Launching a new fund can be both exciting and nerve-racking. You might have broken away from a larger firm, convinced you could do things better on your own. More power to you.
But now the pressure is on to attract investors and deliver. On paper, the plan looked doable, but now as you prepare to follow through, challenges emerge:
1. "How do I convince investors to join my fund?"
2. "Will I have a winning strategy?"
And this is a situation where outsourcing may help.
You might be thinking:
1. "How does outsourcing help me?"
2. "And why should I let the investors know I'm outsourcing? Why would they even care?"
The answer to both questions is fairly simple when you think about it.
1. Outsourcing lets you focus on your core competencies.
You don't have to spend time focusing on areas that not only take time out of your day, but also in areas you lack the relative expertise in.
2. Outsourcing helps you cut costs.
By partnering with a qualified outsourcing provider, hedge funds can lower costs.
According to a KPMG survey of hedge funds, 71% of survey respondents said the remote work experience convinced them they could achieve greater cost efficiencies if they outsource some of their operations.
3. Outsourcing helps hedge funds be more efficient.
Third-party providers should have the resources and know-how to deliver greater efficiency, and depending on their locations of operation and flexibility, they can provide custom services on an as-needed basis at any time of the day.
The above KMPG survey also found that 70% of respondents believes outsourcing makes their work more efficient.
As an outsourcing services provider, Empaxis helps fund managers boost efficiency and cut costs by streamlining their middle- and back-office processes.
In addition, our web-based turnkey asset management platform, TAMP1, provides a single place to store all documents and data, as well as view reconciliation and performance reports, all taken care of by Empaxis.
Outsourcing Shows You Are Committed to the Investors
As a fund manager, letting investors know you are outsourcing operations-related work shows you are 100% committed to the task at hand: investing.
When you spend more time on ways to generate big returns rather than handle operations and admin, you're serving the investors to to the fullest.
You're Being Honest about Your Capabilities
Honesty and openness will open the door to better relations with the investors.
You are proud enough to boast of your investing acumen, but also humble enough to admit your "weaknesses."
After acknowledging those relative weaknesses, you are enlisting the services of an outsourcing provider that can do the job at a higher level.
This reinforces to the investors your commitment to excellence in all aspects of the organization.
You are not misleading investors into thinking that you have everything under control, yet behind the scenes, you're sweating and scrambling to generate performance reports.
If you've spent your career dealing exclusively with the investments side of the business, then that's clearly your area of expertise.
When starting your own fund, you now have to think about the operational side of things, which may have never been your focus before. Even if you have experience, ask yourself these two questions:
It's safe to say for question 1, the answer is investments.
And for question 2, the only answer there could be is investments.
So if your interest and expertise are in investments, and if investment activity generates revenue and operations doesn't, why not outsource something like operations, among other functions?