Is August the Toughest Month To Raise Capital?

December’s actually where activity is relatively lower and we have analytics to back that up… (read on).

August isn’t the most challenging month for fundraising, but it’s not the greatest either, which plays into the anticipated post-summer “capital raising season” from September to early-December. This year’s different too, with the summer months being further compounded by distractions of the Olympics and a wave of [largely domestic] travel in countries with higher vaccination rates.

The graph below showcases a standardized score of our own proprietary data of 2020 investor engagement across dozens of fund managers representing a range of geographies, strategies, and AUM. Given fundraising, diligence, and the subscription process were largely done virtually in 2020, we picked out email outbound email marketing as a standardized measure of fundraising efforts. This computation included (1) open rates, (2) clickthroughs, (3) web visits, (4) downloads, (5) opt-outs.

1.       Why The Spike In April 2020? The height of COVID panic. Some funds suffered life-ending redemptions, and portfolio companies were in survival mode. It’s a case of “be careful what you wish for” in investor engagement. Our proprietary data has shown time and again that investors are most engaged in times of underperformance.

2.       That August Dip – Putting aside the anomality of April 2020, investors remained engaged across the year though there are noticeable blips in August and December + January. There is no denying that August isn’t the greatest month for fundraising, but it isn’t as bad as December and January.

So… What’s The Opportunity For Me?

Buy the dip.

The traditional capital raising season runs from September to early-December. Get a head start in August.

Competition for marketing is lessened with fewer managers putting their foot through the pedal in August. Use this to your advantage. There are some economics to things being cheaper too; it is akin to being in a quieter auction house.

There has been no shortage of capital in the first 6 months of the year and we’re expecting the same when numbers come through for July and August. Private capital is providing financing for firms which otherwise would never receive any support from the big banks, and alternate financing is coming in where private capital won’t. There has been a quarter-over-quarter trend of niche managers springing up which has turned heads in the community. Many family offices are also launching their own first-time funds.

The upcoming traditional fundraising season promises to be an exciting one.

Don’t find yourself on your back foot by the time it comes around.