It might be harder than ever for hedge funds to raise money.
Their market is crowded with competition and many clients aren’t interested any more. Others are demanding more specialization, and bigger staffs of financial and compliance executives, said several fund managers and marketers at Context Summits, an investor conference in Miami.
To help, many funds pay for brokers and other companies that make introductions. Otherwise it can take dozens of phone calls and emails a day to find someone who is interested. And often that is just a low-level analyst who starts of process of going through several layers of decision-makers, all with their own worries about regulators and a shaky economy.
Blake Hirschbach has spent the past year marketing for The Waterfield Group, a Miami Beach fund that picks small company stocks. Working through phones and emails leads to a success rate of only about 1% to 2%, he said.
“Allocators are so picky now,” Mr. Hirschbach said. “They’re all trying to make sure they don’t get caught in the next big downturn. Nobody wants to end up with egg on their face.”
Waterfield was one of about 450 funds to pay $8,000 for a booth at Context, which is holding the biggest event in its three-year history this week. It is essentially speed-dating for fund managers and potential clients. About 1,800 people came, representing firms with $1.5 trillion in combined assets, said Mark Salameh, Context’s chief executive.
A booth here is just a small table, surrounded by four chairs and a white curtain on three sides. There are hundreds of them, side by side in giant meeting rooms with names including “Sparkle,” “Splash,” and “Fleur de Lis” at the Fontainebleau Miami Beach.
For nine hours a day over two days, money managers sit investors down between their curtains and pitch them on why they should give money to the fund. Everyone can see who’s meeting with whom, but so much chatter fills the room with white noise that it is hard to hear people unless they are right next to you.
There are few speakers at the conference, and none on the main two days. It is all meetings, in half hour increments, booked through Context’s smart phone app. It allows managers and funders to send and accept meeting requests, the same way Facebook and dating apps allow people to connect with friends and dates. Fund managers said they’ve booked anywhere from 10 to 30 meetings, usually back to back.
“They’ve worked harder than they ever have at any other conference,” Mr. Salameh said.
Many fund managers said they spend weeks tracking down the right potential clients. That includes phone calls and emails to make sure meeting requests get spotted. Many research what each investor does to be sure of a potential match and that they strike the right chemistry during the meetings. Time is precious: Often only about half of the introductions are worth a follow-up after the conference, and fewer lead to investments, fund managers said.
“It’s a very intense two days,” said Arnaud Chretien, chief investment officer at Aequam Capital, a quantitative-trading firm in Paris that specializes in futures.