REMC’s consulting practice focuses on the launch, growth and/or long-term stability of undercapitalized and emerging hedge fund and private equity investment management firms. We provide bespoke services custom-tailored to the client’s strategy, investment space, current positioning and long-term goals. Areas of expertise include:
· Capital Raising for Investment 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 for investment managers has become extraordinarily challenging. Allocators’ standards for acceptance of managers have become increasingly onerous over the past 15 years. The bar has been raised substantially higher for non-“name brand” managers, particularly for small/medium firms and acutely so for emerging managers. Due diligence processes can extend for multiple quarters or years, with detailed dissection of staffing, backgrounds, investment protocols, sourcing, risk management, compliance, back office procedures and references. Managers must be uniquely prepared with documentation and for meetings to respond to global macro, industry macro, deal/trading critiques and adverse outcome questions.
Heightened investor expectations and risk avoidance have negatively impacted the likelihood of success for undercapitalized and emerging managers, eliminating them from consideration by all but for smaller sized allocators. While this creates a painstakingly slow process to build AUM and graduate to acceptability with larger institutions, the silver lining is that smaller investors’ due diligence processes tend to be more streamlined and managers are more likely to have direct contact with decision makers.
Undercapitalized 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. For both, 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 managers with disappointing AUM’s 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 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 investment 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 must always be consistent with this message. In this regard, a synergistic firm-wide approach 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, provide a meaningful imprimatur and minimize time allocation to fund raising for clients.