How to Get Started with Raising Capital: A Step-by-Step Guide

Raising capital can feel like an overwhelming challenge, whether you’re aiming for $1M or scaling up to $100M+. Many fund managers find themselves stuck with questions like:

• Where do I even begin?
• Who should I pitch?
• Do I just start pitching everyone I meet?
• What exactly should I pitch?
• What materials do I need?

Rather than spinning your wheels, here’s a structured framework to get you started and set yourself up for success.

Step 1: Have a Solid Investment Offering

Many fund managers worry about raising capital before they even have an investment offering. This approach rarely works. If you pitch without a solid deal, the best response you’ll get is, “Sounds interesting, come back when you have an actual offering.”

While it may feel like you’re gathering useful feedback, investors won’t take you seriously until you present a concrete opportunity. Wasting their time now can also hurt your chances when you return with a real offering.

Key Considerations:

• If you don’t have an offering yet, what’s holding you back?
• Are you hesitating because you’re unsure about your ability to raise capital?

Step 2: Know Your Investment Offering Inside and Out

Raising capital for a single-asset syndication tends to be more straightforward than raising for a fund. With a syndication, investors can evaluate a specific asset. With a fund, they must trust your strategy and ability to execute it across multiple future assets.

Investors will ask detailed questions about how the fund is structured and why. They want confidence that you understand your own fund mechanics and can manage, administer, and report on it effectively.

Questions to Prepare For:

• Do you fully understand why each structuring decision was made?
• Can you explain economic alignment between you and your investors?
• Have you identified potential conflicts of interest and know how to discuss them?
• Are you prepared to defend your fund structure against investor critiques?

Step 3: Determine Your Own Capital Commitment

One of the most common investor questions is: “How much of your own money are you investing?���

The outdated expectation that fund managers should contribute 10% of their fund size is unrealistic for most. Instead, determine what is reasonable based on your personal finances and be prepared to explain your decision with confidence.

Alternative Strategies:

• Seek an anchor or seed investor to show early commitment.
• Consider seeding the fund with real estate assets instead of cash.
• Be prepared to discuss your “skin in the game” confidently, without hesitation.

Step 4: Commit to the Grind

Unlike syndications, which have a clear start and stop period, raising capital for a fund is often an ongoing process. If you have a closed-end fund, you’re racing against the clock to hit your target before the raise period ends. Open-end funds require constant capital raising efforts.

Successful capital raising demands daily focus. Developing a structured marketing, outreach, and follow-up plan is essential to maintaining investor interest without overwhelming them.

Are You Ready?

• Do you have a plan to make capital raising a daily activity?
• If you have a closed-end fund, do you have a timeline and milestones?

Step 5: Build and Organize Your Investor List

Before you start pitching, you need a well-curated list of potential investors. Many managers hesitate because they aren’t sure who in their network is accredited. While there’s no perfect solution, start with a broad list and refine as you go.

Your list should include both direct prospects and connectors—people who can introduce you to high-net-worth investors.

Where to Start:

• Investors from previous deals
• Friends and family members
• Professional and alumni networks
• Colleagues in real estate and other industries (e.g., doctors, attorneys, executives)

Best Practices for Organization:

• Use a CRM or spreadsheet to track contacts, outreach dates, follow-ups, and notes.
• Involve your team in list-building efforts to expand your reach.

Final Thoughts

Raising capital is a long-term commitment that requires preparation, persistence, and a solid strategy. By structuring your approach, understanding your offering deeply, and building the right network, you’ll be well-positioned to secure investors and grow your fund successfully.

Are you ready to start your capital raising journey? Begin by refining your investment offering, building your investor list, and committing to daily outreach efforts. The sooner you take action, the closer you’ll be to closing your first deal.

Legal Issues

Whenever you are raising capital, you are selling securities. This implicates various laws and other regulations, and also creates potential liability for you, so you want to make sure that you understand the limits around what you can and cannot say while selling securities, the legal limitations on who you can raise money from, and various other issues that your securities counsel can guide you through. If you aren’t already familiar with these legal issues, you should take some time to discuss them with your attorney.