What is the minimum check size for institutional investors?
Short answer
There is no single minimum check size for institutional investors. Each one sets its own, and many write checks in the millions. One guest on our webinar said the smallest check in their private equity fund so far was about $5 million. Ask each investor for their range, and build a track record in smaller steps first.
Why no single number applies
I can't give you one figure, and I would be wary of anyone who does. Pension funds, endowments, insurers, family offices and funds of funds each set their own floor. Many of them write checks in the millions. The floor usually comes down to the size of their portfolio and how much work a deal takes to review.
Think about it from their side. A large investor has a small team and a long list of deals. A small check can take nearly as much diligence as a large one. So the smaller deals often get passed over. How to structure your offering is a separate matter that many sponsors talk through with a securities attorney.
What I hear from people who raise at this level
On one of our webinars, a guest running a private equity fund said the minimum investment they had made so far was about $5 million. They also said they had not managed to take smaller checks. That is one data point and not a rule. But it shows how far apart a sponsor's world and an institution's world can be.
This webinar clip has a sponsor describing check sizes of about $5 million in their private equity fund and how hard smaller checks have been.
The same gap shows up for first time sponsors. At our family office investor summit, someone told the room they tried to raise a $30 million deal and raised nothing. They went back to the drawing board and started small.
"He bought a $110,000 deal next. He did $55,000 of that $110,000 and syndicated the rest to six different investors for about $9,000 each."
From there they did a $400,000 deal, then an $800,000 deal that went well, then a $10 million deal. When they spoke at our event, they had just closed or were working on a $30 million deal. The early investors can come back for the next one. They are not tapped out after a $9,000 check.
Moving up to the next size of investor
You might be raising half a million dollar checks right now and want to raise $5 million checks. I tell people to be a half notch above where they need to be. When you look more institutional, the $100,000 checks come in faster. When you meet a big investor at a summit, you are not caught flat footed. You might land a check a year or two earlier.
In this talk I explain why looking institutional quality helps you move up to bigger check sizes.
Looking institutional is mostly basic habits. Respect people's time. Keep your one liner short and clear. Be friendly, and do not pitch someone for fifteen minutes when they cannot help you.
How to find the real minimum for an investor
- Ask the investor directly what range they write in.
- Check whether they invest through funds, co-investments or both.
- Look at past deals they have done to see typical sizes.
- Match your deal size and structure to their range before you send anything.
- Many sponsors talk to a securities attorney about which investors fit their offering.
If your deal is below an institution's floor, do not force it. Start with investors who fit your current size. Build the track record. Then move up.
More from my talks
One thing I would add is that the check size you need to raise decides which investors you should go after. At the startup phase you are not targeting institutions. Most people begin with friends, family, angels and private investors, and the family office space is the middle ground after that. Institutions usually come in much later. Even at the high net worth level, it helps to have what institutional investors require, like a master due diligence questionnaire. Those smaller investors often ask what else they should be asking, and you can give them the answer.
"At the startup phase you're not targeting institutional investors. You really need to get to usually $70 to $100 million, maybe even a couple hundred million, before you have institutional interest. A lot of people start with friends, family, angels, private investors, and then the family office space is really the middle ground."
"For example, nobody raising capital $50,000 at a time that I know of has a master due diligence questionnaire, but those investors ask all the time, what else should I be asking? I don't know what I should be asking next in my due diligence. Well, having what all the institutional investors require would help you at that high net worth level."
Facts from this talk
- A summit attendee who failed to raise a $30 million deal later bought a $110,000 deal, putting in $55,000 and syndicating the rest to six investors at about $9,000 each.
- A webinar guest running a private equity fund said their minimum investment so far had been about $5 million.
- I describe moving from half million dollar checks to $5 million checks, and say looking institutional quality can bring $100,000 checks in faster.
Sources
From Richard C. Wilson's Centimillionaire Strategies YouTube channel: Capital Raising Frequently Asked Questions Webinar, Joint Venture & Co-GP Webinar - How to Close Deals with Peers & Partners in the Family Office Club, Raise Capital Faster: The 6 Must-Have Assets for Serious Investors. Quotes come from the video captions, lightly edited for readability. Figures are the speakers' own estimates and experience.
General education only. Not legal, tax or investment advice.
Talk to a securities attorney to explore options around offering documents, investor eligibility rules and offering structure options. Do not use AI to write your own legal agreements.
Your next steps
- Write down the check size range of each investor on your target list.
- Ask each investor about their minimum before you send materials.
- Match your first raise to the check sizes you can realistically close.
- Tighten your one pager and one liner so they look institutional quality.
- Many sponsors talk to a securities attorney about how to structure their offering.
People also ask
Should I raise a smaller deal first?
If you have no track record, starting small can build credibility. One summit attendee went from a $110,000 deal to a $10 million deal that way. Every situation is different, so decide with your own advisors.
Do I need to look institutional to raise from family offices?
It helps. I suggest being a half notch above where you need to be. Capital comes in faster and you are ready if a big investor shows up.
Can a small check still matter to my raise?
Yes. A sponsor at our summit syndicated part of a $110,000 deal to six investors at about $9,000 each. Those investors could come back for later deals.
Related questions
- How do fund managers use Preqin to find institutional LPs?Fund managers use Preqin as a paid database to build a target list of institutional LPs, filtering by investor type, strategy and region.
- What is a fund of funds and how do I pitch one?A fund of funds pools investor money and spreads it across several other funds instead of buying assets directly.
- How do institutional investors evaluate a manager's ESG policy?Institutional investors judge an ESG policy as part of their wider review of a manager.
- What track record do institutions require before investing in a fund?Many institutions want a team larger than two or three people, a track record of about seven years or more, and at least a dozen deals done.
Work through it with the data room checklist. See all institutional investors resources.