Emerging managers often focus on one milestone above all others: raising their first $10 million in assets under management. This threshold determines survival, credibility, and momentum.
We sat down with Tec Han, Head of Manager Development at Ashton Global, to demystify what it really takes for emerging managers to raise that first institutional dollar and avoid common mistakes.
Q: Where should an emerging manager start when raising their first capital?
Tec Han: Start with people you know. That means friends, family, former colleagues, and professionals in your immediate network. You won't close a large allocator at the beginning, so build from a base of trust.
But one thing I always emphasize—don't manage money for free. Even if it's a small account or an SMA, charge fees. The precedent you set early affects your long-term trajectory. If you act like a professional manager, people will treat you like one.
Q: What are the most effective tactics for raising the first $5 to $10 million?
Tec Han: Think grassroots. Meet professionals like doctors, attorneys, and executives over dinner, building one relationship at a time. Leverage local networks, speak at curated events, and tap into affinity communities.
Once you approach $10 million, the strategy should shift. That’s where RIAs, private wealth managers, and smaller family offices become more realistic targets. Institutional allocators are rarely first movers, but they follow momentum.
Q: How should managers think about time management at this stage?
Tec Han: Be ruthless with your time. A $250,000 investor might take as much effort to cultivate and onboard as a $5 million investor. That's not sustainable if you want to grow.
Start building internal systems and using automation tools to scale outreach. Your energy should go toward high-value conversations, not one-off relationship management.
Q: Many managers are approached with GP stake offers. What should they consider before accepting one?
Tec Han: GP stakes can be useful—but they can also be distracting or even harmful if rushed into.
You want to know: What's their track record? Do they offer strategic support? Will they help you raise future capital? A good GP partner brings more than just money—they help you scale and succeed.
Sometimes, a well-designed fee-sharing agreement better aligns incentives. I’ve seen LPs agree to pay full fees initially, then reduce them over time as AUM grows. That gives managers breathing room without giving up equity too early.
Q: Who’s the ideal investor for an emerging manager just getting started?
Tec Han: For most, your ideal LP is a U.S.-based investor who’s flexible on structure, writes manageable checks (say $250K to $1M), and understands the emerging manager journey.
Canadian investors can be a strong second group. They often allocate to U.S. assets and are comfortable working with American managers. I generally recommend holding off on targeting Asia or the Middle East early on—it adds complexity before you’re ready.
Q: Should managers explore offshore vehicles or international structures early?
Tec Han: Not yet. Focus on your core. Offshore structures like Cayman or Ireland are expensive, and they require scale to justify.
Too many managers chase international money with zero traction to show. Worse, some get pitched unrealistic offers—"We'll invest if you domicile in Dubai and give us 40% of your GP." Be cautious. These deals are usually one-sided, and there's no U.S. tax advantage to being based in Dubai or similar jurisdictions.
Q: What's the best email strategy for investor outreach?
Tec Han: Quality beats quantity. Your emails should be short, with a clean layout, concise narrative, and performance vs. benchmark comparisons. If it fits, add a story or case study from your portfolio.
Send less frequently if needed, but keep the quality high. Every email should enhance your brand and build confidence.
Q: Are quarterly investment letters still relevant?
Tec Han: Absolutely—if writing is your strength. Today, some of the most respected managers have built their following through thoughtful quarterly letters.
But if writing isn't your thing, don't force it. A well-crafted email update or performance snapshot can do just as much, especially early on. The key is consistent communication and high-quality content.
Q: How should a manager define their "edge" when pitching?
Tec Han: It starts with clarity. Have you run a business or led teams? That real-world experience can differentiate you from pure analysts. It's not about jargon—it's about showing depth, conviction, and a repeatable edge that resonates with investors.
Avoid being vague. Instead of saying "I have great risk management," explain how you build conviction and why it drives long-term outperformance.
Q: Should a manager reference their prior roles or track record?
Tec Han: Yes—but always tie it to your current strategy. If you were part of a top-performing team, use that to give context to the fund you've built now. Explain what you learned and how you've designed your fund differently. That's compelling.
Q: How do you address investor concerns about commitment or distractions?
Tec Han: Be transparent. Explain how you manage your time if you have another business or outside obligation. Most investors won't disqualify you for being a multitasker, but will question your commitment if you're evasive.
Also, emphasize your personal investment in the fund. That's the strongest way to show you're aligned and serious.
Q: How should a manager structure their first investor call?
Tec Han: Start by asking about the investor's allocation strategy, timing, and current priorities. Don't lead with a pitch.
Then share your story—how you entered investing, why you launched your fund, and what makes you different. Close by determining fit and offering to follow up.
And if it's not a fit? Politely ask if they'd be open to referring you to someone who might be a better match. That's how you turn dead ends into warm leads.
A Final Word from Tec Han
"Raising your first $10 million isn't just about money—it's about laying the foundation of your firm's DNA. The right habits, the right relationships, and the right positioning early on will compound over time. Don't chase shortcuts.”
Ashton Global's Elite Access Program is designed to help emerging managers navigate these challenges. We equip our members to scale with confidence through strategic guidance, access to over 3,000 institutional investors, and tailored support from industry veterans like Tec Han.
Ready to raise your next $10 million? We're here to help you get there.
