Hey folks, Got another series of those emails advertising hedge fund contact databases yesterday. At the same time, recently started working with an institutional 3pm guy who takes a cut of commissions... And this begs the question. Assuming money for buying the database isn't a consideration... Is it a good idea to get one, and either email/call every name on ther? Or just add them to my distribution list? How are they going to respond...? Will they give the tearsheet a fair look, or do they view it with hostility as spam? (I personally hate being cold called, but am okay with solicitation emails.). And this doesn't classify as general solicitation, does it? I'm interested in hearing both from managers who've done the cold-calling, and investors who've received. And by the way, I HAVE reached out unsolicited to one FoF with no introduction... Just a comment from a third party that "they might like you.". And it worked out in that case, at least in the sense they called back, and we expect to go forward with due dil later in the year.... So why not repeat that x500?
My experience regarding raising capital from a data base was not positive. Basically, any names on the data base have been hit so many times with requests for capital-- any normal fund isn't even considered. In other words, the names are burned out due to being in the data base. However, if you believe you are different enough to attract interest from jaded data base names, ask the provider for a sample test list you can try prior to spending the coin for the list itself. The list business is very inbred--- most of these names appear on multiple if not dozens of lists.... my opinion, once again, its a waste of time. good luck!
Is it a good idea to get one, and either email/call every name on ther? -------------------------------------------------------------------------------- To build up a foundation of clients it is a smart way to call. However, I have no idea about your list, or the list that is being sold. Keep in mind many of those list are shit. Not worth much. I built my million plus book on the back of the Manufacturing Guides. I only deal with individuals who have a minimum net worth of 5 million and many times I do not take them on as clients. Due to the high risk nature of what I do, I like the net worth to be in the 20s on up. I do not call Public Companies and their CEOS or CFOS or VPs. If it is not the owner of the company, I tend to hang up. CEOS, VPs, and CFOs have zero balls and they hardly make the type of money for high risk investments. Of course the Hedge fund world differs as many will deal with School Teachers now a days. My only advice, if your dealing with REG A, Rule 144 and Accredited investors. Do not play with the lower end of 5 Million. They do not like risk, they are the first to try and sue even after they read risk disclosures and sign documents. 5 million and less remind me of your typical daytrader. Talks a lot of shit but in the end, they are basically broke.
On the cold calling, I think I'm giving up on the idea. Other than the potential SEC issues... I don't think it's a good use of my time or resources. Stay tuned. Generally speaking, I like the concept... especially for us tiny funds. We need attention, and SEC-regulations make it extremely difficult for us to grow organically. I've been at or near the top of various databases, but the number of (quality) leads generated so far hasn't been what I'm looking for. So... paying people a cut of my profits for growing my business? Makes a lot of sense. But I've talked to a lot of people who are clearly posers. In particular, talked to several people who aren't active in the industry (or haven't been for a number of years). I think they just need a job. I had one gentleman with no credible credentials ask me to pay him to fly out, "just to get to know me". I'm working with several people in parallel. The one I'm most excited about, and who adds the greatest value, is with a reputable firm that provides execution/prime and cap intro services. He's speaking specifically to institutionals, and that's a market I have *no* other access into. We already have a few nibbles, but no bites.
Surfer has a good point: Basically, any names on the data base have been hit so many times with requests for capital-as a point: -------------------------------------------------------------------------------------- Cold calling will tell you if you are made for being a serious Private Equity guy and if your cut out for it. 90% of my cold calls are no, not interested and not interested now. You have to learn how to build relationships fast, over the phone and how to over come all the bullshit objections to get to the real objection, which is usually trust. Very few can raise money in the sum of millions and less have the skills to raise hundred of millions. I make on average, 200 calls a day when I'm not dealing with current clients. I spend a good 4 hours on the phone. Of the 200 dials I get about 5 business cards out, 10 on a good day. I have about 100 business cards and letters out at any given time. That is my pipe line. Of that 100, i get about 60 -70 books out...prospectus & Risk disclosure documents. Of that 60-70 I have about 40 conferences and take them through the project. Of the 40 that I "Pitch" I close, usually over the phone (and not in one call, may take a few calls and pitch's ) about 8- 10 guys. I raise about 2.5 million to 5 million a month on those numbers.
You will find 99% of who you talk to are salesmen, themselves. Any real hedge fund investors will come from your network, not 3 party marketers--unless you are institutional level, obviously. Clearly, based on you AUM and info-- there is NO WAY any institution would have interest. Your target needs to be ultra high net worths. Just the infrastructure cost demanded by any institution far exceeds your level right now. Everyone wants a piece of the pie, go out an mingle and befriend billionaires---- great use of resources not to mention a good time. everything else is for the birds, wannabees and salesmen
go out an mingle and befriend billionaires- -------------------------------------------------- Easier said than done Surfer..LOL. I have been in the Private Equity game going on 7 years or so now. I only have one Billionaire client. The majority are between 20 mil and 100 mil. And those 20-100 were a pain in the ass and very hard to close. The Billionaire, well he drills oil wells because he can and he likes to fuck off with money. He was the hardest to get trust going with but once he liked me and flew down to walk on a few projects. He is in very deal we fund. Took me a year or so to close him.
exactly, the HNW clients who like to gamble a bit are the key trust is crucial, even more so than the deal itself--if there is lots of upside potential. well, yeah, actual billionaires can be tough to find. $100 million plus net worths aren't that hard to locate--- gotta join the right clubs and hang out in the right places.... they are there...
surfer, the only clubs I hit up are in IBIZA and Playboy Parties. I have no interest in hanging with that crew. Business and pleasure are separate for me and that has worked well. Besides, the guys that are my clients....they roll a different way, far different than the "Harvard" clubs. They do their own thing. That is why the drill oil wells and a have less than 1% of their net worth in Stocks or the markets. The majority of their net worth is in their Private Companies and other hard assets.