Here's an abbreviated checklist when fundraising for a private equity fund.
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CHECKLIST
✓ Fundraising goals
Articulate how much money you are looking to raise exactly.
✓ Define the fund investment strategy
You want to highlight the unique nature of the fund. Touch on the exact type of strategy the fund will invest in and sort of investments that will be made in accordance with the strategy.
Clarify the exact strategy you will pursue:
- Distressed & special situations
- Growth equity
- Leverage buyout (LBO)
- Private credit
- Secondaries
- Etc.
When outlining the type of investments you’ll undertake, address variables such as geography, industry, size, etc.
Address deal flow origination and how you will pinpoint investment targets.
✓ Identify target investors
Build out a list of potential investors whose criteria align with your investment strategy and style. This is an evolving list as you will identify investors on an ongoing basis and add them to this list.
✓ Marketing material
You will need to prepare all the requisite information and data to educate potential investors on the offering. This includes:
- Presentation(s)
- Teaser
- Financial model(s)
- Etc.
Also, it wise to begin preparing Due Diligence Questionnaire (DDQs), which are there to help investors better understand and evaluate an investment opportunity and to address questions that arise. Begin to think about the sort of questions that may be asked. This document will of course evolve as questions you didn’t think of in the beginning will come up as you start speaking with investors.
✓ Virtual room
Prepare an easy-to-use and easy-to-navigate virtual data room where important files and documents will be placed. They may include the above ‘marketing material’ and more.
At some point during your discussions with interested investors, you may give those who show real interest access for them to carry out due diligence.
✓ Develop your advisor / professional service provider network
Identify the relevant third-party advisors and industry professionals (e.g. lawyers) who will be used as part of the fund’s strategy and operations.
✓ Engage with investors
Initiate outreach to investors.
Arrange calls, set up meetings and present to them the offering.
✓ Negotiations
Have your desired terms of investment ready ahead of negotiations and anticipate having to perhaps compromise on certain areas. Flexibility may be needed.
✓ Ongoing monitoring and reporting
Keeping investors up to date on your fundraising progress.