Hedge funds raise money from individual and institutional investors who contribute capital in exchange for interests in the fund entity. Because hedge funds are generally prohibited from using any public advertising to attract potential investors, hedge funds are typically marketed through close networks. These networks may include friends and friends of friends, business associates, or relationships introduced through third-party placement agents, who can certify that prospective investors are “accredited investors.”

Hedge fund managers may also negotiate “seed” investment deals with anchor investors who will often expect reduced fees or an ownership stake in the fund’s management company in exchange for a significant early contribution. To introduce the fund to prospective investors, hedge fund managers often develop collateral marketing material, which generally includes a “pitch book” and a “tear sheet,” to provide an overview of the fund’s strategy, manager, performance history, and investment terms.

A hedge fund manager may maintain a web presence but may not use a website to advertise any specific fund (although hedge funds may begin to advertise publicly as a result of new flexibility created by the 2010 JOBS Act). For this reason, a hedge fund manager’s website will generally have a public portion and a password-protected portion. The public portion of the site will often contain basic information about the fund’s advisor and investment strategy, and may include a questionnaire to gain information about a prospective investor. The information gained from such a questionnaire should be used to begin a dialogue to determine whether the investor is qualified to invest into a particular hedge fund.