Institutional vs. Retail Investors

If you’re raising at least $2 million of equity for an acquisition, your cap table may include both institutional and high net worth investors. To get to a close, you’ll need to manage two very different audiences — each with its own expectations, pace, and decision-making style. This isn’t meant to be a comprehensive guide to raising capital — just a few key differences to keep in mind when pitching HNW vs. institutional investors. High Net Worth Investors HNWs invest based on conviction in you and the deal — not a 1,000-file data room. -Lead with the investor deck: Start with a clear, concise story about the business, the deal structure, what kind of financial return the deal can realistically generate, and why you are the one to lead it. -Keep diligence in the background: Supporting materials should be available, but they shouldn't be the focal point. Most HNWs won’t review the target company's tax returns — they just want to know you’ve thought it through. -Show the terms early: HNWs typically expect to see investor terms upfront. They don’t want a negotiation — they want clarity. -Be ready for “what’s your minimum check size?”: It’s one of the most common questions you’ll get. If your minimum is on the higher side, it’s better to say so upfront — it saves everyone time. -Expect slower follow-up: Imagine if tomorrow someone approached you about investing in a deal. Between work and family, it might take a few days to respond. That’s the headspace many HNW investors are in — it’s not disinterest, it’s bandwidth. Institutional Investors Institutional investors are paid to put capital to work — that’s how their business works. But they’re also under pressure not to look stupid. Whether it’s to an investment committee, senior partner, or LPs, no one wants to back the deal that blows up and makes them look careless. -Strict mandates: Institutional investors usually have a defined buy box around industry, deal size, structure, and return thresholds. There’s often no flexibility. Try to get a read on their criteria early — and don’t take it personally if your deal falls outside the lines. -High volume, high bar: You're not being evaluated in a vacuum. They’re comparing your deal to dozens of others — which means clarity, preparation, and polish matter. -Diligence-focused: They care about how you think through risk, not just what the deal looks like on paper. If you’re early in your diligence process, that’s fine — just show that you have a clear plan for how you’ll diligence the business and pressure-test assumptions. They’re evaluating how you run a process as much as the deal itself. -Fast but thoughtful: If they like it, most institutional groups will move quickly. That doesn’t mean they’re cutting corners — it means they have teams and processes built for speed. You should be ready to match their pace. Blending both types of capital is often necessary. But understanding what each group values — and tailoring your pitch accordingly — can be the difference between a quick pass and real traction. -- ABOUT MAIN STREET CAPITAL NETWORK Main Street Capital Network is a syndicate of 200+ SMB investors—individuals, family offices, and funds. You can learn more about us here: https://mainstreetcapitalnetwork.com. * Searchers / Independent Sponsors * If you are raising equity for an acquisition or expect to do so in the future, don't hesitate to contact us here: https://mainstreetcapitalnetwork.com/#searcherscontact. We like to connect with searchers/sponsors at any stage (currently searching, preparing an LOI, or under LOI). * Investors * If you're an accredited investor interested in investing in search and independent sponsor deals with us, please complete this brief investor form: https://tally.so/r/wLbbbj.