Hedge Fund wannabees turn to Speed Dating

It’s been so long, we can’t remember in which Broadway revival we first heard “You gotta have a gimmick” sung. We think there was something about a stripper with shaking her electric lights, but whoever sang it. couldn’t have known how far it would go. Case in point: Eos Airlines Flight 2 lurched amid heavy turbulence on Saturday night, while hedge-fund manager Kurt Hovan tried to stay on course, making his pitch to a prospective investor.

The 25-minute sales job by Hovan, manager of a $21 million health-care fund, fell flat. The investor didn't bite -- he said the fund was too tiny and its investment team too green.

Hovan was one of a handful of small-fry hedge-fund managers whose hopes took off with the Eos flight. Each paid $3,900 for a round-trip seat on the New York-London trip. The draw: to mingle with captive big-time investors and make sales pitches over champagne and canapes. Investors rode free of charge.

"It's speed dating for hedge funds," says Bartt Kellermann of Global Capital Acquisition, which raises money for hedge funds. If investors express interest, Mr. Kellermann arranges follow-up in-flight dinner dates.

Call it the underbelly of the hedge-fund boom. The biggest and best funds have turned away investors flocking to these private investment pools, which cater to wealthy investors. Assets into hedge funds have doubled over the past five years.

But the hedge-fund galaxy is littered with thousands of no-name players lacking the marketing bucks of industry giants and hungry for the mere chance to make their pitch. The vast majority of hedge-fund managers "do not resort to desperate measures or gimmicks to raise capital," sniffs Martin Byman, who helps some of the biggest hedge funds raise capital at Morgan Stanley. That being said, what distinguishes the airline gambit is its midair ambience and allure for small hedge funds. Billed as a one-of-a-kind "1st Class Capital Raising Flight," the marketing ploy was hatched by Global Capital and Eos, a start-up airline bankrolled by private-equity firms.

Cue the theme from Star Trek, “Going where no man has gone before…”

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