Fundraising happens when you don’t fundraise – Fund Management / REIT


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At a conference last month, I heard the line, “fundraising happens when you don’t fundraise” in one form or another from speakers from members of at least three different panels. There is no way I heard that statement from even a single panelist five years ago.

The point they were making was simply that fundraising these days takes a lot longer than ever.

It’s a crowded market and the capacity of an LP is limited. Naturally, their primary focus will be renewal opportunities and other managers with whom they already have significant acquaintance.

Give before you consider taking

If you want to permanently close your fundraiser in a reasonable timeframe — and with a reasonable number of new LPs — you need to communicate with the prospect well in advance of officially launching your raise.

No genuine relationship ever begins with one person asking another for money.

Kyle Dunn, Managing Director at MJ Hudson

We all talk about the importance of relationships in our business – but in our quest to raise capital as quickly as possible, we seem to skip the ‘build relationships’ part and jump to the ‘sell’ part as soon as we meet someone. one able to allocate to our strategy.

The point is, a “real” relationship is one that involves giving something of value to someone else without asking for anything in return.

This is not usually what happens, however, in our business. In our business, we reach out to random complete strangers and ask them for huge amounts of money without ever investing the time to get to know them or give them a reason to know us.

Marketing ROI

My colleague, Kyle Dunn, who taught me this almost a decade ago, points out that “no real relationship ever begins when one person asks another for money.” For this reason, we’ve always maintained that you should communicate with your audience regularly – preferably with value-added content that positions you as a thought leader – and not just when you expect something from them.

His point. The more you invest in these relationships, the more return – that is, quality prospects and eventually, AUM – you can expect in the long run.

More importantly, in an industry like ours where products are primarily ‘bought’ and not ‘sold’, it’s essential to be on top when they finally decide to allocate them to your strategy. Plus, it will take you much less time to prove you’re thoughtful and interesting when you’ve demonstrated it from the start.

A little encouragement goes a long way in fundraising

Historically, managers have made very little effort to nurture relationships with non-LPs after a fund has closed. That is, until they launched a new fundraiser several years later. And, of course, no matter how much work a prospect did, those who weren’t allocated to a previous fund would undoubtedly end up starting all over again.

The implications for your next raise are twofold. First – let’s not say it (but we said it anyway not so long ago when we discussed making investor relations a “profit center”) that your existing LPs need to be treated like the partners they are. Providing an exceptional investor experience is no longer a “nice to have”. And second, be visible with value-added information.

After all, it’s never too early to give people a reason to know you.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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