October 10, 2013
by kapadmin
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To Fund or Not to Fund, That is the Question…

What are your firm’s short and long-term goals?  Do you want to be an investment manager?  What is your target raise, average deal size, target returns, and anticipated annual investment?  What is your competitive advantage and competitive landscape?  What potential conflicts may pose a road block for investors?  Prior to launching an institutional raise, it is imperative to think through many of these questions.  KAP may be able to provide guidance as you consider various capital raising alternatives that are advantageous to your firm’s growth.  KAP will also identify areas that need to be addressed or emphasized as the client embarks on the raise to optimally position the vehicle in the marketplace.

August 16, 2013
by kapadmin
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No Pipeline, No Dice.

What is in your current pipeline? Are you sourcing transactions that match your proposed fund’s investment objectives? Be prepared to convince investors that the opportunity is now, and show them how you are taking advantage of these investments even before your fund’s first close, perhaps through joint ventures or bridge capital. If you don’t create a sense of urgency around the opportunities that you are witnessing, investors will not feel compelled to move quickly toward a close!

June 25, 2013
by kapadmin
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KAP’s Top 10 Fundraising Tips

  1. Build a thoughtful capital raising strategy.
  2. Be able to articulate your investment strategy concisely, in one minute or one slide.
  3. Be ready, willing and able to provide investors with well prepared, thoughtful due diligence materials.
  4. Be relentless with industry rags – know the appetite and allocation of investors.
  5. Engage an attorney that knows the real estate private fund market.
  6. Be prepared to pound the pavement – this means lots of airplanes, meetings and follow up.  GP competition is fierce, and you must be prepared to go the distance for the capital.
  7. Communicate, communicate, communicate!  If you are transparent from the onset, investors will take more comfort in investing in your platform.
  8. Pick your battles on fees and structure.
  9. Put your money where your mouth is when it comes to the GP commitment.
  10. All relationships matter.  Keep in touch with all investors you meet during your road show… there’s always next time.

April 16, 2013
by kapadmin
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Start Smart

Step one, figure out your capital raising strategy.  In the GP haste to get into the market, this element of the raise is the one that is most often under thought.  Start with the basics:  Are your existing investors likely to reinvest with you?  Have other investors expressed interest?  Who is likely to come into a first close?  Then, do your homework.  Stay on top of the market, and be relentless with industry rags.  This will offer great insight into who has an unfulfilled capital allocation for real estate, and often into the types of strategies managers are seeking.  Keep an open dialogue with the consultant universe, even when you’re not marketing a fund.  Consultants not only manage a great deal of capital, they also have their ear to the ground and can guide you to investors that are seeking your strategy.  A well devised capital raising plan will get you to a first close more quickly and minimize the time marketing your fund so you can get back to your day job – investing.

February 3, 2013
by kapadmin
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Avoid the Stalemate

Investors today are more concerned with your fund attracting enough capital than you are.  In general, investors do not want to be more than 10% to 20% of your fund.  If they come into a first close, they want to know that you are going to continue to gain traction in the market and eventually get to a final close that gives them optimal dilution.  The biggest mistake we see is the failure to ask the big, obvious question – who is willing to come into a first close and how quickly can they move to do so?  This list should include your existing investors and other investors that you have gotten to know in your non-marketing period.  Investors that already know your platform will take less time to underwrite your new fund, and trust in your platform enough to take the first step.  The longer you linger without a first close, the staler you become.

December 19, 2012
by kapadmin
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So You Want to be a Fund Manager?

It is not enough to be a top performing investor to attract capital in today’s market. Institutions are looking for managers who will be like minded partners and prudent stewards of their capital. Make sure that you can address their concerns and be able to demonstrate your capabilities as an investment manager.

October 18, 2012
by kapadmin
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Put Your Money Where Your Mouth Is

What amount is the right amount for the General Partner commitment? Put simply, it should be a meaningful amount of your net worth that will keep you motivated and hungry to make sound investment decisions. This rule should flow through the investment team, not just the top one or two partners in the shop. Don’t underestimate the power of a strong GP commitment, particularly when negotiating management fees and carry with investors. Remember, the goal is to create an alignment of interests. Putting your own capital in the game may influence others to do the same.

August 3, 2012
by kapadmin
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We’re on the Road. Now What?

Be ready, willing and able to provide investors and consultants with well prepared, thoughtful diligence materials. If the due diligence process with you is too cumbersome, this is a red flag that investing with you will not be any easier. Transparency and effective communication reign, and this must be obvious to investors at the onset.