Fram’s team has a long track record of working with capital raisers across asset strategies. Since the financial crisis, we know how much more complicated securing investors is, particularly for first time managers or boutiques. Embarking on the journey of raising capital as a first-time manager or boutique firm presents both opportunities and challenges. Success requires a well thought through capita raising strategy which encompasses various critical factors beyond talent and sales processes. We wanted to briefly touch upon some of themes we’ve consistently come across such as timing, track record, investor profiling, marketing materials, and the transition challenges for capital raisers.

Knowing when the right time to raise money for first time managers and boutiques is key. We all know that investors look for a track record of success and consistency in performance before committing capital. Establishing a sufficient track record of delivering returns or demonstrating a compelling investment thesis can significantly enhance fundraising efforts. Of course, these processes can be helped by having a superstar founder, but for many this isn’t an option. The need and temptation to bring onboard an internal capital raiser before track record is established can be an error.

Understanding the investor landscape and targeting the right audience is essential, and time spent on research is time well spent. Managers must carefully identify potential investors, assess their investment preferences and criteria, and determine their accessibility. This includes understanding investor geography and jurisdictional considerations, ensuring access to investors in target markets. This requires enormous candour within the asset manager regarding their attractiveness to the various investor channels.

Effective marketing materials play a vital role in attracting investors and communicating the investment opportunity. Managers should develop comprehensive marketing collateral, including pitch decks, offering memorandums, and investor presentations. Allocating a budget for marketing activities and travel is essential to ensure the creation and dissemination of high-quality materials that resonate with investors. In an ideal world, this will be done in conjunction with your newly appointed capital raiser, but you need to accept that this process will take time and may stop them going to market immediately.

For capital raisers joining a boutique firm or startup can be an attractive prospect. The chance to get in somewhere early, a chance to earn outsized rewards, the chance to have high levels of autonomy. However, transitioning from an established firm can pose significant challenges. Our advice is spend as much times as possible on the selection of the right individual, but also on how to successfully onboard an appointee. Boutiques don’t have RFP teams, they quite often don’t have marketing teams, and so the transition phase can be a real shock for many established industry professionals. CRMs can be underpopulated, poorly managed, or not sufficient for the next phase of growth. Whilst the appeal of no hierarchy can appeal to some, it can be a challenge to others who are used to a more structured environment.  Managers must provide support and resources to help capital raisers navigate these challenges and ensure a smooth transition.

The cardinal sin of many funds is expecting miracles overnight. Hiring an in-house capital raiser can be a game-changing move, but almost invariably takes even the very best time to get up and running. Be very conservative with your projections.

Successfully raising capital as a first-time manager or boutique firm requires a multifaceted approach that considers timing, track record, investor targeting, marketing materials, and transition challenges for capital raisers. By strategically addressing these factors and leveraging resources effectively, managers can enhance their fundraising efforts and position themselves for success in the competitive landscape of institutional asset management.

Fram’s experienced Sales & Marketing Practice is headed by Chloe Tillman. To discuss anything in this article or your hiring needs, please contact Chloe at [email protected] or call 01525 864 372.