https://www.operationalroom.com/how-virtual-data-rooms-benefit-private-equity-fund-raising-deals/
Private Equity
Private equity is different from real estate in that investors buy commercial and residential properties to then sell for profit after a few days. Instead, private equity invests in huge companies. This could result in the possibility of higher investment returns as the profits generated by the business are divided across all investors who have invested in the fund. Private equity firms make lots of money from fund management fees and carried interest, as well as an amount of the deal’s profits.
As new managers enter the market, they will face a difficult task of raising an entire fund since LPs are sceptical about their performance and have cut their allocations. Successful fundraising efforts are dependent on planning and preparation. Fundraising is a cyclical game and GPs should be able to clearly define their path to achieving their desired levels of capital committed prior to going on the road. They should also be clear on the sweeteners they are willing to provide such as scale discounts, early bird benefits or first-movers.
Many PE firms employ placement agents to connect with LPs, and promote their funds. These professionals are compensated by a fee that is set by negotiation based on the total amount of money raised by the fund. Therefore, it is essential for GPs to review their internal investor relations team’s capabilities prior to enlisting the assistance of an agent to place the fund.