WHY YOU SHOULD STOP ACCEPTING ALL INVESTORS – What I Learned – Capital Raising – Investment Banking

If you create a private equity fund, you have to learn how to turn away investors. If you upset everybody into your private equity deal to buy more real estate or to buy businesses, it just shows that you may be desperate. You have to learn how to just tell people that they’re not a good fit if they’re not a good fit.


And you can’t, you have to have specific parameters, types of investors that are suitable for your fund. Because by defining the types of investors who benefit most from your private equity fund, that’s the only way you’ll be able to attract what you want. And people respect, honestly, somebody that is clear about what they want, because the more you define what you want, the more likely you potentially get it.

So, real quickly, it’s like, when people are creating a private equity fund to buy real estate and all this, either a single purpose syndication or, you know, a blindfold fund, some people have it open where they say, Oh, I’ll acquire whatever I want. Um, and then they just try to, they just take calls of everybody.

that would agree to potentially write them a check. So the two problems are, number one, there’s some investors that you don’t want to work with that are potentially very lethigent. They can cause you a lot of problems and we’ve seen where people would be, there’s some people that you work with, they’re very high touch, they need a lot of support through the process and then if their returns are not exactly what they’re expecting, then they can start bringing in their lawyers really quickly.

Um, and they get agitated very quickly. There are some people that are like this. And so you have to just look for warning signs like this. And one clear warning sign is, is when you talk to an investor and then they start saying that they put money in different deals and then they have a lot of horror stories about the past deals that they’ve invested in.

And then they complain a lot about the past CEOs that they’ve funded. Then, and the past funds they funded, then you may want to see this as you’ll be the next one, because it’s almost like somebody, if you’re, if you’re dating somebody, uh, or you’re courting or dating somebody. And somebody complains about their ex a lot.

That’s usually a sign that you’ll be the next person that they’ll complain about. So just watch that and then see that as a harbinger for things to come. So, the thing after that is, you want to make sure that you, you know, understand that there are some investors that are, that are fraud. You know, I know somebody personally, he spent 100, 000 buying somebody from, I believe, Abu Dhabi.

And he realized that the family office club that he was a part of, it was something where, uh, they were just luring people into deals that were, that involved money laundering. So if somebody sees your agreements and then they see your fund and then they don’t want to follow the proper customer or KYC process where they just share some information about who they are and where they’re coming from and what country they’re in and, and just some information, they’re really resistant to doing that and they want to pay through other means, you know, just take it as a, as a caution sign.

WHY YOU SHOULD STOP ACCEPTING ALL INVESTORS – What I Learned – Capital Raising – Investment Banking

Just so that you can make sure that you’re in compliance. And then the last thing I’d say is, you know, make, there’s some people that could invest with you, like who you shouldn’t probably take. Based on, you should put yourself first, um, for your company. And your company and your, your fund or whatever you’re looking, you should make sure that you find people that align with your values.

Because some people, the problem, the reason why sometimes people are kind of floating, and then they don’t, they’re not getting what they want. It’s because they haven’t established their own values for their, for their private equity fund or for their company. Because if you don’t have any corporate value, then the people that work for you or and the people that you attract will be all over the place.

You have some people that, that prioritize making money over people, for example. And there are many people I know that I like to say they prioritize how much money they can make over relationships and people. And Sure, you know, it’s, it’s, it’s legal, but just if that’s not what you’re valued in, that’s fine.

And then there are other people that value complexity over simplicity. There’s some people that would talk about a complicated deal that has all kinds of bells and whistles, and you have to put money here, and then it comes out there, and then it spins around in three circles, and then you have to put money in this account to get that assurance back, guarantee to multiply your money by here and move it there with an SBLC, uh, and, you know, some PPE, and…

You know a bitcoin deal here. There’s some people that are really just all over the place and it’s great If it aligns with you, that’s great But then if it doesn’t align with you then you have to make that known and then there’s some people that value Uh talking a lot and do dealing with a lot of paperwork and some people that don’t there’s some investors that they’ll just say Oh, just send me the returns every quarter.

Leave me alone There are more passive investors and there are other investors that want to control the deal and take shares and then really be like an advisor to you and they call you every day because they want to actually have another, they want to be like a backseat driver and then that’s fine.

It’s just that you just have to know what exactly, what is the ideal type of condition that you want because you’re going to get the money, you’re going to get it for your fund if you just keep on working hard, you’re going to get it. The idea is like when you get it, make sure that you define an ideal state for after you get it, what type of fund or company that you want to build.

Because if you do that, then you’ll be able to attract the right people that align with those values. So, yeah, overall, just make sure you do this early, because once you start picking up traction, and you start growing your assets under management for your new fund, to buy real estate or businesses, then eventually some people will align with your values, some people won’t.

Then you may have to go through a culling process where you fire your investors. And that’s something we can save for another video. But if this makes a little bit of sense, make sure you need some help doing it. Make sure you head to razors. com to see if you want to create your private equity plan, but if you’re somebody like already doing it and you want to learn more, just check out the YouTube and make sure you click around to learn more.

So we’ll see you in the next one.


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