We provide bespoke services to emerging managers, custom-tailored to the client’s strategy, investment space, current positioning and long-term goals. Areas of expertise include:
Fund raising for emerging managers faces more challenges than any other manager type, but they are by no means insurmountable with the appropriate approach. Our areas of expertise include:
· Capital Raising for Emerging Managers: Target Allocator Sectors, Stand-alone/Joint Presentations
· Firm Raison d'Être: Firm-Wide Conformance
· Marketing Documents: "Layered" Presentations for Graduated Texture and Dialogue Continuance
· Structural & Staffing Considerations: Institutional Standards
· Portfolio Management: Investment Protocols Addressing Trigger Issues
· Administration: In-House versus 3rd Party
Fund raising is at its most challenging for emerging managers. Allocators’ standards for acceptance of emerging managers have become increasingly onerous over the past 15 years, some with expectations that can border on non-economic due to limited fee income.
Heightened investor expectations and risk avoidance have negatively impacted the likelihood of success for smaller and emerging managers, eliminating them from consideration by over 95% of allocators. No longer do investors “take a flyer” based upon qualitative observations and limited management background of the principals. For emerging managers, their size dooms them to chasing an excessive number of small bite-size allocators, forcing a disproportionate time allocation to marketing and straining back office capabilities. As with established managers, diligence processes can extend for multiple quarters, with detailed dissection of the principals’ direct experience sourcing and managing investments (and, in the case of emerging private equity managers, deal specific references, e.g. CEO’s, CFO’s etc.), staffing, investment/compliance protocols, risk management and references.
Heightened investor expectations and risk avoidance have negatively impacted the likelihood of success for emerging managers, eliminating them from consideration by over 95% of allocators. As a consequence, their size dooms them to chasing an excessive number of small bite-size allocators, forcing a disproportionate time allocation to marketing and straining back office capabilities.
Emerging managers face size and organizational scale bias, resulting in a frustrating cycle of struggling to grow AUM and resolve these issues. Most emerging managers have limited experience and resources for capital raising, managing entire firms or overall portfolio management. This exposes principals to significant challenges in achieving reasonable economics and corresponding growth pains, as a low fee base impacts personnel and structural buildout. The outcome is a reinforcement of investor biases and creating conflicts of interest for principals between raising capital to end this frustrating cycle and that by doing so the distraction may impact portfolio performance.
Most emerging managers struggling to raise capital assign blame to lack of access to the right relationships within the investor space. This perception is largely inaccurate and fuels disappointing outcomes with marketers (both in-house and third party). Successful capital raising for emerging managers is certainly aided by relationships and reputation. However, these characteristics merely open the door for a look at a manager’s deck and perhaps a phone call – nothing more. If the message isn’t presented succinctly in a form that addresses investors’ priorities, even the very best of relationships will fall flat.
REMC practices a holistic view to fund raising for emerging managers. Firms with skilled managers that are struggling to achieve its full potential frequently require refinement of their approach in one or more of our practice areas prior to an enhanced capital raising campaign. This is because there’s good reason why otherwise qualified managers fail to win their fair share of commitments, and that explanation invariably circles back to allocators’ expectations regarding the firm’s organizational characteristics and investor communications buttressing therewith.
We believe that successful firms understand their “raison d’être,” or identity, and practice this through their strategy, structure and marketing approach. REMC views all areas of a firm as interconnected to its identity, and its communications with investors always consistent with this message. In this regard, a synergistic whole best positions the manager for optimizing its potential for allocations.
Once functionality and messaging are in alignment, the process of accelerated capital raising can engage. REMC can assist in identifying appropriate target allocator spaces, specific investors within such spaces, provide introductions and participate in the marketing process. Mr. Rubin’s background as the founder and portfolio manager of a long-time successful firm uniquely positions him to assist in refining deficient fundamental matters. Critically, and unlike other capital raisers, he is highly qualified to present strategies at a “manager level” of competence and provide a meaningful imprimatur on behalf of clients.