Start your club deal

When he does his road show, the manager solicits people, often strangers, to obtain their blind trust in the management of their money. This trust is not easy to obtain. The larger the sums raised, the more expensive it will be. In order to lower this barrier of trust, the manager can opt for a long-term strategy to build this relationship. By doing Deal by Deal, that is to say investment by investment if not global, he chooses a progressive path, while being financially viable.

If he finds it difficult to raise his first fund, the manager can rethink his strategy by starting with a less ambitious objective, seizing investment opportunities one after the other. He would, in fact, have an interest in doing deal by deal, before leading his multi- asset fund. This Deal by Deal will take the form of a club deal with a leader who regularly brings together a community of investors around his opportunities.

Rather than asking investors to put their money in a fund without knowing precisely in which asset their money will be invested, the manager can present a specific opportunity to his community. By defending a concrete file and not an abstract set of files, the manager can reassure his investors about his ability to identify great opportunities. He provides proof that his concept works and of his capabilities.

This strategy will be more time-consuming, but it will have the advantage of being concrete. Managers sometimes struggle for several years trying to raise funds, without ever succeeding. By raising money for each investment, he will be able to earn fees on each transaction, build a track -record and nurture his relationship with investors. When the first investments bear fruit, the happy beneficiaries of these will not hesitate to put the money back in the pot. The manager must be clear that he wants to evolve his strategy towards a multi- asset structure , so that he no longer has to solicit his community each time.

The Deal by Deal will also have operational flaws that the fund would not have had: when negotiating with portfolio companies, the manager does not know how much he can invest precisely. He may have an idea of the amounts, without being able to make a firm commitment. He still has to convince investors, and he may well not succeed. These investors may be disappointed by the investment conditions that the manager renegotiates. The manager will then be in a back and forth between investor opportunities. A take strategy it or leave it , take it or leave it, will probably be preferable in order to save valuable time.

On the occasion of each of the deals, the manager will structure a single-asset vehicle (SPV), the economic conditions of which will resume those which would have been provided for in the event of funds: management fees or set-up fees, carry, etc. He will be remunerated for its sourcing , negotiation and closing work . Investors will assume this remuneration: for example, out of €105 raised and brought into the vehicle, €5 will go to remuneration for the work of the manager.

If investors have to pay 5% of the amount mobilized, the operation is not very expensive: any manager takes often higher costs. The Deal by Deal is not the most expensive.

The Deal by Deal strategy will often pay off. The manager will have demonstrated his ability to make good investments, while building a relationship of trust with a community of investors. The latter will be ready to invest for the long term and blindly with him for the next opportunities: they will pool their financial resources, thus diluting the risk, accepting in principle that the manager knows better than them how to invest the money. .

An intermediate step would be to provide a vehicle in which investors make the decision collectively (and no longer individually) for each investment, within the same vehicle.

Once the vehicle has been created, it is possible to make the first participations in the common vehicle. The Deal by Deal stage was the perfect introduction to the emergence of this multi- asset vehicle . The vehicle will be quickly deployed. The manager may gain here the time he thought he was losing by opting for this strategy.