Private equity fund raising deals can be a difficult (but crucial) component of establishing a new investment firm. To locate LPs and reach your goals, you must leverage your network. This requires careful relationship management with the right tools and processes.
LPs are investors who pledge capital to an equity fund that is private. They are often large institutional investors like pension funds, endowments and mutual funds. Sometimes they are wealthy families or individuals seeking a return on their investment in a fund of private equity. Lastly, some LPs are funds-of-funds that have the resources to make investments in a range of private equity funds. They can help you build operationalroom.com/a-virtual-data-room-or-box-which-should-you-use a portfolio with diversified investments.
You must meet certain requirements to be a LP. LPs are looking for an investment strategy similar to yours, as well as a track record in a similar strategy and a commitment. They also require you to have a good understanding of how your fund works and be able to explain the reason why it is worth investing in.
It’s a good idea to allow your legal team to create the offering memorandum and partnership terms prior to beginning to search for potential LPs. It’s also a good idea to evaluate your internal capacities in investor relations and to consider hiring a placement agent.
