Preparing to pitch an LP: Tips for getting it right

Limited partners offer plenty of advice to GPs coming to them with fundraising pitches.

Much of it you’ve heard before. Do your homework! Did the LP you’re pitching play lacrosse at Duke, or field hockey in Indiana? Do they back emerging managers or shy away from seed firms?

Be sure, as well, to find a simple way to explain your differentiation. And don’t hesitate to drop the names of co-investors, especially if one of your first deals attracted standouts, such as Spark Capital.

Then test your pitch ahead of time and listen to the feedback of smart, experienced people.

Other suggestions for a memorable pitch are less obvious.

Be ready to explain how you expect to weather the economic downturn when it arrives, and to detail the preparations you are making today.

Also be sure to speak the same language as the LP on the other side of the table. You may define “deal sourcing” in different ways.

Remember the aim of a meeting may be simpler than you think.

The key purpose of a first meeting should be to get a second meeting, said Kartik Natarajan, a partner at Blue Cloud Ventures, speaking at Buyouts Insider’s Emerging Manager Connect East conference in New York July 26. “The main thing is this is going to be a long, long sales process.”

When it comes to qualifying an LP, be clever and consider starting a meeting with a question, suggested Alex Abell, a partner at RCP Advisors. Ask directly, for instance, about a firm’s allocation policies.

“Most LPs are happy to talk about themselves,” Abell said at the conference. “Don’t be afraid to start off a meeting by asking about the people on the other side.”

At the same time, don’t focus solely on the slide deck, he added. Listen to what the LP is saying or asking.

Jud Hill, a Blue Star Capital managing partner who’s presented to about 800 LPs, said LPs love to hear war stories. They want to know what went wrong and how a GP fixed it.

Another technique for digging deep into process is to ask for a whiteboard, said Sanjay Sanghoee of Delos Capital. Use the whiteboard to walk step by step through a deal and provide an in-depth sense of how it was done, he said.

Another smart way to anticipate LP questions is to provide a lengthy list of people connected to or serving as references on a deal. An LP may appreciate the transparency. It will save him or her the trouble of tracking them down.

And it may make you look like a problem-solver.