$300m GP shared fundraising tips

A quick note before we jump in…

If you ever consider being a GP or LP for an investment firm.

You might want to tattoo that on your eyelids:

A short-sighted GP meets with a potential LP and immediately makes proposals to raise capital. A long-term focused GP invites LP on a journey to start a relationship…

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Ugh.

Early days of building a company and a private equity firm.

• Work

• Boosting your belief

• Work

• Boosting your belief

• Work

You want to make sure that what you built exists and more importantly – that YOU can do it too.

To boost your belief – these can be books, articles, podcasts, or personal conversations with people who are already doing it.

With strong belief you get into the details.

So when you're working, you know exactly what you need to work on WHILE avoiding costly mistakes. Big one!

All VERY logical.

But what usually happens:

Things get tough and the belief becomes very weak.

• Too hard…

• Not for me…

• It doesn’t work…

• I actually want to do something else…

• It’s not worth it…

Take out the belief and you don't do ANY work.

You are done!

I have seen this SO many times over the past year.

Sadly this is the case for 95% of people who want to acquire a company or start a PE firm.

To sum up:

Folks think that "doing the work" is the most important part.

Wrong (IMO).

It still comes down to the belief part.

If you know you're going to succeed, with 100% certainty, you'd do whatever it takes to get there, right?

So it’s NOT only about doing the work.

With your strong belief comes work-ethic and confidence…

• to make the calls to brokers to find deals and build the pipeline,

• to create various presentations (tens if needed!),

• to chase off-market businesses and ask the founders to sell it for 4x EBITDA instead of 7 times,

• to pitch investors to raise millions for your business/fund.

You do (all this) what you said you were going to do.

(Ideally for years by not getting desired results. But without losing enthusiasm.)

Once you've overcome the first hurdles and what you wanted to build has started to become a reality. Congratulations!

What next?

Spend 95% of your time at work, and the rest to still strengthen your belief. To make sure you don't lose it (knowing how costly it can be).

At the end of the day, it's about constantly getting real-life proof that what you want to build EXISTS.

For example, I've met 10+ gentlemen (both via podcast and IRL) who have successfully made 10+ investments and some earned wild IRR returns…

So in my belief I know it's possible.

With this crazy belief in yourself and an idea, one can work extreme hours with tremendous effort to make it all a reality…

All while running circles around brighter folks who burn out, give up and say it's too hard…

Just sticking to it, doing the work with strong conviction, is better than being 10/10 smart or talented with less conviction.

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"I call a lot of traditional companies in the $2-10 million revenue range, niche companies - if I find something interesting, would you like me to send you more information?"

Using this line has given me a 100% yes when talking to new investors.

Such an easy way to make sure they pick up my phone / answer my emails EVERY time I reach out.

I want to be the guy they're happy to talk to. They get news and potential great deals.

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Btw, I only started using it very recently and it works very well.

Show me an investor who doesn't want a good deal?

They all do.

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Want hard-hitting actionable strategies you can use RIGHT AWAY to dramatically improve IRR and MOIC of your private equity firm and holding company?

Talk to folks who are doing that today.

If you manage a $20M fund and invest in traditional $1M and above EBITDA companies, talk to someone who does just that.

There is no point in reading about Mr. Kravis and Mr. Roberts from KKR, who manage $500B and have a team of 4,490 people.

They are so far ahead.

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How to raise millions to fund your $2-10m deals?

A copy-paste from a guy who raised $300m from normal people:

• What if you could acquire an unlimited number of profitable $1m+ EBITDA traditional companies?

• What if money was not the bottleneck…

• What if you could have unlimited funding to fund your deals?

Here we go:

1) Become the smartest and most well-read person

Credibility

It can either be earned, displayed or borrowed.

Earned — done tons of deals in private equity space

Displayed — show your systems and processes, build in public

Borrowed — attach yourself to someone who has done what you want to do

The better track record you have, the better ability you have to raise capital.

2) Start building your network

It’s like a funnel. The more people know about you, out of these the more people will invest.

(In case they know, like and trust you!)

List of 50 potential investors interested in what you do. Maybe 1 end up investing.

Or maybe you have a list of 500 people.

Imagine if you have 5,000 people…

How to get to a list of that size?

By teaching and educating; mixed with entertainment

3) You have to actually have solid deals

That requires a process to secure those great deals on a regular basis.

Finding deals is also like a massive funnel.

You talk and visit 100s of companies in order to acquire 1.

4) Explain in clarity and enthusiasm, using psychology

You have to be able to explain why the deal makes sense.

You have to be able to pitch it right.

CLARITY and EXCITEMENT

• This is what the deal is

• This is why it makes sense

• Here’s what you do

• Here’s what I do

• Here’s the risks

• Here’s why I’m excited about it

5) Make it easy for investors

Make it easy for the pitch deck to look at

Make it an easy website to go to learn about it

They should never be confused about what type of return they’re going to get.

Everything should be made very easy.

6) Overcommunicate

Tell them everything that’s going on – The Good, The Bad, The Ugly.

It’s hard to say when things go bad. But be honest and it will be okay.

You’re in this together. The big boys and big girls that are investing alongside you; you want to be TRANSPARENT.

Again let them know the good and bad and what you’re doing to fix the bad things.

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How has been the week in the small private equity world?

Consumer loan company

We just had our monthly meeting today. A screenshot says more than a thousand words.

Take care,

Mikk Markus / PrivatEquityGuy

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This week’s podcast

Pretty crazy that an hour long and value-​​backed interview with the gentleman who built a $1b revenue HoldCo has 87 views.

While a video of an Indian lady eating spicy mutton curry has been viewed 57,383 times.

In case you want to listen to the interview:

Conversation with Eran reminded me a very important business & life lesson:

The importance of getting into a great business and STAYING in it.

Links to Spotify, Apple Podcast and YouTube.

Thanks a lot for following the journey.