December 9, 2021
Kelly Tucker

7 Metrics to Track When Raising Money for a Fund

If you’re raising money for a fund or are interested in doing so in the future, prepare to be faced with a few challenges.

For example, when you announce the fund to members of your database, they will either decide to invest or not invest — but then what? It’s not ideal to keep sending the same people emails about the same fund. You will need to continue to generate leads in order to grow.

To attract more investors, you’ll need a solid marketing strategy. That’s where Joe Fairless’ seven metrics to track when raising money for a fund can help.

First, Get a CRM

Before launching into the metrics, it’s important to note that having a CRM is an absolute necessity when raising money for a fund. HubSpot and ActiveCampaign are great choices, but there are plenty of others to choose from.

Also, make sure you have an expert who is working on your team’s behalf to track the CRM; otherwise, you will only be scratching the surface. Without an expert, it’s unlikely that you’ll get the most accurate information you’ll need to make business decisions.

Qualified Investors vs. Investors Who Have Funded

It’s also important that you make a distinction between qualified investors and investors who have funded. Although you may have an excellent lead source, you need to track how many of those leads actually convert to people who are funding. If none of your hundreds of leads convert, then your lead source didn’t provide you with the right audience.

Make sure you are always measuring both qualified leads and funded leads, and that you know the difference between the two.

After taking these first two steps, you can begin tracking the following seven metrics:

1. Total Amount of Spend

The first metric is straightforward. Identify the total amount of money that you have spent to date on attracting new investors.

2. Total Qualified Leads

Calculate the total amount of leads you are attracting who are qualified. To determine this, ask: Are they accredited investors? Do they file U.S. tax returns? You may even want to qualify these leads based on their potential investment amount.

3. Qualified Leads Cost per Acquisition

The third metric is the qualified lead CPA. Of the total amount of dollars spent, you’ll need to know how many leads you are generating, and what that equates to from a per-person standpoint. Ask yourself how much it costs you to attract one qualified lead — the dollar amount is likely going to be in the low hundreds.

4. Funded Leads Cost per Acquisition

Determining the funded lead CPA involves tracking the cost per acquisition of each lead that you bring in who funds. It can be calculated by dividing the total amount spent by the number of leads who actually fund. This number should fall in the low thousands.

5. Average Funded Amount

The average funded amount will show you how much each lead is funding. This includes returning investors as well as new investors. The average funded amount doesn’t provide the average first-time funder amount, however, which is another important metric to track separately.

6. Average First-Time Funder Amount

This metric tells you how much new investors are investing on average. The average funded amount is often higher than the average first-time funder amount. It makes sense — people who have been investing with you for a while are likely to invest more. Meanwhile, first-time investors who are just getting to know you are likely to invest less at first. There is typically about a $40,000 difference between the average funded amount and the average first-time funder amount, but that certainly could vary depending on what your minimums are with your offerings.

7. Percent of Qualified Leads Who Fund

The final metric to track is the most important to remember. While you may be generating lots of qualified leads, that number is meaningless if you’re not converting them to people who actually fund. The percent of qualified leads who fund is the number that truly matters, and it’s imperative that you track it diligently. When launching a fund, you should ideally review these metrics every two weeks.

Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.

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