Networking and investor events
Why Top Investors Favor Relationships Over Brokers
How Top Investors Use Relationships Over Brokers to Win Deals
Investors, sponsors and capital raisers who want to source deals through relationships and decide how much to rely on brokers.
What this talk covers
A panel at the Beverly Hills Investor Club Summit was asked whether investors should work a short list of brokers or build deal flow through reputation. The speakers mostly favored personal relationships. One said brokers are like real estate agents who want the deal to close. Another said the best deals came from friends or professional associates, and that brokers often send the same deal to 75 other people.
Brokers were not ruled out. One investor said a broker can help the first time in a new industry or a new geographic area. After that, building expertise and connections in-house was described as the better long-term approach. Another speaker offered the 30-second update, which covers what you are working on, one challenge and one thing you are excited about. A further tip was to give someone your best deal.
- 1Say what you are working on
- 2Name one current challenge
- 3Share one thing you are excited about
5 key takeaways
- Brokers are table stakes. One speaker compared brokers to real estate agents. They want the deal to happen because that is how they get paid. They do not necessarily care about the people in it.
- Personal relationships beat mass distribution. One investor group works with brokers only if it personally knows them. Otherwise a deal gets sent to 75 other people, which the speaker called a waste of time.
- Use brokers to enter new markets. A broker can be useful the first time in an unfamiliar industry or geographic area. As the investor learns the market, the speaker said it is worth building expertise and connectivity in-house.
- Use the 30-second update. The 30-second update replaces the elevator pitch. Share one thing you are working on, one challenge and one thing you are excited about. The speaker said this gives an investor something to get excited about or get involved in.
- Give your best deal first. One speaker said the best way to build a lasting relationship is to make someone money. They now bring their best company to a contact instead of offering a full set of deals, and they said they get nothing from it.
Said on the call
"We don't work with brokers unless we personally know you. So, we like to have personal relationships, otherwise it's a waste of time because they send it to 75 other people."
"One thing you're working on right now, one thing you have a challenge with, and one thing that you're excited about."
"As you get to know the market, if you want to continue investing in that space, if you want to continue investing in that area, it's worth developing the expertise and the connectivity in-house."
Key facts
- The 30-second update covers three items: what you are working on, one challenge and one thing you are excited about.
- One panelist said brokers often send a deal to 75 other people, so the investor group works with brokers only if it personally knows them.
- The moderator asked whether investors work the top three brokers in their niche or build a universe of 50 to 100 assets.
Sources
From Richard C. Wilson's Centimillionaire Strategies YouTube channel: How Top Investors Use Relationships Over Brokers to Win Deals. 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.
Related questions
- Which investor conferences are worth attending for fundraising?The conferences worth your time have real investors on stage, a team that has run many events, and plenty of time to meet people in person.
- How do I close a funding round?I close a funding round by focusing on investors who fit the opportunity and moving each interested prospect through clear, consistent follow-up.
- What documents do investors request during due diligence?Prepare a clear, organized package covering your operations, investments, compensation, team, and track record.
Questions about this video
Should investors rely on brokers to find deals?
The speakers said brokers are table stakes and care mostly about getting the deal done. The best deals one panelist found came from friends or professional associates.
When can a broker still be useful?
One investor said a broker helps the first time in a new industry or a new geographic area. After learning the market, building expertise and connections in-house was described as the stronger long-term approach.
What is the 30-second update?
It is a replacement for the elevator pitch. You share one thing you are working on, one challenge and one thing you are excited about.
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