Advice for Fund-Raisers –

If you’re going to cold call Christoph Manser of Winterthur Group, be prepared for disappointment. “We often approach a manager before the fund-raising process begins,” he notes. “That’s the case in most of our manager selections. We have a relatively low hit rate for unsolicited fund managers.”

Before writing a check, Manser wants to see five things: consistency in strategy and focus; discipline in pricing deals; domain/industry expertise (especially for firms doing early stage science or technology deals); good team dynamics; and exits with consistently high returns.

The Winterthur process works like this:

“We get an introduction to a firm and a PPM. We see the PPM and digest that to a one-page summary, discuss it internally and if it seems worthwhile, we’ll meet them in Zurich or at their offices. We’re a small firm, so we have a lot of discussions within the team.

“Step two is a meeting. We send out a spreadsheet to get more information about that GP’s track record and do a fair bit of number crunching with that data. We also do some early reference checks with other LPs at this stage. If we’re really excited we look closer into the individual deals in their portfolio, have more GP meetings and do reference calls with the execs at the portfolio companies. After that is tax and legal due diligence.

“We try to get an idea of where the value is added by a manager. Do their companies grow EBIDTA, is [the GP’s] work just multiple arbitrage or does the value come from de-leveraging the company? We want to know what kind of role our managers are playing in their transactions. Since our GPs are mostly involved in very competitive markets, we also want to understand what their particular edge is in sourcing and securing a transaction.”

Winterthur isn’t big on emerging managers. “The investment process for a first-time fund is lengthy,” Manser says. “If people have not worked together before, we often don’t look at the group because this adds another dimension of risk to an already risky business. We generally like to wait as long as possible to see how people are working in the new set-up.”

Like all other LPs, Winterthur was slammed with pitches this year. “Unfortunately, some funds did not realize we were busy and called on us almost on a weekly basis,” Manser says. “It really didn’t help any of their cases, and it demonstrated a lack of professionalism when a firm didn’t understand that. Others delayed the process of fund raising because they knew that LPs have been so busy.”

One of Manser’s pet peeves is VCs who dress down, which is the habit in Silicon Valley but not in Europe. “We know that chinos and a blue shirt are standard for a VC overseas, but we see so many people that the first meeting is really important,” he says. “For that first meeting, people should wear a suit and a tie.”

And GPs had better be on time. “We’re very punctual here,” Manser says. “That’s not just a Swiss habit; it’s a continental European thing that is important. It never helps if you’re 30 minutes late. We had one guy come in, who was not only badly dressed, he had cut himself badly shaving and had patches all over his face. It was clear that he came in on a redeye, rushed to a hotel and shaved quickly and showed up here. It wasn’t a good fund either. We didn’t turn him down because he didn’t shave properly, that was just a demonstration of other things.”

Above all, Manser is looking for respect. “The worst is when people are B.S .ing,” he says. “That’s really bad. People meet with us and tell us stories [that indicate] that they think that we don’t understand the industry. They treat us like dumb money. Just write our check. That’s a real showstopper. We tend to stay polite but it’s a short meeting.”