Capital raising is always a hot topic and many fund managers are struggling in this area. Jeb Altonaga in Sydney has recently posted a few videos talking about some of these issues. Hedge Funds Club boss Stefan Nilsson checked in with him to find out more. Jeb Altonaga is the COO and Head of Distribution for Sandon Capital in Sydney and the Founder of Clearglass Capital Partners. Previously he was COO and Partner at Pinyin Capital Management in Hong Kong as well as Northern Trust’s Head of Hedge Fund Services in Asia. He started his career at Citi and his career has also included stints at Bank of America and Citadel.
You’ve recently created a few great short videos around capital raising for funds. What made you do this?
I found that my journey was met with a lot of trial and error. I wish I had additional resources that helped me along the way. There were a few, however, it was basically a short infrequent call with industry colleagues or very high-level guides, etc. as I stumbled through the process and was miraculously getting meetings with LPs. Allocators were indicating their preferences to receive short videos (10-15 minutes of the pitch) to assess the strategy, get a feeling of the personalities and make a decision to commit to the 1–1.5-hour meetings. It gave me the idea to run a series of videos that focus on the lessons learned. It could be a resource I couldn’t find on this capital raising journey. Unfortunately, I haven’t been consistent but I am more committed now to keep it running than before. I also drew inspiration from Henri Arslanian’s weekly Crypto Capsules. Those have provided tremendous insight into blockchain and cryptocurrencies in great summaries. I am hoping to develop something similar aimed at raising capital, particularly to the boutique firms that do not get the full service of prime brokerage teams and the attention of their cap intro professionals.
Why do you think that many emerging fund managers treat marketing and capital raising as a non-strategic activity?
In my opinion and experience, it seems there are two main drivers. The first, eager new portfolio managers run around the world getting commitments for a fund launch. They focus all their time and energy on a seeder or anchor investors to go along with their own capital commitments at launch. Then, habits set in and the focus on a track record begins, leaving behind the initial relationships not consummated during that starting phase process. Then as the demands of running a business, being the CIO, PM spread their time too thin, there is absolutely nothing left timewise to market. The time and commitment it takes to raise money go beyond their ability to commit to what it takes for success. The second and similar issue for those that do not land a seeder or anchor becomes a budget issue. The CIO/founder again focuses on their track record, running the business and the cap raise gets put on a back burner or the good old spray-and-pray method that yields little benefit.
What are the biggest marketing mistakes you are seeing funds doing at the moment? Generally, boutique, smaller managers have no real marketing strategy. I’ve seen too many examples where they are sending the same marketing message across various allocation channels. There is no customisation or thought into what problem they, the manager, are trying to solve for the firms in those lanes. The RIA, family office, multi-family office, private banks, funds of funds, endowments, pensions, foundations, those that will anchor or seed, life insurance companies, etc, etc. They are all different with unique features. Yes, foundationally similar but a tailored unique message to each makes it personal. It shows you understand their needs, have done the research and how you are potentially solving what they’re missing or why you’re the better alternative to what they have now. That takes time, it is a marathon, maybe an Iron Man competition that only those willing to persevere and have grit get to finish.
You can find Jeb Altonaga’s recent video updates here.