Often word of mouth is the best way to get an idea spread through groups of people – especially when most forms of marketing are not allowed. One way to make a name for your hedge fund is through your existing investors who provide a source for potential investor referrals. If your investors are happy with the returns of your fund and are excited about the investment program or the future prospects, they are likely to mention this to their friends at dinner and cocktail parties.
Hedge Fund Annual Meetings
We believe that one way to keep investors excited and involved in the fund is to have an annual meeting with your investors. It is very easy for a manager to send off generic performance statements (the tearsheet) or write a one page synopsis of the fund and the fund’s returns, but it shows another level of commitment if the manager is willing to meet with the investors face to face to discuss the fund and the results. The annual meeting can keep them informed of the fund’s progress (their investment) and it also allows you to discuss the intricacies of the investment program and to answer any of their questions. The annual meeting could be at the manager’s office or a local restraunt and we advise managers to pay for this meeting out of the management fee, although certain funds would be able to cover this cost.
I got this idea when I was reading the book “Fooling Some of the People All of the Time” by David Einhorn. I recommend all hedge fund managers, and start-up hedge fund managers, read this book. Einhorn had an annual meeting to keep the investors abrest of developments and also as a way to keep them involved. The idea is also similar to Berkshire Hathaway’s annual shareholder meetings where investors travel from all over the world to hear Mr. Buffett’s thoughts on Berkshire’s performance and its future.
Other Sources for Investor Referrals
As we’ve noted before, one of the biggest sources of frustration for start-up hedge fund managers is the lack of access to start-up capital. Besides the friends and family approach and the friends of friends approach, start up hedge fund managers should also potentially look to hook up with a good third party marketing firm or ask their broker about capital introduction services.
Other hedge fund marketing ideas:
Please also feel free to contact us if you would like to discuss your situation with a hedge fund attorney.