Hedge Funds + Social Media … a Seismic Shift

September 18, 2007 |

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I reported back after my attendance at Gnomedex in August that the social media phenomenon is already changing the way people do business. This announcement reported by Reuters today is evidence that it is, in fact, happening: 

Facebook and Accel (their primary VC firm) announced that they will launch a new fund, investing in companies that build applications on the Facebook technology. It seems that Facebook is moving beyond being simply a social networking site and morphing into a platform for developers — and they are putting their money where their mouth is.

Also, check out the September issue of Fast Company.  Robert Scoble discusses in his column why social media sites like Twitter are going to change business.

The question is whether the hedge fund industry is aware of this and ready for it?  In my opinion, established funds will be more apprehensive to embrace this new movement than thier start up counterparts — to their detriment.  Start up funds run by younger, savvy managers will know about this technology and use it to their advantage and gaining an edge.  Let’s list the ways:

– Raising capital:  This is a no brainer and anyone with any familiarity with Facebook can see the potential.  It may already be happening.  After Gnomedex, I understood the power of social media and how it can empower start up hedge fund managers to raise capital faster and more effectively by networking and getting the word out about their funds and expertise.

– Finding talent: fund managers will be able to find talented people with the necessary skills and motivation to work for them.  The days of the resume, as we know it, are numbered.

– Managing the business: hedge fund managers who embrace social media tools will be able to manage their funds better and from practically anywhere (remotely).  They will also be able to interact with administrators, prime brokers, investors more effectively.  The brighest of the bunch will be able to take this, combine it with the 4 Hour Work Week and apply it to their business.
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