Online Hedge Fund Cap-Intro Service Celebrates Success

Date: Thursday, May 31, 2007
Author: FINalternatives

While the largest hedge funds are seeing record inflows, mostly from institutional investors, smaller hedge funds are left slugging it out for investor dollars. In late 2005, hedge fund industry veteran Lisa Vioni combined her extensive Rolodex with some ingenuity and founded Hedge Connection. The online service allows fund managers to find investors specifically interested in their particular strategy. While some were skeptical that the online “matchmaking” approach would take off, 20 months later, Vioni estimates that the site has helped fund managers raise $50 million.

“Since our hard launch last year, several hedge funds have raised capital on the platform at a fraction of the cost of traditional marketing channels,” says Vioni, who has been marketing hedge funds since 1998.

Douglas Leighton, a portfolio manager for Dutchess Private Equities Fund, a $110 million PIPE vehicle, has been using the platform and credits Hedge Connection with helping him to bring in three new investors.

“It was the first time we took a really proactive approach [to raising capital],” says Leighton. “We started using their platform and we saw almost immediate results. I would say that within 30 days we got our first investor. He put a million dollars in our fund.”

The online service now boasts details of close to 700 investors, all of whom have agreed to be listed on the site. Hedge funds sign up for one of two membership packages: The first allows fund managers to contact 50 investors, while the second allows managers to contact 120 investors, for $5,000 and $9,500, respectively. While this price tag may seem steep, Andrew Saunders, vice president of Hedge Connection, explains that it is just a fraction of what other methods of fundraising cost, and that the service basically pays for itself if a manager finds just one investor.

Buoyed by its initial success, Hedge Connection is now revving up its marketing efforts with a series of members-only events. Saunders says he expects the first event, which will be held on June 7 in New York City, to draw a crowd of 100-120 investors and fund managers. In order to break the ice, he has arranged for PGA professionals to provide golf swing and putting analysis.

“It’s just another way for our members to connect,” Saunders says.