For Fund managers, prospecting emails are still one of the most powerful tools for making new connections with asset allocators and new investor professionals. Despite potentially negative connotations, prospecting emails are still popular – why is that?
Because they still work.
Recent global research has confirmed this, testing billions of emails sent throughout 2021 across all major industries. The data for financial services indicates that the mean open rate for a prospect email is around 12%, so let’s dig in as to why that is useful, and how as an emerging fund manager you can outperform those numbers and raise more.
Do cold emails work for fund managers?
Much of the research into cold emails isn’t focused on hedge funds but the lessons are the same. One company called Yesware gets responses rates between 30%-40% and other independent organisations have obtained the same results.
Don’t be put off if you don’t get a 30% response on your first try. Many organisations will see ~20% open rate, and 5% response rate in the early days but things like performance and messaging in your fund marketing will affect this.
Here at Edgefolio we do send either cold or lukewarm prospecting emails and can confirm that these results are still true in the fund industry. There are a few important changes and we’ve included those techniques later in this article.
Why send prospecting emails at all?
A common objection from fund managers is that the time and money they spend on cold emails could be spent on connecting with asset allocators who are already in their network. Instead of planning and executing a prospecting email campaign, the same manager could be organising a speaking event for their contacts in the same city or online. At Edgefolio we don’t believe this is an either/or strategy and in 2022, you need to be doing both. After all, there must be a reason why 86% of business professionals prefer email as a communication channel.
There are two simple reasons as to why it’s valuable: reach and data.
Reach. Traditional fund marketing is about building connections at the sides of your network and extending outwards like that. Prospecting of all types, but especially cold email, is about seeding new networks far away from your current one. When a prospect does come back, and you have a great conversation, that person can easily become the starting point for a new network far away from the people you already know.
Data. Old school fund marketing is all about relationships and intuition but cold email is about data. If a dinner or a speaking event doesn’t result in investment conversations, you don’t know what’s gone wrong. When a cold email campaign doesn’t get results, you can use a tool such as Edgefolio’s to understand where or why that campaign has gone wrong. Not enough people, low conversion or low open rate? Having that information at your fingertips can be addictive.
How to write a great prospecting email
Okay so you’ve agreed to run an email campaign either for existing cold contacts or for a new list. Now how do you actually write a killer campaign? Here are our key rules for success.
• Follow up. You don’t need an automated follow up but plan a sequence of at least five emails per campaign. Each additional email lets you use a different message and for each person who doesn’t like the extra email, there’s another person who just forgot to respond to your first.
• Keep it simple. With your five emails, put a different idea or feature in each email. If your fund is a start up specialising in market neutral crypto, run by industry veterans – that’s two or three different selling points in three different emails.
• One email, one argument. Extending the idea of simplicity, there is a famous story about when Steve Jobs was working on the iPad launch. He wanted 5 arguments for his campaign. His marketer said no. He threw 5 bits of paper at him and Steve could not catch any. Then he threw one, and Steve understood the argument.
• Name drop. Fund marketing solutions like Edgefolio will let you customise the email and the subject line. Find ways to use the name of the company and individual – e.g. “Is {Alpha Bank} investing in market-neutral crypto?”
• Key words. You won’t change someone’s mind in a cold email – you’ll get a response when you offer something they already think they want. If you send out 100 emails, some of those organisations will have agreed a mandate for a fund like yours – you need to quickly mention the words they’re already using internally.
• Social proof. Either using prestigious research or existing clients (always get sign off of course) you can quickly establish credibility.
• Call to action. What should the recipient do if they’re interested? We’ve experimented with all types of Call To Actions but the best is always ‘email me back’ in some form. Low friction and obvious.
Keep the subject line the same between emails. This will thread your emails for the recipient so they can see the whole story.
Examples of great fund marketing emails
Okay, let’s get down to brass tacks. Below we have a couple of example cold emails that we’ve seen in our industry. First, this would be an opening email for a fund.
Example 1
Subject: Is {company_name} thinking about market neutral crypto?
Body:
{First_name},
Are you looking at market neutral crypto hedge funds in 2022? If you are then please take a look at work. Over three years, we’ve established an amazing track record with above-market returns and lower volatility.
We’d be happy to give you a tour of our strategies and the outlook for the space, plus we can talk you through our fund.
Can we speak next Tuesday or Thursday afternoon? Send me an email back and I’ll suggest some times.
All the best
{your_name}
What about a follow up? Below we’ve got an example of something we would use in email number three or four. A polite reminder to the recipient but introducing more information.
Example 2
Subject: Same as above
Body:
{First_name},
Did you get a chance to look at my email? We’re a start up fund that will give you managed exposure to crypto, but our managers have over twenty years of combined industry experience.
Industry research from Gartner (for example) shows that crypto funds run by industry veterans experience two to three times less volatility.
Can we have a quick chat? Would next Wednesday work for you?
All the best
{Your_name}
Example 3
Subject: Same as above
Body:
{First_name},
I appreciate that you’re very busy. Is there someone at {company_name} who looks after your mandate for crypto funds?
All the best
{Your_name}
Key takeaways
In this post, we have shared with you:
• How and why an emerging fund manager should consider prospecting emails as part of their fund marketing strategy
• Data that proves that cold emails and prospecting emails still work
• Methodologies & ideas you can use to open that previously closed door
As the world opens up again, there will be benefits to layering your approach to prospecting with a dual approach of established relationships and digital tools. It’s key to remember that the data and reach of a (well-written) email campaign can hand you the insights needed to continuously improve as a fund marketing and investor relations manager.
Although the easiest way to beat that would be by using Edgefolio’s FundPortal, as emails sent through our platform consistently outperforms the industry average.