One of the most underrated & overlooked skills a GP in REPE (or really any GP) should optimize for is “investor experience”.
Especially, early on.
Investors want returns, the bigger the better. Great returns over a long period of time are what keep a GP in business.
Especially, early on.
Investors want returns, the bigger the better. Great returns over a long period of time are what keep a GP in business.
What else do investors want besides returns?
Transparency of good & BAD news, consistent & detailed reporting, quick responses to inquires, safely stored & easily accessible investment documents, quick K-1’s, etc.
Transparency of good & BAD news, consistent & detailed reporting, quick responses to inquires, safely stored & easily accessible investment documents, quick K-1’s, etc.
LP’s want to be treated like a high valued customer, not a checkbook.
My mentor growing up beat this into my head early on, “Treat your investors like a customer, and you’ll go far in this business.”
Returns will always make their way to business or dinner table conversations.
My mentor growing up beat this into my head early on, “Treat your investors like a customer, and you’ll go far in this business.”
Returns will always make their way to business or dinner table conversations.
That’s table stakes.
What separates 2 GP’s that each provided a similar risk adjusted 20% return to the same LP is the experience they had with each GP.
What separates 2 GP’s that each provided a similar risk adjusted 20% return to the same LP is the experience they had with each GP.
I am convinced that over the long haul, LP’s would prefer to invest with a GP consistently delivering 18% returns and exceptional experience over a GP that provides 20% returns and has a terrible experience.
There will be people that disagree with that, that’s ok.
There will be people that disagree with that, that’s ok.
The relationship created when one party trusts another with their MONEY is built on intense trust.
The highest level’s of trust come through delivering an unbelievable experience (to the extent your resources can provide) that is consistent, intentional, & overly transparent.
The highest level’s of trust come through delivering an unbelievable experience (to the extent your resources can provide) that is consistent, intentional, & overly transparent.
This thread isn’t meant to minimize the importance of returns (it’s ultimately what keeps a GP in business), it’s to emphasize that everything else a GP does is equally as important and will open up a lot of doors for raising more capital, w/ less friction, as they move forward.
Great Returns + Great Experience is ultimately where GP’s begin to separate themselves from the pack.
It creates raving LP’s who will, w/o asking, introduce you to new LP’s, which creates more available capital (from current and new LP’s) and less friction/time...
It creates raving LP’s who will, w/o asking, introduce you to new LP’s, which creates more available capital (from current and new LP’s) and less friction/time...
(less convincing needed when a referral is made) in raising that capital.
When you tell a new LP about a deal & your company, remember to tell them about the experience they’ll get with you once their dollars are in your control.
When you tell a new LP about a deal & your company, remember to tell them about the experience they’ll get with you once their dollars are in your control.
If you’re not excited about telling LP’s about the experience they’ll have with you, get to work. By making this a priority, you’ll realize it doesn’t cost a lot in dollars or time to create an experience LP’s will love.
If you’re not sure whether your experience is great or not, ask your LP’s. Consumer companies look to customer feedback surveys, GP’s should do this more often with their LP’s (customers).
The end.
The end.
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