Private equity fund raising can be a difficult (but necessary) part of starting up a new investment company. To locate LPs and reach your goal, you should increase the reach of your network. This requires a deliberate approach to managing relationships using the right techniques and tools.

For a private equity company, LPs are the investors that back your fund with committed capital. They are typically large institutional investors like pension funds, endowments, and mutual funds. In other cases they are high-net worth individuals or family offices seeking an increase in their investment in funds for private equity. In addition, some LPs are funds-of-funds with the funds to invest in a variety of private equity funds and can assist you in building a diverse portfolio of alternative investments.

You must meet a set of requirements to be considered an LP. Generally speaking, LPs seek out an investment plan that is aligned with yours, a history of a similar strategy and an investment commitment. They also expect you to be knowledgeable about the operation of your fund and be able to demonstrate why it is worth investing.

To maximize the value of your LP relationships It’s a good idea to get your legal team to draft your offering memorandum, partnership terms and a subscription agreement prior to when you actively search for potential LPs. It’s also an excellent idea to look at your internal capabilities in investor relations and consider enlisting the help of an agent for placement.

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