The top buy-side city for investor headcount is New York and by a wide margin. This came as no surprise to me.
New York City has more professional investors than any other city in North America. New York City also has more assets under management than any other city in North America but the AUM market share position is far less pronounced. New York City has a much higher relative percentage of hedge funds to traditional asset managers when compared to Boston which helps explain the following AUM slide.
It is important for IROs to understand that most hedge funds deploy leverage which amplifies their investable assets. Therefore AUM in hedge fund heavy geographies such as New York City and Fairfield County CT most likely understates the buy-sides purchasing power by a significant margin.
When you take the collective AUM of a given city and divide it by the number of institutional investment professionals working within that city you find what I like to refer to as the Money Density for that city. This measure of purchasing influence should help redefine IRO and FinTech vendor targeting strategies.
When Money Density is taken into account the primary buy-side target list is turned on its head. This bar graph simply illustrates how much money is under management per analyst and portfolio manager in each city. Meetings in San Francisco, Atlanta and Minneapolis represent more buying power than meetings in New York, Toronto and Fairfield County CT.
The high Money Density cities are also under penetrated on a relative basis versus the low Money Density cities. Investors in these locations are less inundated with requests for meetings and therefore more likely to meet with you.
Posts
Good article - look forward to learning more through your research and findings.
ReplyDeleteThank you. Any feedback re: what you would like to see here is welcome.
ReplyDeleteThought provoking concept. It seems to me that 'money density' could also be thought of as limited supply viewed through the eyes of a job-seeker.
ReplyDeleteI hadn't thought about it in that way but you are correct. I suspect that there is a very strong inverse correlation betwen money density and job availability on the buy-side. Thanks for your comment Bob.
ReplyDelete