Private equity fund raising can be an intimidating (but essential) element of starting a new investment company. To locate LPs and reach your goal, you should build your network. This requires careful management of relationships using the right methods and tools.
For a private equity company, LPs are the investors who invest in your fund using committed capital. LPs are typically large institutional investors, such as pension funds, endowments, and mutual funds. Sometimes, they are wealthy family offices or wealthy individuals seeking a return on investment in a private equity. Finally, some LPs could be funds-of-funds that are able to make investments in a range of private equity funds. They can help you build a portfolio that is diverse.
To qualify as an LP you must meet certain requirements. Generally, LPs are looking for an investment strategy that is compatible with yours, a track-record in a similar strategy, and an intention to invest. They will also want you to have an understanding of how your fund works and be able to communicate why it is worth investing in.
To make the most of your LP relationships it is recommended to have your legal team write your offering memorandum and partnership terms and subscription agreement before you actively search for potential LPs. It instructions for remote employees is also an excellent idea to look at the capabilities of your internal investor relations department and consider enlisting the help of a placement agent.