Private equity fund raising is difficult (but necessary) aspect of starting an investment company. To locate LPs and reach your goal, you must increase the reach of your network. This requires careful relationship management using the appropriate methods and tools.
LPs are investors who pledge capital to the private equity fund. They are often large institutional investors, such as pension funds, endowments and mutual funds. Sometimes, they are wealthy family offices or wealthy individuals seeking a return on their investment in a fund of private equity. Lastly, some LPs can be funds-of funds with the capacity to make investments in a variety of private equity funds. They can help you build a portfolio with diversified investments.
There are certain requirements in order to be a LP. LPs are looking for a strategy of investing similar to yours, a track-record of a similar strategy, and the commitment. They also require you to understand the operation of your fund and to be able explain why it’s worth investing.
It’s a great idea let your legal team draft the offering memorandum and partnership agreements before you search for potential LPs. It’s also a good thing to data room system assists private equity companies assess your own capacities in investor relations and to consider hiring an agent for placement.