Fundraising in 2023: A guide for emerging hedge funds

Fundraising as an emerging hedge fund

Launching and fundraising for a new fund is no easy feat. In a crowded market, and with many investors shut-off to building new relationships, new fund managers can face months or years of scarcity and uncertainty. As the hedge fund industry matures, it is becoming harder for new managers to come to market and raise enough capital.

Attracting your first commitments can be extremely challenging. While demonstrating an attractive track record and having a compelling story are key for investors, expanding your network to gain attention and trust has never been more critical.

A tough environment for hedge funds

Preqin data shows that the number of new managers globally has declined every year since 2013, except for 2017 and 2018. Put simply, an unfavorable environment for hedge funds hasn't attracted many new managers to the scene, and data from 2021 suggests that managers are now more cautiously entering the market.

Where are asset allocations coming from for hedge funds?

Family offices are an increasingly important source of investment into hedge funds, and so far in 2022 we have seen the number of these mandates grow after a stagnant couple of years.

Endowments, along with family offices, have the highest median allocation to hedge funds. The recent decline in the median allocation by endowments is partially due to the tendency of those who follow the Swensen model to rebalance to target, as well as the fact that hedge funds are liquid.

In general, hedge funds have performed well in recent years, with cumulative returns increasing on average since 2020.

Market changes globally continue to make it more challenging for emerging managers to attract fresh commitments. Standing out from the crowd with a differentiated strategy is therefore becoming increasingly difficult—but crucially—more important than ever.

How Preqin helps

In an industry dominated by established fund managers, Preqin is dedicated to helping funds of all sizes to capture investor commitments. Our data and research can help emerging managers to sharpen their fundraising strategy by identifying successful placement agents in a given geography and focusing on investors actively seeking new GP/investor relationships.

By providing insider access to key investor news, data, and research, we can help you better understand changes in the market and explore the latest trends driving the industry.

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Gain traction with investors: Robust fund profiles are 5X more likely to be seen by investors.
Enhance your track record: 74% of fund managers contribute performance data to improve their fundraising efforts.*
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maximize your visibility among global investors and decision-makers.
ensure key stakeholders see the most accurate representation of your profile and performance.
keep up with your competitors who already update their information and showcase their achievements.
become eligible to rank in our league tables and differentiate your firm in a crowded fundraising environment.

*Source: TechValidate

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$11.7bn

Investors are looking to allocate up to $11.7bn to hedge funds in the next 12 months

Preqin is pretty much a standard in the industry for getting data and getting access to potential investors and their contact information

Mark Landwer - Operation Manager & Portfolio Strategist, Chicago Equity Advisors

Source investors looking for funds like yours

Grow your network and find new LPs

Our Suggested LPs feature uses powerful and personalized modelling to rank our database of 17,000+ investors in relation to your unique use case. As a first-time or early fund, you can use Suggested LPs to grow your network and find previously unexplored investors.

Source LPs looking for new GPs

Our Mandates & RFPs feature allows you to filter specifically for investors who are receptive to first-time funds. You can also filter for investors seeking to engage with fund managers they haven't invested with previously.

Find the best placement agents

Utilize our search tools to find placement agents that suit your needs, opening your door to more networking opportunities and allowing you to focus on your wider goals.

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The Fundraising Dashboard provides a space where you are able to set preferences across asset class, strategy, sector, investor type, and location to refine your overall view in Preqin Pro.

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