Introduction
A Limited Partner is a part-owner of a business whose liability for the company’s obligations is limited to the amount invested in the industry. Limited partners are frequently referred to as “silent partners. It is usually those investors whose personal liability is limited to their stake. Most limited partner investors are “passive” investors. The word “limited” in the title is restricted. The term usually references their legal standing in Venture Capital or Private Equity funds. They’re essentially partners in such a fund, but their rights and duties are limited. Control is not a priority for fixed partner investors. They also do not have access to their funds or receive frequent updates on the status of their investment. Of course, this is not mean that they are uninterested.
Leading investment deals by limited partners across India
If you need to generate funding for your business from a few investors while maintaining complete control. In that case, a limited partnership is for you—people in your neighborhood, particularly the 3Fs (family, friends, and ‘fools’).
Importance of Limited Partnership
Limited Partnerships are great for obtaining money for a specific investment or collection of assets. They enable limited partners to invest while also limiting their responsibility. Limited partnerships are great for securing money for a particular acquisition or group of assets. They allow limited partners to invest while also limiting their responsibility. One of the most significant advantages for a limited partner in a restricted partnership is that their commitment is minimal. If the company goes bankrupt or is sued, the limited partner is only liable for his investment and the company’s assets. The real advantage of limited partnerships is that personal liability for corporate obligations is reduced. Limited partners can only be held personally liable for the amount they invested. Limited partners have a safe investment because they cannot lose more money than they invest.
How to find Limited partners
The following are some techniques for finding limited partners:
How to Find Limited Partners
Leveraging your network
The most excellent place to begin is within your network or on its outskirts. Depending on what you were doing before you had your Eureka moment and decided to focus your efforts on creating a business, you may already have an extensive network waiting to be tapped into. This can extend beyond the 3Fs. So, before you widen your search, exhaust those options in terms of contacts and reliable ‘friends of a friend’ looking to invest in a business.
It is advised that you and your partners interact with your network of GPs, Founders, friends, and family to organize a successful fundraising campaign. This will most likely be the primary source of your fundraising efforts if you have an extensive network. According to our research, the amount one can raise from their internal network is a significant indicator of the size of your entire capital. As a result, we recommend multiplying your firm commitments from your internal network by ten to determine your ideal fund size. This is the one way to Limited Partner Reach-out.
Connectors:
Using existing contacts inside your company to link you with potential investors is one of the most acceptable methods to meet new Limited Partners. Connectors are often well-connected individuals in Venture Capital who can open their networks to help you obtain money quickly. They might be one of your most valuable assets for fundraising and Limited partner Reach-out.
Connectors enable you to utilize and expand your network, increasing your capacity to significantly meet and raise cash from Limited Partners. These can include Founders, other Venture Capitalists, Limited Partners, and anybody who can connect you to a pool of HNWIs interested in investing in the asset class.
Events and conferences:
Events and conferences are an excellent way to broaden your horizons. However, venture conferences often pitch to your LPs who have already committed. Conferences like Slush, TechCrunch Disrupt, South by Southwest, and RAISE might help pitch LPs; attending them only to discover new ones is a poor approach. These conferences will play a role in your fundraising efforts and Limited Partner Reach-out.
Cold outreach:
Even if you aren’t fundraising, you may strive to broaden your network and form new connections. Cold outreach is an excellent technique to achieve this, and some of the most experienced Venture Capitalists do it. The caution is that a cold outreach effort might be useless unless adequately implemented. In your cold outreach, you may target HNWI and Family Offices because they are often the best investors for new fund managers. This is the best way to reach out to limited partners. Keep your eyes open for opportunities at networking events and meetups and local business meetings and seminars. Regular face-to-face interactions can help you form a deeper relationship and better understand each other’s requirements. Don’t hurry into a lousy partnership because you’ve set a self-imposed deadline for yourself. Take your time interviewing possible business partners and researching each option extensively for Limited Partner Reach-out.
How to engage with the potential Limited Partners
Finding a prospective shortlist is the first step; communicating with them is the second. As you may expect, many people are contacting them for the same reason you are. As a result, you must persuade them to put their money in your hands. The most crucial thing is that your pitch isn’t flawless. Understanding the profile of investors, you want within your fund can help you locate the proper LPs for your fund. This depends on various criteria, including geography, stage, and emphasis sector, to mention a few. Make sure you concentrate your efforts on highly relevant individuals who have the financial means to contribute to your fund. We recommend focusing on the proper sort of investor to Limited Partner Reach-out.
You must share the same values in order to approach a business for a partnership. It would be beneficial if you looked for a partner with complementary skills. Make every effort to clearly explain your partners’ responsibilities and tasks. Check to see if the business structure is appropriate for you. Don’t waste your time on it. Make it appear credible in writing. You must be honest with one another.
Be prepared for the pitch:
The investment pitch for your limited partnership is convincing, informative, and highlights what makes your firm distinctive and worth a potential investor’s time and money. Because your fund is new, you won’t be able to depend on previous institutional success. Instead, investors will be impressed by your personal history, philosophy, and investment knowledge. Most experienced LPs have similar questions regarding potential funds, so be prepared to address the most popular ones. What is your team’s track record (either collectively or individually)? How well do you guys collaborate? What is your investing strategy, and how do you choose investments?
Make sure Limited Partners is a good fit for you:
Not every investor is a suitable match for you and your business. They are researching investor fit before pitching will help you work more strategically and save time to Limited Partner Reach-out. Consider the value and role you require from your LPs. Obtain as much information about potential investors as possible: What inspires them? In the past, who have they collaborated with? Read the website if they have one. Examine any articles they’ve published as well as their social media accounts. Please don’t hesitate to ask questions while meeting with LPs to qualify their interest further and fit with your fund.
Magistral’s Services on Limited Partner Reach out
-LP Research: Global listing and profile of all LPs who have invested in funds or opportunities like yours. Provide customized research database of limited partners.
-Limited Partner Reach-out: Contact LPs to establish a link between the GP and relevant LPs. Emails, social media, and phone calls communicate and reach out to limited partners.
-Events Support: Listing all relevant events in your business, locating attendees, scheduling your presence, and assisting you in developing material and profiles for the event.
-Meeting Support: Content preparation, previous investments, partner profiles, and anything else that can aid you in the meeting.
About Magistral consulting
Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family Offices, Investment Banks, Asset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE funds, Corporates, and Portfolio companies. Its functional expertise is around Deal origination, Deal Execution, Due Diligence, Financial Modelling, Portfolio Management and Equity Research
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About the Author
The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com