Institutional investors
Audi oversees alternatives at a $6 billion reinsurance company that generally does not look at funds under $500 million and prefers fund three or higher. 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, usually with audited returns. Smaller managers may be better off starting with family offices.
The hub also covers the process. A pension fund CIO rarely decides alone, since committees and investment consultants shape the outcome. A first due diligence questionnaire runs 35 to 70 questions and can take one to two business days, so a master version helps. Videos feature John of Fairbridge Asset Management, which manages over $1 billion in real estate, and PFM, a broker dealer since 1998. The guide on getting meetings with institutional investors is a good place to start.
4 videos, 24 questions and 1 guide on this topic.
Guides
- How to Get Meetings With Institutional InvestorsMost people who ask me about institutional meetings are still raising from friends, family and private investors.
Videos with summaries and takeaways
- How John Built a $1 Billion Real Estate Lending PlatformInstitutionalizing the platform was what moved Fairbridge Asset Management past $1 billion, according to John, its co-founder and partner.
- The 3330 Method and Lessons From 28 Years of Fund MarketingA placement agent's job starts with a 30-second voicemail, according to Chip and Sam of PFM.
- What a Reinsurance Company Looks for in Fund ManagersAudi oversees alternatives at a $6 billion reinsurance company and also manages investments for their family.
- 5 Types of Hedge Fund Investors and How They AllocateRichard C.
Questions answered
- How do I get a meeting with a pension fund CIO?A pension fund CIO rarely decides alone.
- 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.
- What does an institutional allocator expect in quarterly reporting?An institutional allocator expects reporting that comes from an institutional platform.
- What is the difference between institutional and retail capital?Institutional capital comes from organizations that invest on behalf of others, such as pensions, endowments and large managers.
- What is a separate account versus a commingled fund for institutions?A separate account is a portfolio run for one institution, with terms negotiated for that investor alone.
- What are emerging manager programs and how do I qualify?Emerging manager programs are allocations some institutions set aside for newer fund managers.
- 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 institutions think about fund size and concentration limits?Institutions usually want to own a modest slice of any one fund and avoid putting too much into a single manager.
- 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.
- How do I prepare a DDQ for institutional investors?Build one master DDQ before any institution asks for it.
- Why Do Institutional Investors Reject Emerging Managers?In my experience, many rejections trace back to a missing institutional platform.
- 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 is the minimum check size for institutional investors?There is no single minimum check size for institutional investors.
- 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 role do investment consultants play in institutional allocations?Investment consultants advise institutions like endowments and pension funds on which managers to hire.
- How do I get on a pension consultant's approved list?There is no single form that gets you on the list.
- How do university endowments allocate to real estate sponsors?Most university endowments put money into real estate through their alternatives bucket, which is a large share of their total portfolio today.
- How do insurance companies invest in private credit funds?Insurance companies usually invest in private credit funds as limited partners, inside an allocation set by their own investment team.
- How do pension funds choose which managers to invest with?Pension funds usually pick managers through a group process.
- 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.
- How do I raise capital from a foundation?Start by checking whether your fund is large enough.
- How long does institutional investor due diligence usually take?There is no single number, and I would not promise one to an investor.
- What is an operational due diligence questionnaire for fund managers?It is the written list of questions an institutional investor sends a fund manager before allocating capital.
- How do sovereign wealth funds invest in private deals?Sovereign wealth funds sit among the institutions that write 10, 30, 50 or even 100 million dollar checks at a time.
- How do I become institutional quality to attract bigger investors?I become institutional quality by building a professional, consistent, transparent operation that sophisticated investors can evaluate with confidence.
- What is an institutional investor?An institutional investor is an organization that invests money on behalf of a fund, institution, or group, rather than investing only its own personal wealth.
- How do startups raise money from institutional investors?Start by checking whether institutional investors fit your startup's stage, sector, team, and evidence.
Tools for this topic
Common questions
What track record do institutions require before investing in a fund?
Most 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. They also expect numbers on everything, usually audited returns.
How do I get a meeting with a pension fund CIO?
A pension fund CIO rarely decides alone, because pension funds often decide by committee and many work with an institutional investment consultant. A better route is to get on those consultants' good list, write short and useful emails, and make sure your fund is big enough to be considered.
How long does institutional investor due diligence usually take?
There is no single number. The first due diligence questionnaire, usually 35 to 70 questions, can take one to two business days to complete, and a master version makes the next one much faster.
Earlier answers on this subject: Questions about institutional investors.
