Private equity fund raising is difficult (but essential) aspect of starting an investment company. The best way to leverage your network is to use it as the best way to find the right LPs to help you achieve your goal of committed capital, but this requires careful managing relationships using the appropriate processes and tools.
For a private equity company, LPs are the investors who support your fund with committed capital. They are usually large institutional investors such as pension funds, endowments and mutual funds. Sometimes they are wealthy families or individuals seeking a return on investment in a private equity. Also some LPs are funds-of-funds which have the funds to invest in a range of private equity funds. They can help you build a diverse portfolio of alternative investments.
To be considered an LP, you must meet certain requirements. LPs are looking for an investment strategy that is webpage similar to yours, an track record using a similar strategy, and the commitment. They will also expect you to be familiar with the operations of your fund and be able to explain why it’s worthwhile to invest.
It’s a great idea to let your legal team create the offering memorandum and partnership agreements before you look for potential LPs. It’s also a good thing to examine your internal investor relations capabilities and consider hiring an agent to place your offer.