Independent Sponsors: How are you responding to probing questions about capital raising?

April 27, 2021
by a searcher from Rice University - Jesse H. Jones Graduate School of Business in Houston, TX, USA
Specifically, how do you respond when asked "what does your cap raise process look like" or "how long does it take you to raise"? I understand each sponsor is going to be slightly different in the approach, but I'm looking for some good sound bites to better communicate the process, especially for those who haven't worked with Independent Sponsors before.
from University of Pennsylvania in Austin, TX, USA
from The University of North Carolina at Chapel Hill in Raleigh, NC, USA
That said, I think the answer you want to give (the answer I want to give to that question) is that you have assembled a group of investors who will evaluate potential offers and are ready to commit capital if the opportunity fits their profile. The key here is to do that leg work, prior to giving that answer so you are being honest. So, even before you find your next big thing, have a group of people who are willing to entertain your wild goose chase of self-funded or independent sponsor search. It doesn't cost these people anything, but some people won't buy into your investment thesis and some will. Do the work up front so you actually have a group of people (with money) who you can run deal flow past to see if things make sense. Even if they don't invest, they will help you spot potential problems and risks that you will need to account for no matter what.
Long answer short: do the work early so when someone asks you, you can give an honest sound bite.