Perhaps a greater opportunity, right? Well, not exactly. This industry is still wildly competitive and with investors still having their pick of the litter it doesn’t mean that capital will necessarily fall in your direction. So what is an emerging fund to do to get not only the first or second prospective LP meeting, but actually securing capital for their fund? They must take a critical eye and ask themselves, “what do I bring that is unique and can’t be replicated by the vast resources at a large investment firm?” There are numerous ways that a fund manager can answer that mind-numbing question of “what is my edge?” But the first step is defining who you are.

This mental roller coaster that emerging fund managers go through day in and day out is exactly why we created and launched the Global Emerging Manager Incubator. Although defining your edge is critical to outlining your firm’s value, it is only the first of many steps to get an institutional investor to look at your firm. This is why we broke the program into four categories to mirror what we know investors – especially seeders and earlier stage investors – look for: business development (read: how do you raise capital?), marketing (read: what’s your edge?), business management (read: are you creating a firm that exudes operational excellence or are you at least heading in that direction?) and, finally, investor relations (read: how do you engage investors to trust their capital with you?). Each of these factors are fundamental puzzle pieces in answering the most basic of all questions that emerging managers have: how do I get from where I am today to evolve and become an industry-leading firm? For many fund managers, they seek to achieve USD$1 billion, USD$10 billion, USD$50 billion in assets under management, while others are looking just to get to USD$500 million or USD$800 million in assets mark. Whatever your ambition may be the burning question still remains...how do I get there? What do I have to do to beat those I am competing against and become the premier firm for investors to seek out and as a direct result become the gold standard for funds?

Funds globally are trying to answer this question and are competing alongside one another. As more investors look for exposure across various countries and continents your competition is no longer against your local competitors, but from emerging managers hundreds and even thousands of miles away from you. In an effort to work towards that goal and as what has grown concurrently with this new renaissance for emerging fund managers are outsourcing solutions. Now you can outsource until your heart’s content, but sometimes outsourcing 90% to 95% of your operational duties and even times investment to someone else isn’t always the best solution. This has been a common complaint our team has received from institutional investors about emerging fund managers.

The process of building a fund business even with all of the resources that are available today still is not a cheap, rather it is quite an expensive proposition. But then again you are asking people to put tens and in some cases hundreds of millions of dollars with your fund and trust you with it, so are you surprised about the cost?

Now, I am going to walk you through some data and why we believe our program is the best solution for emerging fund managers (shameless promotion I know, but this is the reality), how we’ve helped to further democratize the process of building a fund, and why our vision should matter to you. While we offer a wide range of resources for those selected to come into our program, the simplest way to understand what we do is if you were to take a placement agent (author’s note: most leading placement agents do not even work with managers sub-USD$100M, we will do a post on that another time), a PR agency and a business advisory firm and throw it into one bucket. Now, remember this as I walk you through the cost of success and what it takes to build a fund business because these are real numbers; I am sure for many of you that these figures have already been pitched to you so you know this is the reality.

Now that you’ve seen the data you can see why we make sense for emerging managers and why a program like this needed to be created. What do we look for in a candidate? We start with three basic things: the team, the operations and the performance. Why? This is where many institutional investors start to breakdown who they want to keep and who they will pass on. Most emerging managers will maybe have one or two of these things, which we understand it is not cheap to build a fund business. It requires money in order to achieve each of these – hiring a team, building an institutional grade operational infrastructure and the cost of information to achieve that stellar performance. As I mentioned in my earlier note, the reality is that building a fund business is an incredible experience, especially as you achieve your own benchmarks of success, but it isn’t cheap. This is why our team knew that something like this needed to be created in order to help high-potential emerging managers from around the world to realize success.