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Now that the avenues critical to a fund manager’s capital raising process have been wiped out, fund managers have to unearth a new strategy on how to get on the radar of allocators, if they want to get ahead. So how should a fund seeking to raise capital navigate this new normal? Let’s walk through it together.

Amidst the madness of the Coronavirus, the good news, in our conversations at least, is that the majority of investors are still actively looking to meet with and assess managers who could meet their criteria. In fact, many investors we have spoken to these past few weeks are actively looking to either allocate or for those more hesitant to at least start initiating pre-screening measures of potential managers. This is great news for funds who are actively seeking to partner up with investors, but unfortunately the process has become even more selective than even before. Due to the requirements and restrictions conjointly, investors are now having to adjust how they source opportunities by turning to and reviewing the majority of opportunities that come through one of two ways: through recommendations and/or funds that are currently being monitored by their firm.

But what if you are not on an investor’s radar already and you traditionally have relied on conferences and in-person meetings to attract allocators? Our recommendation is to start building out your strategy immediately and look to firms or those within your network with strong investor relationships. In our discussions with allocators, the sentiment for connecting with and meeting with fund managers, even if at this time it must be accomplished through teleconferencing, is very strong, however to secure that meeting the referral would need to come from a trusted source if you are not already on their watchlist.

Currently, we see fund managers look to re-tap into old investor prospects and while this works as a sensible initial first step, they are also finding that they can dry up quickly if your network is not deep enough or the investor does not have the appetite for your particular strategy.

The new normal is frightening both from a health and business perspective, however there are a lot of opportunities abound and capital raising is not stopping anytime soon. In fact, our predictions indicate that the traditional timeline for capital raising will in fact extend further than ever before, which is good news for managers.

Why? Typically during the end of the summer [July to early September], a time usually reserved for vacationing by industry professionals, had historically placed a pause on fundraising, now as a result of the Coronavirus that will very likely change to the benefit of those private funds actively seeking to raise capital.

This prediction is based upon the growing safety and health concerns coupled with the social distancing measures that have caused the tourism industry at large to markedly plummet – flight disruptions and mass cancellations, public terror of interacting in large settings along with a steep decline in hotel reservations – signifies an elongated period of opportunity to present, albeit virtually to start, to prospective allocators.

All in all, while the Coronavirus is a frightening new reality, this is not going to put a full stop to fundraising by any means nor should you put a halt to your sales and marketing efforts [read: do not wait and see or you will get left behind]. During this time managers should be concentrated on developing a viable sales strategy to match the new reality and then initiate a game plan on sourcing and developing new investor prospects through respected partners and contacts. This way when the global pandemic starts to wane enough where social distancing laws dissipate, managers only need to crystallize their offering through an in-person meeting moving to allocation more quickly.

Funds need to rethink their approach to raising capital in this new environment and design a sales and marketing program that considers the new reality as projections have stated this will be a long-term occurrence. The good news remains which is that capital raising is still healthy, however the dynamics to which a manager needs to think about capital raising has to be altered and in some cases re-engineered and executed with the right level of finesse.

As the saying goes “this too shall pass”, but how you manage everything amidst the mass hysteria that is our current reality will determine your fund’s future and its success.

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If you have any questions, feel free to reach out to our team directly.

General Inquiries: info@creativecapadvisors.com

Urgent Inquiries: tyra.jeffries@creativecapadvisors.com