Think setting up a trading methodology and process is intense? Try raising capital to manage professionally!
Capital raising is one of the most difficult parts of the money management business – and that’s true even for battle-tested veterans! Emerging managers are finding it especially hard to raise institutional funds as their small size prevents them from even showing up on the radar of institutional allocators.
But there are some alternative methods of capital raising that offer opportunities to managers looking to build a professional shop. Click on the video below to hear an interview with Bryan Borgia – founder of Topwater Capital Partners – and hear how he is allocating tens of millions to individual managers to help them kick off their businesses
(bullet-point outline of key points below the jump…)
A summary of the interview is below…
If you would be interested in an introduction to Topwater – and possibly receiving an allocation to jump-start your trading program – or beef up your assets under management, please fill out the form below or send us an email (allocations [at] mercenarytrader [dot] com).
We can have a quick conversation about how the program works, the payout structure, the pros and cons of a risk-based managed account, and determine if an allocation is worth pursuing.
Best of luck with your trading!
Key Points From Interview:
- Topwater Capital Partners places capital with traders in a “risk based” managed account.
- Topwater allocates capital into an account for traders to run.
- Traders put up risk capital which sits in a first / first position.
- (First to take losses, first to recoup any losses).
- As compensation for the first / first position, traders are given a higher payout percentage of profits.
- Topwater’s approach to managers is very “hands off”
- The trader is allowed to focus simply on making money.
- Topwater handles the setup of the account / paperwork / administrative issues.
- Topwater was created to provide a unique approach to investing in emerging managers.
- Choosing a manager off a powerpoint presentation is difficult.
- The model allows Topwater to analyze traders in real-time.
- Topwater is now able to analyze a deep pool of talented managers.
- Post 2007, it is increasingly hard for new talent to raise capital.
- Portfolio managers and traders are burdened by regulatory issues.
- Even established, veteran traders have trouble raising capital for new ventures.
- The large institutional investors allocate only to the top tier of alternative managers.
- Topwater doesn’t fit with the typical “seeder” model.
- Topwater does not take a piece of the management company.
- Topwater does not require a revenue split agreement.
- But Topwater CAN be the first allocator to a new manager or a new venture.
- Topwater’s focus is on managers that have the potential to grow into a strong business.
- Bryan Borgia spends the majority of his time talking with existing and new managers.
- Does not allocate based on particular strategy or trading style.
- Focus is on whether a prospective manager can take money out of the market.
- The setup process can be very quick once a trader has been approved.
- Emerging or smaller managers will continue to be challenged in raising capital.
- From a cost / benefit perspective institutions must allocate $100 mm plus.
- Large allocators can’t put this much with an emerging manager.
- It’s tough to “move the needle” so smaller allocations aren’t available.
- Topwater focuses exclusively on emerging mangers – one of the few small allocators.