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There are so many unknowns these days. Sometimes it feels like we just don’t know who we can trust anymore.
Investors are feeling the same way!
Following the financial crisis in 2008, so many people were unaware what exactly their investments were in… investors have since been more skeptical.
And they have good reasons to be!!
“Ask investors what kind of financial information they want companies to publish, and you’ll probably hear two words: more and better.”
Investopedia
Now you’re probably thinking…
“That’s great, Bridger. But what does it have to do with closing a deal??”
Being completely transparent with your potential investors is what will set you a notch above the rest when it comes to finally closing that deal!
Transparency is Key
For example: One of my well known mentors started a real estate fund a couple of years ago…
He found a knowledgeable, skilled team and started searching for great deals.
Eventually, he found some promising prospects and set out to make pitches.
He realized he could try to convince investors to put their money with him, or simply provide these potential investors with the information that would PROVE to them that him, his team, and his model where the best!
During the pitch, he actually invited the investors (Limited Partners) to sit in on his investment committee meetings.
Now, do you realize what this means in business?
To understand how uncommon this is, you’ll need to understand what an investment committee actually does…
Your investment committee is made up of professionals that analyze asset investment performance, develop investment strategies, and make key decisions.
Generally, an Investment Committee weekly or monthly hold a 2-4 hr meeting discussing the portfolio performance of the fund and make possible investment decisions for the future.
Now, letting investors go to that meetings… that’s complete transparency.
When you let investors watch your team go through and analyze a potential investment, they will understand the care that will be taken with with their money.
After the meeting, investors would come out of the meeting and say to my mentor,
“I have never seen anything like that before.”
If you show people how thorough you are about choosing investments, their trust in you will grow.
My friend explained,
“If we got investors into that room, it was almost 100% hit rate that they would end up investing with us.”
Investors will want to keep giving you their money!!
Pro tip: Your first investment committee might only be 3 or 4 people, but the stronger you build your committee, the more money you’ll get from investors AND the more you’re going to get out of investments that you make on behalf of the fund.
If you’re going to build a good fund, you’ve got to have a good investment committee.
If you really believe in yourself and your fund that much, and are willing to put your OWN money in, you shouldn’t have a shade of doubt about letting investors know what’s going on!
Best of luck!
And thanks for the read!
DISCLAIMER: This content is for educational and informational purposes only. It is not to be taken as tax, financial, or legal advice. You should always consult a legal professional before taking action. Furthermore, this is not a recommendation to buy or sell any security. The content is solely just the opinion of the authors.
