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Institutional Insights: LP feedback for fundraising GPs

by Andrés Ramos, Content Marketing Specialist – eVestment Private Markets

In a recent piece, Private Equity International asked a group of experienced institutional investors to give advice to private markets fund managers who are trying to fundraise from them. We’ve highlighted some of that advice here, with three key insights gained through working with our own LP clients.

1. Do Your Research

“Deeply understand our investment discipline, our mission, our people, and our culture as much as our investment needs.”

– Chris Philips, Washington State Investment Board

 

“Do your homework on our current portfolio and be able to clearly explain where you fit and how you can be additive.”

– John Bradley, Sr. Investment Officer – PE, SBA Florida

Takeaway: Sophisticated LPs want to know how your fund can complement their existing portfolio, and beyond that they want to ensure that as a GP, you understand who they are as an investor. Fundraising presentations that focus solely on your track record, your investment process, and your partners’ pedigree will not resonate with anyone. Spend time understanding what matters most to the investor. Be sure to appreciate their data and reporting needs and be prepared to demonstrate how your team and your workflows are equipped to meet those needs.

Related Article

Learn about how to find and utilize key sources of information to conduct granular research on LPs to aid your fundraising in this related blog: “How to Find Private Equity Fundraising Success: Assessing Investor and Fund Fit”

2. Tell the Whole Story

“Be humble, grounded, and pragmatic”

– Greg DeNinno, MD of Private Investments, Howard Hughes Medical Institute

Takeaway: Be prepared to speak to your entire track record: the winners, and the losers. Investors value humility and the ability to learn and grow in their fund managers. They to ensure that their fund managers feel the same sense of capital preservation and fiduciary obligation that they do themselves. It is a significant red flag if a GP cannot be introspective and speak critically and honestly about why certain deals in their portfolio may not have worked out and what was learned from those experiences.

3. Plan Ahead

“Don’t let our first meeting take place after you’ve launched a fundraise.”

– Office of the Treasurer, Connecticut Retirement Plans and Trust Funds

“Spend time with us way in advance of the next fundraise.”

– Daniel Winther, Head of PE and Infrastructure, Skandia Mutual Life Insurance Company

Takeaway: It is very clear to investors when the only reason a fund manager comes calling is because they need capital. LPs value GPs who take the time and effort to build a relationship. Working with institutional investors is a two-way partnership, not a simple monetary transaction. Fund managers who approach investors with this mindset will do better than those try to make a sale.

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