Private equity fund raising transactions can be a challenging (but essential) aspect of starting an investment company. To find LPs, and reach your goal, you should increase the reach of your network. This requires a deliberate approach to managing relationships using the right methods and tools.
LPs are investors who invest capital to an equity fund that is private. They are usually large institutional investors like pension funds, endowments, and mutual funds. Sometimes, they are wealthy individuals or family offices looking to earn a profit in a private equity. Additionally, some LPs are funds-of-funds that have the resources to invest in a range of private equity funds. They can help you build a portfolio that is diverse.
To be a qualified LP You must meet certain requirements. LPs are looking for an investment strategy similar to yours, as well as a track record using a similar strategy, and a commitment. They also expect you to be familiar with the operation of your fund and to be able to articulate why it’s worthwhile to invest.
To maximize the value of your LP relationships it is recommended to get your legal team to draft your offering memorandum, partnership terms and a subscription agreement prior to when you begin actively seeking out potential LPs. It is also a good idea to evaluate the capabilities of your internal investor relations department and consider enlisting the assistance of a placement agent.