Tue, 21 April 2020
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
Targeting investors for your fund and getting buy in is a key step in raising a fund.
Potential investors include family offices, high net-worth individuals (HNI), and angel investors.
Larger, institutional investors such as pension funds, are typically not interested in unproven fund managers and rarely go below $50M funds.
Institutional investors look for a prior track record and have minimum investments that would put their investment above a limit on how much of the fund their investment takes. This is typically around 20%.
You could engage a placement agent whose fee is usually in the range of 2 to 3 percent.
You can also use meetings with investors before the fundraise to see how the market will respond.
The key to launching the fund is to secure an anchor investor who will allow you to use their name.
This gives the fundraise momentum as the initial funds are secured.
The most common question will be about past performance. If you have led funds in the past then you have a track record to present. If not, then if you invested as an angel investor in numerous startups then that too could give you a performance record. Be sure to highlight any investments that resulted in a successful exit.
If you were an operator of a company with a successful track record, that could be used as well.
Let’s go startup something today.
Direct download: Startup_Funding_Espresso_--_Targeting_Investors_for_your_Fund.mp3
Category: -- posted at: 11:06am CDT