How do sovereign wealth funds invest in private deals?
Short answer
Sovereign wealth funds sit among the institutions that write 10, 30, 50 or even 100 million dollar checks at a time. From the manager's side, access usually runs through an institutional investment consultant or directly, and a detailed due diligence questionnaire comes first. I can speak to that process. I cannot speak for how each fund decides internally.
What the check size tells you
Start with scale. When I talk about institutional capital, I mean managers with hundreds of millions of dollars who want to raise 10 to 30 million, or 50 or 100 million dollars at a time. Those checks come from sovereign wealth funds, endowment funds, pension funds and insurance investment plans. Large family offices with billions of dollars are treated much the same way, and they often act like institutions too.
At that size, investors rarely write a check off one good phone call. The people on the other side expect an in-depth team, an in-depth track record, numbers on everything and usually audited returns.
The route in, and the questionnaire waiting there
There are two common paths. You work with an institutional investment consultant to reach these investors, or you go directly to wealth management platforms, banks and institutions. Either way, a document comes up early.
In this clip I explain what an institutional due diligence questionnaire is and why a manager raising big checks should expect one.
I have filled these out many times. The first one can take a full business day, or even two. Over time I noticed that most of the questions repeat. One investor's 50 questions might differ from another's 35 or 65 by only about five.
Why I keep one master version
So I keep a master questionnaire. Every new question I answer goes onto the template. When I meet a new investor, I can say I already have a thorough one that answers everything they asked, plus seven more. In my experience about 95 percent of the time they say sure. Sometimes they need the answers placed into their own database format, and that is fine.
Here I walk through why a master questionnaire matters once you chase allocations of three, five, ten million dollars or more.
The same logic works one step down from the sovereign funds. Multi-family offices and wealth managers might send 28, 40 or 70 questions, and some of them will differ from the last set. If you win over one chief investment officer or one investment committee, you might raise 10 to 50 million dollars at a time. So even if you never land a sovereign wealth fund, the preparation pays off.
What I would have ready first
- A documented team and track record, with audited returns if you have them.
- A master due diligence questionnaire with clear answers and sources.
- Written answers to the 25 or so questions investors ask most often.
- Bios and transparent examples, such as a well documented track record from a prior employer.
In my experience, fuller disclosure tends to work better than less, and many managers talk to a securities attorney about what to share. Each new question you meet makes the master document stronger. Many managers also talk to a securities attorney about their outreach plan before they reach out.
What I have said on this at our events
One thing I would add is how different the volume looks from the investor's chair. What worked with friends and family, high net worth and private investors, who see four deals a year and maybe invest in one, does not work at this level, where they see hundreds of deals a month. That is why the questionnaire matters so much. A sovereign fund or its consultant has to filter fast, so a complete, consistent, ready answer set helps you stay in the pile. Also, institutions usually show up only once a manager is well past the startup phase.
"What worked while going to friends and family, high net worth and private investors who see four deals a year and maybe invest in one of them, does not work at the family office level, where they see hundreds of deals a month."
"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 around. A lot of people start with friends, family, angels and private investors, and then the family office space is really the middle ground."
Facts from this talk
- Institutional due diligence questionnaires usually run 35 to 70 questions.
- Filling out a questionnaire for the first time can take one to two business days.
- Winning over one multi-family office investment committee might bring in 10 to 50 million dollars at a time.
Sources
From Richard C. Wilson's Centimillionaire Strategies YouTube channel: 2 Critical Core Due Diligence Tools - Episode 4, Benefits of Closing Deals Using a Master Due Diligence Questionnaire. 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 investor outreach rules, information sharing limits and track record presentation. Do not use AI to write your own legal agreements.
What to do next
- Collect every due diligence questionnaire you have ever answered.
- Merge them into one master document with sourced answers.
- Write short answers to the 25 questions investors ask most.
- Gather audited returns, bios and track record documents in one folder.
- Consider talking to a securities attorney about your outreach plan before approaching institutions.
Follow-up questions
How big are the checks institutional investors write?
In my experience, managers raising institutional capital aim for checks of 10 to 30 million dollars, or 50 or 100 million dollars at a time. These come from sovereign wealth funds, endowments, pension funds and insurance plans.
How long does a due diligence questionnaire take to complete?
The first time, it can take a full business day or two. After that, a master version saves most of the time because the questions overlap a lot.
Do I need institutional investors to benefit from a master questionnaire?
No. It helps with multi-family offices, wealth managers and private investors too. It cuts back and forth by email and shows you are prepared.
Related questions
- 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.
- What is an anchor investor in a fund raise?An anchor investor is the first big, highly credible investor who commits to your raise.
- What do endowments look for in emerging fund managers?Endowments want a manager who can win over a group, not just one person.
- How do I raise capital from a foundation?Start by checking whether your fund is large enough.
Work through it with the dilution calculator. See all institutional investors resources.