Hi, I've raised a few PE funds that were very successful at growing their AUM (>$2bn raised). I also headed cap intro for a big Wall Street investment bank, in a non-US region. I've also been involved subsequently in several consultancies for capital raising, and in several failed PE capital raises. Happy to answer questions on capital raising, what funds do right, what they do wrong, what GPs fail to understand, etc.
Trending Content
| +86 | Sr Asso / VP Unemployment Check-in | 52 | 1h | |
| +30 | What did you do after signing? | 10 | 11h | |
| +26 | VP Level - when to follow up after final round | 10 | 3d | |
| +24 | Resume Gap after 2.5 Years in PE | 5 | 17h | |
| +21 | Public company LBO | 7 | 1d | |
| +20 | Vista Lateral Associate | 12 | 2d | |
| +18 | VP HF Lateral to PE | 1 | 1d | |
| +18 | PE Recruiting From IB- Play It Safe Or Reach For Best Fund Possible? | 6 | 10h | |
| +16 | Banner Ridge | 27 | 1d | |
| +16 | IB/PE Lifers, Was It Worth It? | 5 | 3d |
Career Resources
Yes, this is what I was going to say too. I 100% agree with PersonofWalmart.
The original question from M_1 asking "What kind of pedigree do LPs like to see for funds between $250M - $400M?" did not make sense to me, so I wanted to clarify. LPs don't care even one little bit which school you went to, or even much about which bank you went to. They care only a little bit about what fund you came out of - so if you did 10 years at KKR, Bain Capital, or a top performing niche fund, that will help.
All LPs will care about your deals and the performance. It's pretty cut and dry. If you led a famous few deals, and they delivered outstanding returns, and your startup team for the fund worked together for a while, then you have a shot at raising a fund. At no time has anyone ever asked me where I went to school. They want to know which funds you worked at, what deals you did, and what your performance was. They will want to see consistency in strategy, team cohesion, and a "secret sauce" about why your fund needs to exist and why you will win.
It comes down to product, market, process. I had an easy time raising $1.5bn in 2008 after Bear Sterns' collapse, because our product rocked and we had a strong soft-marketing process. Now I struggle to raise even tho market is good, because the product I'm saddled with sucks. My methods haven't deteriorated - if anything they've been honed.
Good product =
Stable team that's worked together for a long time Secret sauce = able to have some way of generating extraordinary returns that others cannot replicate Solid 20%+ returns consistently in the past Strong risk control / compliance / legal / backoffice Ability to add value (in PE) to portfolio companies Good DPIs (liquidity matters, not just paper gains) Other LPs are blue chip and speak well of you Transparency with prospective LPs (share obfuscated pipeline if needbe)
when you say "thats a good question" to an LP, are you lying or are you lying?
• Best Practices: o Qualify your leads, pre-screen your contacts - 90% is knowing who to speak to, and if they have $ for your strategy o Softmarket – market your strategy and fund when you are NOT in fundraising mode o 50% first close – don’t announce fundraise until you have much of the capital already raised; aim for 50% first close o Keep top of mind – have frequent & short contacts; use short emails/messages o Dataroom – use Lightserve, keep it ease for LPs to view your docs; use tiered VDRs; enable downloads for stage 1 o Materials– have a teaser, a short deck, a long deck, and an extremely long deck (much of VDR); PPM less important o Visits – drop people a note when you’re in town, in order to try to connect o Tracking and contacting – GoogleSheets, PipeDrive, etc. Invest in Preqin o Placement agent – worth getting if you can afford it. You tend to get what you pay for. Ask for references. o Social media - worth doing and having a presence
>CRM?
I use Google Sheets with a mail merge plugin that works in Chrome. It's basically like an Excel that does mass mailing, which means that I can fully leverage it just like Excel and even cut and paste from Excel. This is brilliant, because I pay an exec assistant to organize the sheet for me (after all, it's just like Excel). And I can have multiple copies of the database saved as backups, and have currated / chopped up versions of the database. That means that I have a separate Sheet for each city, and when I go visit there, I just mail merge email everyone on the sheet. "hi I'm going to be in NYC in 2 weeks. Would you care to meet up?"
>Deck length? Content?
I use a 1-2 pg teaser, a 10 slide short deck, a 30 slide long deck, and a 100+ slide full DD deck for late-stage capital closing.
>Advice on closing prospects?
strippers and beer? Get them so drunk they sign anything? F- if I know. I suck at closing. I leave that to others that I tag-team off to. I suppose that's why I dislike IR and capital raising so much.
Here are my broad thoughts about what LPs are looking for, and some best practices I've noted.
Without more info, I cannot advise better.
Perhaps you can elaborate.
What I will say is that for most HF managers, it's better you grind it out at a famous shop, build a decent track record, and line up a patron or two before you strike it out. You don't want to launch w/ less than $30-50mn, because below that you cannot support a decent fund infrastructure.
Without infra, few LPs will want to jump on your fund due to risk and compliance factors. So we used to call the sub-$50mn funds drifting around as being in the "valley of the shadow of death."
Just one redemption away from collapse and unable to get themselves out of the doledrums, even with good performance.
• LP Requirements:
• Best Practices:
Things to like about capital raising:
get to meet a lot of people and have verbal interactions
it's a sophisticated buyer, looking at complex and interesting products
you get to talk about the underlying portfolio and industries. That can be especially interesting if you are representing a cool VC fund, a healthcare fund, etc. where you're looking at some world-changing new technologies.
conferences - I like attending those and experiencing the buzz and activity, bouncing from meeting to meeting to pitch
if you work at the right shop, you might get carry, and in some cases might get a partner role and be valued
What I didn't like
most shops have limited appreciation for capital raisers, and don't give carry/partnership
If the fund gets raised well "it's because our fund and investment guys are awesome" and if the fund doesn't get raised it's all the capital raiser's fault. There is some truth to this, as it is the product that matters, but give the guy working 18 hour days hustling capital for you some credit for effort here!
having to tell the same story again and again and again and again
the capital raising process is highly inefficient and analog. You have to deal with finding the LPs, getting intros to them, presenting to them, and dealing with the fact that there's no urgency on their part to deploy capital. At all. "Dude, we've met like 5 times, and you still haven't written me a check!"