Raising your first $10 million in assets under management (AUM) is one of the most challenging—and defining—milestones in an emerging manager's journey. This early stage tests your investment thesis, network, storytelling skills, and operational endurance.
In a recent session led by Tec Han, Head of Manager Development at Ashton Global, Elite Access members received a blueprint for navigating the unique hurdles of early-stage fundraising. Whether preparing for your first close or refining your approach to capital raising, these insights will help you avoid common mistakes and accelerate growth.
1. Raising the First $10 Million: Start With Proximity
Tec Han emphasized that most emerging managers raise their first capital from people they know and trust. Friends, family, former colleagues, and close professional networks are often your best—and only—source of initial funding.
This doesn't mean compromising your professional standards. Tec strongly advised against managing money for free, even through separately managed accounts (SMAs). Valuing your work from the outset sets the tone for future investors. Charging appropriately—even on small accounts—helps position you as a serious, institutional-quality manager.
2. Tactical Strategies for Getting to Critical Mass
Getting to $5–10 million in AUM requires creative, grassroots efforts. As Tec explained, it's less about massive roadshows and more about surgical targeting. Strategies such as networking with physicians and professionals ("dining with doctors"), leveraging community circles, and attending curated events can help build early traction.
But once you hit $10 million, your strategy must evolve. That's the inflection point where institutional pre-allocators—like Registered Investment Advisors (RIAs) and private wealth managers—become viable targets. From there, you can approach family offices, foundations, and eventually endowments and sovereign wealth funds.
3. Time is Your Most Precious Asset
One of Tec's recurring themes was time management. Emerging managers often spend as much time nurturing a $ 250,000 account as they do a $5 million one, creating a bottleneck that can quickly stall growth.
The solution? Be deliberate about who you pursue and onboard. Not every investor is worth your bandwidth, and not all capital is good capital. Create systems that let you qualify prospects, automate follow-ups, and scale without burning out.
4. GP Stakes: Be Picky, Not Desperate
The GP stakes market has become a hot topic, but Tec cautioned managers to be highly selective. Not all GP investors are created equal. Before accepting strategic capital, conduct thorough due diligence to ensure a sound investment. Ask about their long-term objectives, past partnerships, and value beyond capital.
An ideal GP stake partner helps you raise more capital, build institutional relationships, and grow your business sustainably. Otherwise, a fee-sharing agreement might be a better fit. Tec shared an example of an LP paying full fees at the start, which tapered off as AUM grew, aligning incentives while preserving independence.
5. Define Your Ideal LP Persona
Not every LP is a fit for every fund. Tec recommends that emerging managers define their "ideal LP archetype" early. Consider attributes like:
- Minimum check size
- Structure flexibility (fund, SMA, co-investment)
- Asset size and sophistication
- Geographic location
- Alignment with your strategy and values
For most managers, starting with US-based investors makes the most sense. Canadian investors can also be strong targets due to their exposure to US equities and willingness to invest cross-border. Tec suggested focusing there before venturing into more complex international relationships.
6. Offshore Vehicles and International Assets: Wait Until You're Ready
It's tempting to chase international capital early, but Tec recommends waiting until you've built a domestic foundation. Setting up Cayman or Ireland-domiciled vehicles is complex, expensive, and often unnecessary unless you are dealing with larger allocations.
Even then, be skeptical. Many managers receive "too good to be true" offers, especially from groups claiming Middle East or Asia-based capital. Tec advised caution: some proposals require giving up control, relocating domicile, or diluting the GP. In most cases, they don't deliver what they promise.
7. Email Marketing That Converts
Regarding raising capital through cold or warm outreach, Tec recommends concise, data-backed storytelling. High-quality performance snapshots, benchmark comparisons, and narrative-driven updates are key.
Your investor emails should include:
- A brief PDF update (1–2 pages)
- Clear performance attribution
- Commentary on key positions or decisions
- Any relevant fund news or milestones
You don't need to send frequent updates. Instead, focus on consistency and quality. Less is more if your content is strong and professional.
8. The Value of Quarterly Letters
Quarterly letters can be powerful tools—if writing is your strength. For managers with a compelling voice and unique perspective, a well-crafted letter can build a loyal following of prospective LPs and allocators.
However, Tec emphasized that if writing is not your passion, don't force it. A simple, recurring email with clear, concise messaging may be more effective. The goal is not to publish for the sake of it but to engage and inform the right audience.
9. Nail Your Narrative: What Makes You Different?
Emerging managers must clearly articulate their investment edge. Tec recommended focusing on three key differentiators:
- Independence: Are you making truly independent decisions or tied to groupthink?
- Proprietary research: What do you know that others don't? How do you uncover your ideas?
- Operator's mindset: 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.
10. Reference Your Background, But Tie It to the Present
If you've managed money before—especially in top-tier funds—mention it. But don't let it overshadow your current thesis. Investors want to know why this fund, why now, and how your past has informed your present.
Tec encouraged managers to connect their launch stories to what they learned from previous roles. For instance, you observed that over-diversification weakened performance and now focus on high-conviction ideas. That's compelling when communicated clearly.
11. Be Transparent About Capacity and Commitment
Investors want to back fund managers who are fully committed. If you have another business or prior obligations, please explain how you manage them. Investors care less about your multitasking and more about whether their capital is getting your full attention.
Tec shared that some LPs scrutinize financial stability and long-term commitment before writing checks. Anticipate and address those questions head-on—ideally by showing skin in the game and a long-term plan.
12. Structure First Investor Calls with Intention
Initial LP meetings are not for hard pitching. Tec recommends the following structure:
- Start by understanding the investor's mandate, allocation process, and timing
- Share your journey and the "why" behind your fund
- Explain your strategy and edge briefly and clearly
- Ask if there's a potential fit
- If not, ask if they can refer you to others
Always end with a clear next step—but don't pressure them for an immediate follow-up.
Final Thoughts
Early-stage fundraising is an art as much as a science. As the Head of Manager Development at Ashton Global, Tec Han brings clarity and practical frameworks to a chaotic and opaque process. His advice to emerging managers is both strategic and grounded: know your value, be intentional, and build relationships that scale.
For Ashton Global's Elite Access Program members, these lessons provide the foundation for raising capital and building enduring businesses. Whether targeting your first $10 million or your first institutional allocation, the path forward is more straightforward when guided by experience.
