-right-technology-can-help-raise-assets