Nolan Olsen has shuttered his third-party marketing shop and joined Greenwich, Conn.-based FrontPoint Partners as a vice president in the firm’s client advisory team.
Olsen and his business partner, Ty Schlobohm, who ran fundraising firm Langschiff Partners, cited increasing competition in the space as the reason for closing down the shop.
In an e-mail obtained by FINalternatives, Olsen wrote, “hedge fund managers and investors alike will increasingly require a set of resources that are difficult for small firms to provide. We have determined that growing firms are best positioned with access to a range of research, due diligence, legal and risk management processes that are beyond the scope of a stand-alone consultant.”
One New York-based third-party marketer, who requested anonymity, said he wasn’t sure if the fundraising environment had gotten tougher in recent quarters, but that the cost of running a shop has increased in the past year because funds now won’t deal with third-party marketers unless they are Series 7-registered and are monitored by a broker/dealer.
“The big institutions have tried to raise the bar and make it difficult for the small guys to survive,” he said, “There is always a lot of bellyaching that it is hard to raise capital, but it is always hard.”
In fact, while small third-party marketing firms may be finding the fundraising environment tougher now than in the past, it certainly isn’t because of a lack of new money coming into the asset class.
According to Chicago-based Hedge Fund Research, investors poured a record $44.5 billion into hedge funds in the third quarter this year, making it the second consecutive quarter of record inflows since HFR began tracking inflows in 2003. In the first nine months of this year, almost $111 billion in assets have been added to the hedge fund marketplace, which is now estimated to total over $1.3 trillion.
According to the source, there are two sides to being a good capital raiser. “One is knowing who to go to in order to raise the money,” he said, “and the other is finding the product to sell.”