Here are some key quotes from my latest podcast with Evan Katz, Managing Director at Crawford Ventures, discussing how to raise investor capital:

“What Crawford ventures does principally in the alternative investment space – hedge funds, private equity funds, venture capital funds – we help build them, raise a lot of investor capital for them, and help them with whatever operational, compliance, legal regulatory needs they might have.”

“I love the industry. Some of the brightest people on Wall Street are in the hedge fund and alternative investment space.”

“Rewarding days for a fundraiser and a fund builder are the days that investors make the huge allocation, whatever the amount is, or could be.  Most of our investors typically do about $10 to $100 million per investor per fund.  Some will do $100 to $250 million per investor per fund.”

“One of the many insane parts of COVID is that after the first couple of months . . . we had a situation where instead of only being able to meet with investors quarterly, or once or twice a year . . . you’d be on a Zoom in a couple of days having a. . . face-to-face meeting with you and your team and the investors.”

“Here we are a year later where a lot of allocators have written some very big checks to managers they’ve never met in person. Yes, they may do more due diligence, and they probably should, and so forth and so on.”

“Once COVID is completely over . . . everyone will be back doing things face to face. And I don’t think managers are going to get quarter billion dollar checks having never met an allocator. But the notion of Zoom and technology being able to expedite thing is going to be tremendous.”

“The truth is that investors get hundreds or thousands of pitches every single year, most of them.  So the question is, if they get an email or a call from someone they don’t even know, will they return it? Probably not.”

“If you’re truly an emerging manager starting out, and you don’t know already hundreds of investors on a first name basis for more than a decade, it’s going to be extremely challenging [to raise capital].”

“if you invest in an emerging manager that something [bad] happens, you get blamed.  You’re out of a job.  Whereas if you invest in one of the huge managers who’s down 30% one year, well, you invested in so and so and so and so and so was everybody else.”

“The first thing is make sure you hire close, if not full time, the best fundraiser that money can buy. And a lot of emerging managers try to outsource everything. They outsource the CFO, they outsource trading, they outsource fundraising, they outsource everything. And then they are surprised when they don’t get the allocations.”

“The most important part of sales is fishing in the right pond. And that’s critical. And if you have that match of your fundraiser with the investors you’re trying to get in front of and pitch, you will raise massively more capital in massively less time.”

“A lot of [emerging managers] end up in this trap where they don’t want to give up 1% of equity in their firm.  They want to be the sole owner, 100%.  So they’ll go spend the next 10-20 years, maybe their entire career owning 100% of a $20 million fund, instead of 70, 80, 85% of a billion dollar fund. And it makes absolutely no sense.”

“Founders’ class makes absolutely positively no sense. And every manager is wrong for doing it. And every lawyer is wrong for setting it up and every accountant is wrong for suggesting it.”

“For those who can step up, just [internet search for] Hedge Funds Care or Helping For Children. And if you can make a contribution, the vetting process is extensive. We really give great money to great organizations that do tremendous work fighting child abuse.”