It’s a complex investing environment for most everyone right now, but emerging managers face their own set of challenges. The fundraising environment toughened even more during 2022, and market declines like we’ve seen over the past year make it more challenging to attract LPs willing to lock up capital with managers with a less-established history.
But emerging managers know that perception isn’t always reality. They often have an interesting set of benefits to offer LPs, and data shows emerging managers outperforming hedge funds on average across the past three years.
How can emerging managers distinguish themselves when the going gets tough? Here are key insights we’ve gathered from our emerging manager client base.
The FinTech Infrastructure to Scale
Fundraising | The alternative investment landscape is full of established players, and emerging managers must cultivate a professional brand and way of doing business that stands outs. Display a dedication to LPs that goes beyond returns with support from FinTech that optimizes the LP experience. Emerging managers can show a high degree of transparency and good communication by offering a centralized portal to manage investor correspondence, data rooms for document collection, and tools that allow the team to work in unison to manage relationships with prospective investors.
Deal Management | Working across spreadsheets and emails can make it difficult to track next steps when evaluating investment opportunities. An emerging manager’s ability to move through deal due diligence in an organized and agile manner is key to building a solid track record in the early stages of the fund. An emerging manager’s ability to remain organized and agile is needed to build confidence and a solid track record in the early stages of the fund. FinTech provides the infrastructure needed to keep important data at your fingertips, automate investment workflows, and maintain a single source of truth about your pipeline and deal-related follow-ups.
Portfolio Monitoring | The pressure is on emerging managers today to provide heightened transparency – not just about portfolio performance, but the ESG and DEI statistics of individual assets in the portfolio. Sifting through the deluge of data is overwhelming when both bandwidth and headcount are limited. But, it’s possible to impress LPs with a platform that streamlines the collection of data from portfolio assets, curates ESG surveys, and stores and reports data in an easily digestible fashion.
Tyra Jeffries, founder and CEO of CCA Global Capital Group, which advises emerging managers, says the key to growth doesn’t always come down to the number of investor relationships, but how well those relationships are managed. “During fundraising, an emerging manager can be talking to anywhere from 25 to 200 investors,” she said. “Successfully managing each individual relationship can come down to the ability to manage the information you have about each investor and communicate what they care about. Fundraising today is a long and complex process, and success can really depend on information flow and good, accurate data.”
Learn More About Successful Fundraising for Emerging Managers
Access an on-demand recording of our 30-minute webinar with tips and information specifically for the challenges emerging managers face today.
Trevor Davis is a member of Dynamo’s Emerging Manager team. Trevor works alongside Dynamo’s product and service delivery teams to help Dynamo drive FinTech innovation and excellence for today’s high-growth Emerging Managers. Everyday, Trevor works collaboratively with Emerging Managers to help them embrace software solutions that will fuel their goals around fundraising, deal management, and portfolio monitoring.