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5 Ways to Improve your Hedge Fund Launch

Let’s face it; launching a hedge fund today if you are not a well-known name from one of the top investment banks is an uphill battle. Most investors now a day are not willing to give the average trader a chance to prove him or herself as a manager in fear of losing their own job, should the manager not do well.

But there are some things you can do to improve the odds of attracting capital and it all comes down to what is known as mental triggers. Mental triggers are built-in to our brains and thus they have been with us for hundreds if not thousands of years and they never go away. There are many of them, but here are 5 that I find really valuable:

#1 – Stories

Turning your hedge fund launch in to a story is crucial. We as human beings have been trained for thousands of years to listen to stories and there is nothing more engaging than a good story. If you think back to your own childhood, just think of the time in the evenings when your mom or dad wanted to get you to relax and prepare for a good night’s sleep. What did they do? Well, most parents, including my own, would tell you a story and this is why we have been conditioned to listening to stories and why I find that story-telling is one of the most important ingredients if you want to engage and attract the investors’ attention.

#2 – Events

People love events and feeling like they are part of something larger than themselves, so turning your hedge fund launch in to an event is another important way to improve your odds of a successful launch. When people go through an event together, especially if you do it in a really clever way, it embodies some of the core pieces of a “ritual” …and rituals are among the most powerful experiences that humans have.

#3 – Social Proof

We all look to other people for clues on how we should act. Imaging you are driving in to a new town and you want to find a nice coffee shop. On one side of the street you see one with people sitting at just one table and on the other side of the street you see a coffee shop where almost all the tables are full. Which one do you go to? I bet you that you pick the one that is nearly full. Why? Because we inherently think that because it’s nearly full, the people inside must know that this coffee shop is better than the one on the other side of the street! So if you can show your prospects that they are not alone and that other people are taking action, you stand a much better chance of convincing them to make an investment.

#4 – Scarcity

When there is less of something, people are going to inherently want it more. This is human nature and investors are no different. So going out saying that your strategy can manage billions of dollars may not be a great tactic. I would suggest that you try to make your offer much more exclusive by indicating that your main focus is being able to manage the funds you raise well and not over-extend your capacity by taking in too much assets. So set your target AuM at a lower level than what you believe your strategy can ultimately manage and you stand a better chance of investors wanting to get in “while they still can”.

#5 – Authority

People will follow an Authority. So it’s essential that you try to establish yourself as an authority before you launch your hedge fund. You can establish huge authority by giving away good quality content and by doing so, investors are going to assume that you are an authority in your field and that will give you more power in your communication with them when you start to promote your new product or strategy.

 

Question: Which of these strategies have you tried? What were the results? Share you experiences in the comments below or send me an email!

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9 comments
  • Kate Erickson July 21, 2014 at 5:50 pm / Reply

    Great list here! Thanks for sharing this info with us in an easily digestible manner :)

  • FireStarters July 21, 2014 at 6:10 pm / Reply

    These 5 keys are super powerful and when using any combination of them really kick it up a notch! Niels, please share an example of how one of these unlocked attracting capital for you, so interested to know!

    • Niels July 21, 2014 at 6:14 pm / Reply

      For me the most powerful one of the 5 is “Story-Telling”, but that does not mean that the others can be left out. But I think most people a tied of listening to factual presentations and would rather here a story that combines that facts with an interesting story. If I think back on a seminar or presentation that I attended a few months or years ago…which of the content and presenters do I remember best? The ones that told a good story and not those who just did a factual powerpoint presentation. Well, that is how my brain works! What about you Dean – which one do you find work best in your business?

  • Nemo Ashong July 21, 2014 at 6:30 pm / Reply

    Such great insight Niels!

    I’m interested in your take on holding events – I’ve heard that “Experience” style events where people actively participate during the event through something like a workshop or even something more out of the box like a puzzle have really helped create memorable experiences. I’m wondering if there might be an opportunity to go beyond a presentation or dinner to really engage people with the fund.

    Any thoughts on this?

    • Niels July 21, 2014 at 6:55 pm / Reply

      Hi Nemo,
      I’m sure events where people get together is a great way of doing it – but to mee an event is most likely to be an online or virtual event. So if you are launching a new course for you business, perhaps there is a way to make this “launch” in to an “event”. I think this is harder as it may sound but if you can pull it off, I think you can win some conversions that would not otherwise have signed up.

  • Frank Gustafson July 21, 2014 at 10:11 pm / Reply

    Wow… Hedge Funds made easy (simple)! I love the approach… Stories, Events, Social Proof, Scarcity and establish Authority through providing high quality content that adds value! Love it!!

    • Niels July 22, 2014 at 7:18 am / Reply

      Thanks Frank! I hope that these principles can be used by many other types of business as Mental Triggers are universal and that if applied thoughtfully it can help people with solid business offerings to get better results. Really enjoyed your feedback! Thanks

  • Roger Graves July 22, 2014 at 4:51 pm / Reply

    Niels, solid tips! As you mention, these are the basis for any product launch or company expansion. So many businesses fail to do even the basics along these lines. Hopefully, this is an inspiration for Hedge Fund launches and many other applications. Thanks!

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