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Alrighty guys today we’re going all in on arguably the most important step in launching a fund.
Raising capital from the BEST investors.
I’ll be honest with you, sometimes in life you just need to get a little lucky.
That’s exactly what has happened with me and my good friend, Paul Hutchinson.
Paul is my father’s business partner and truly one of the best capital raisers in the Western United States.
The man has literally brought in over $100mm for funds, charities and different projects.
I did not do anything exceptional to be so close with Paul, he just happens to be really close with my dad, and that’s what I mean by lucky.
With that being said I’ve sat down with him many times and we’ve gone over just HOW he has become such a wildly successful money raiser.
He’s taken me through a couple of different steps that I’m going to elaborate with you all.
Let’s get to it!
“Where are the Rich People?”
That’s the question Paul had to ask himself as he and his partner set out to start their own fund.
When I interviewed Paul, he told me he actually wrote this question on a piece of paper and began listing several places he knew he could buy his way into to get in front of the right people.
In this case Paul was in Utah and identified places such as the following:
- Front row of Jazz games
- Hummer club in Moab
- Snowbird Ski Club
- Golf Country Clubs
- Charity Dinners
- Lake Powell Super Yacht Getaway trips
Etc. This was the beginnings of a list that built their business.
Now maybe you aren’t going to be able to get access to all, or the majority, of these places, but all you need is to get your foot in the door.
When I was first getting started in this business spending money scared me. I didn’t want to buy the softwares that I knew would be helpful because I wanted to save.
I didn’t see how spending a couple of grand on some sort of “fun” outing would put me in a position to move forward with my business.
But that’s exactly what Paul taught me.
If I have to spend $5k on some sort of event that gets me a couple of $100k commitments, than that cost was more than worth it.
The point being identify places that you know high net worth individuals will be and put yourself in a position to get into those places, even if it comes at a temporary economic sacrifice.
Who’s the right guy to target?
This was another excellent point that Paul brought to my attention.
You need to separate out the pretenders.
He said there’s one key indicator that he always targets, disparity.
What did he mean by that?
Well to be blunt, anytime you see an old lady with some strapping young guy, you’ve found yourself someone with some serious cash.
That goes both way with old men too.
Paul said if he could give away any “secret” of his it’d be, “follow the supermodels, they know the way”.
And it’s true! Other than that there a couple of obvious indicators, but beware people who are over the top, many of the biggest whales will look totallly normal.
The Importance of Edification and Status
Okay let’s say you’re at this point now. You’ve gone to the party, you’ve made contact with the right person and now you’ve arranged a meeting.
To these investors they’re going to automatically view you as inferior.
You’re asking them for money, you need them.
However, you’re going to have a really hard time closing one of these guys if they’ve got that mentality.
Paul shared a trick that he uses, saying that he always goes into a meeting with a partner.
Then he’ll purposely have his partner arrive late so he can brag all about him.
He essentially elevates that persons status in the eyes of the investor to the point where they view him as their equal, or better yet, their superior.
One of my favorite books, “Flip the Script”, dives deep into the importance of status alignment, that’s a must read if you’re looking at raising capital.
Paul said that during the meeting, once he’s built up his partner, he’ll purposely run to the bathroom so that his partner can do the same thing for himself.
Talk him up and edify his standing in the eyes of the investor.
It’s brilliant and worked like a charm for them.
Conclusion
If you’re not able to do this at a high level, you’ll never get your fund where you want to be.
Raising money is critical for your fund.
So I’d encourage you to follow Paul’s advice and make the short term sacrifice, having the long term vision in mind.
Get yourself in front of the right people and then use the right techniques to bring them on board with you.
Best of Luck,
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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.
