Raising money - what am I doing wrong?

Discussion in 'Professional Trading' started by xtrhvydty, Aug 29, 2008.

  1. I made 18% thru April (64% annualized, sharpe 3.3, file att'd). Then I had a financial emergency and had to clean out my trading acct. I've been trading four years and am fluent with options spreads and futures. 2007 I worked full time while in 2006 a similar thing happened whereas I made 48% before I had to deplete funds.

    I figured it's worth a try. After all, people give money to people not causes. So I proposed my deal to accredited investors with over $1MM net worth. A lot listened for over an hour but no deal. I also solicited hedge funds. I was hoping they might want to recruit some raw talent. Still no cigar. So I'm thinking either I'm a lousy salesman or I'm way too green.

    I'm not interested in taking money from friends/family, just accredited investors or those familiar with the financial industry. It's a hairy legal gig otherwise (see thread "How to start an LLC...").

    It seems crazy that I can make over 50% a year and can't allocate any funds from anyone on the planet.

    Any suggestions?

    thx to all
     
  2. You are ignoring the fact that large investors know that what works with $20,000 doesn't work with $1 million and up.
     
  3. They are seeing through your lack of personal finance management. You're selling from a poor position, not a position of strength, they can smell the desperation.
     
  4. Contacting the right people is crucial. In order to get those 10 or 20 you must sell yourself 5000 times....get the picture.....there are as many accredited investors who gamble on red as there are those that dont...piture yourself as the red...and hit the pavement....peace
     
  5. nkhoi

    nkhoi Moderator

    It's like trying to hire a bank clerk but that person can't balance his/her own checkbook.
     
  6. rwk

    rwk

    All the responses so far have been excellent. Your $20k track record is too small and too short to be persuasive. I had a 108% return on $50k over one year and was unable to attract any investors, though I readily admit that I am probably the world's most inept salesman. Getting the first couple investors is the hardest part, because nobody wants to be first. I might also add that it is illegal to pitch investors unless you are licensed.

    You might look into prop trading.
     
  7. EC ,I knew you were a bucket shop broker in the past. But now its leaking out.

    haha...numbers game baby!!! Dial and smile.
     
  8. That's probably the #1 nugget of wisdom so far. It's the same when you startup any business that is asking for tens of thousands of dollars based on "trust."

    Materials, preperation, sales skills, etc all help a great deal but won't change the above fact. There's really only two ways to deal with it:

    1. Get used to rejection and call on the proverbial 5000 customers to get 10. It really is a numbers game.
    2. Get friends and family for your first clients.

    #2 is much quicker, to be blunt. I can understand keeping family out of it, but certainly ask your friends for business. Every new business has to. You'll do business with friends immediately anyway, as every new client (especially at first) will become your friend pretty quickly (at least that's what you'll want.) If you don't have confidence that you'll succeed with friend's money, then keep plugging your own funds until you are.
     
  9. Many people started EXACTLY like that... managing friends & family money before taking on professional investors. Do you think any experienced 3rd party investor would choose you - with zero experience even running your families' money - out of a pool of 10,000 CTAs and professional money managers with years of track records of managing millions of dollars professionally? What's your edge as a money manager (not as a trader) against them? Nothing. You have no back office, you have no compliance officers, you have no legal team.

    Start collecting $5k from everybody you know and build a track record. Once you double your relatives money, mouth to mouth propaganda will work its magic over the next five years and before you know you will be managing millions. Then - maybe - you can employ staff and start soliciting institutions and professional investors.
     
  10. Smile and dial actually...

    but anyways..

    Sell baby...I would say it's almost as hard as trading...some would argue that it's harder, and some would argue the opposite...

    either way..you need to set yourself up as a real entity, and hire a sales guy...someone who believes in your product and believes he can sell it...without that, you will have to do it on your own..


     
    #10     Aug 29, 2008