Part 4: Social Networking
Without question, social media has experienced a meteoric rise in popularity over the past few years. In fact, most hedge fund managers and/or their staff have some sort of social networking presence on sites such as Facebook, Twitter, LinkedIn, and MySpace. While these sites offer a tremendous opportunity to connect with colleagues and build relationships, their use also carries with it a hidden risk. Most notably, given the easy accessibility of such information, investors are increasingly scrutinizing the pages of firms' key employees during the due diligence process. As a result, you would be wise to follow a few simple precautions.
First, bear in mind that anything you or your employee posts on their page will be viewed by fellow professionals. For example, posting a funny profile picture on your page may be funny to you, but to the potential investor conducting due diligence, it may mean something else. That same rule applies to any quotes, links, photos, or messages you post on your page as well. A good rule of thumb: If that if a given picture or quote isn't appropriate to share around the office, it's probably not appropriate to post on the web.
Perhaps the most popular site for professional networking is LinkedIn. For the hedge fund manager, the site offers several advantages. With relative ease, you can list your contact information and job description, not to mention any projects you are currently working on. Perhaps more importantly, you can network with potential investors and pre-qualify them. Your online acquaintances potentially meet the definition for the pre-existing relationship rule. Point being, this online network offers the similar benefits as more expensive alternatives, such as hedge fund conferences, but at little or no cost.
As I mentioned above, social networking can serve as a powerful marketing tool to highlight not only your own expertise, but also your fund's. Furthermore, given the breadth of marketing restrictions placed on the hedge fund industry, you would be wise to consider utilizing social networking to increase your fund's exposure. The results just might surprise you!