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March 28th, 2022

Professional Begging Circuit 

Professional begging circuit is the witty description given to appearing on bended knee while seeking capital for a new private equity fund.  Life on the circuit is filled with seeing many of the same faces awaiting approval at an investor’s committee meeting, strolling airport hallways, meditating in hotel rooms, chewing on side letter proposals and on airline peanuts.  But the process has its entertaining moments.

The predicate for all private equity investment is available capital to invest. An endless array of advisors and ideas are available, for a fee, to help a firm raise capital for a private equity fund.  Often, the general partner raising a fund and the limited partners evaluating a fund are surrounded by posses that include bankers, consultants, score keepers, academics and fortune tellers.  Yet, the decision to invest in a fund and its general partner and the decision to accept a limited partner ultimately boil down to the mutual comfort level of the general partner and the limited partner.  Track record, strategy, integrity and behavior all play a role in determining the comfort level.  The proximity and time together often lead to a variety of memorable tales as these relationships unfold.  Creative tendencies on behalf of either party make the tales more interesting.  Getting a commitment or just an answer often turns the marketing process into a variant of The Pursuit of the Holy Grail.  A few examples from our early Fund marketing days will illustrate this point.  

In the 1990’s, as we were marketing our Fund, I was scheduled to drive to Boston for a meeting with an investor.  I filled my gas tank on a cold windy afternoon the day before the trip.  Gas stations in CT were still selling winter blend fuel which contains high levels of butane (lighter fluid) that works well in cold weather, but can cause stalling in warm weather.  I left for Boston at 8am with the dregs of the overnight frost still evident.  As I drove toward Boston, one of those spring-like days that occasionally arrive in winter began to emerge as I watched the thermostat approach seventy degrees.  Shortly after I reached the Mass Pike, my engine began to cough and to shudder.  I stopped to call my car dealer who instructed me to drive to the nearest dealer in Worcester.  My car continued to sound like a cartoon jalopy as I drove to the dealer.  Two hundred yards from the dealer, the engine simply stopped running as the overheated butane had choked it.  In my wool suit, I emerged from the car, after putting it in neutral, and pushed it the rest of the way into the dealer.  The effect of the heat, the humidity, the wool suit and the car pushing left me looking like a swimming competitor. There was no time to shower, nor to change clothes as my meeting loomed in downtown Boston.  I arrived at the investor’s office in my new sweaty look.  The investor was kind enough to give me a pitcher of water and a commitment. It is a tale we still repeat.

One other quick tale points to the need to adjust to the awkward.  I have a lake house in New England where my family often goes on vacation.  We were there one week when an investor phoned to say he would like to meet in our office to discuss our fund.  He was also located in Boston, so to save him driving, I offered to have him come instead to our lake house.  We set a time for 11am the next day.  At 9am the next day, the toilet broke in the downstairs bathroom located adjacent to the living room where I would meet the investor.  The plumber came at 10am and prescribed a new toilet, which he promised to bring later that day.  At 11am, the investor arrived.  Seated in the living room, we began to chat about the fund and our firm.  At noon, the front door opened. The plumber appeared carrying a large commode that he proceeded to parade beatifically through the middle of our meeting.  The investor looked more than surprised by this development as he was accustomed to more formal presentations.  I explained we usually only offer the special effects in side letter agreements, but we made an exception for him.  Between the porcelain idolatry scene and the ensuing sounds of pipes being hammered, it was not the ideal marketing setup, but you play the hand you are dealt and make the best of it.

Dozens of other stories as unique as these fill the files and the memories of private equity fundraisers.  Most of the experiences are very pleasant, irrespective of the limited partners’ decision to invest or not.  Frustration over the time to receive a decision or a decision clearly not rooted in fact, nor logic, does arise, but over the decades the growing sophistication of the limited partners has made the decision process more efficient.  

I’m Rob Morris and I approved this blog.

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