Private equity (PE) professionals rely heavily on their relationships to create opportunities and close deals. But relationships and networking can be complicated: You have to know when and how to ask for introductions, initiate meetings, and warm up cold contacts to make sure your network grows and stays strong. Stay motivated with these words of networking advice from industry experts.
Build and maintain PE relationships
Private equity dealmakers continually seek and foster strong relationships. Here’s why — and how.
“To be successful in venture capital, you have to be curious about people, and you have to care on a non-transactional level. I try to surround myself with founders, investors, and operators who think about relationships in terms of decades, not just today dollars. We share deals and intros … but also invest time into each other through advice, feedback, help, and heart.”
— Haley Bryant, Golden Wok
“[Private equity is] almost like doing business with friends. Companies will come and go, employees may come and go, but the people in the private equity industry tend to be fairly stagnant. You keep crossing paths with people, so it’s imperative to treat them well and with integrity.”
— Adam Coffey, The Private equity Playbook: Management’s Guide to Working with Private equity
“Don’t get discouraged if … meetings seem useless or a waste of time. Many relationships take years to develop, and if you meet founders or angels or [venture capitalists] that do not necessarily have anything interesting for you today, they may well call you in the future with more attractive information or startups.”
— Agustin Rubini and Esteban Rubini, Angel Investor School: The Complete Guide To Become a Modern Angel Investor
“If you want to get anything done, the strength of your relationships means everything …
Wall Street and business are small worlds. If you start at a great school or a big firm, crossing paths with the best people of your generation, you’ll keep running into them.”
— Stephen A. Schwarzman, What It Takes
“The characteristics of successful private equity firms are the same today as they were decades ago … At the heart of all enduring firms are good investors who have time to work with their companies, an international awareness and network, and a differentiated deal flow edge.”
— T. Bondurant French, Mastering Private equity
Surround yourself with trustworthy partners
Capital markets relationships are built on mutual trust and respect. Top dealmakers share why:
“A strong and trust-based relationship between company management and private equity investors is the basis for value-added involvement in strategic and operational decisions.”
— John Gilligan and Mike Wright, Private equity Demystified
“The best way to get a sense of the performance and character of a manager is to have long-term experience with them, through good times and bad. Therefore, referrals to managers through trusted friends or advisers are extremely valuable.”
“Try to build strong relationships with a handful of trustworthy [limited partners]. Pitch the fundraising process early on in the relationship. As trusted confidants, they will work through fund ideas and pitches with you before you pitch to the general market.”
— Winter Mead, How to Raise a Venture capital Fund: The Essential Guide on Fundraising and Understanding Limited Partners
Remember the importance of give and take
Experienced dealmakers know that reciprocity turns private equity networking from a chore into a pleasure. Here’s what they have to say about relational reciprocation.
“Life is long, and helping people when they need it often comes back to you in ways you least expect it. You never forget the friends who came to your aid in tough situations.”
— Stephen A. Schwarzman, What It Takes
“Ultimately, the constraint on fund managers is reputational: In the long run, investors will not support fund managers that abuse their relationships.”
— John Gilligan and Mike Wright, Private equity Demystified
“If you keep to yourself, it’s a loss to others. They can’t get to know you and benefit from the value you bring to the situation. And you lose, too, because you don’t get to benefit from the value of others.”
“A lifetime of listening to others, forging relationships and constantly asking how I can help has compounded to the point where many of the biggest challenges and best ideas now find me.”
— Stephen A. Schwarzman, What It Takes
“Networking with other investors [is] a good way to hear about potential investment companies, and perhaps more importantly, a great way to get feedback about good and bad experiences with those companies.”
— Sean Cook, Investing in Real Estate Private equity: An Insider’s Guide to Real Estate Partnerships, Funds, Joint Ventures & Crowdfunding
Step outside your comfort zone
Some private equity practitioners would prefer to leave the networking to others. A little inspiration from these dealmakers might help.
“Leverage your network! The best way to discover engaged and compatible [limited partners] is through venture capitalists who have already raised venture capital funds.”
— Winter Mead, How to Raise a Venture capital Fund: The Essential Guide on Fundraising and Understanding Limited Partners
“One of the hardest periods of my life was raising the money for the first fund. There was nearly always a personal relationship.”
— Peter G. Peterson
“We had started modestly and spent years building up our knowledge, experience, and relationships so that we could maximize our rewards and minimize our risks over the course of multiple turns in the cycle.”
— Stephen A. Schwarzman, What It Takes
“Relationship building is critical to wealth building. The best private equity investments are exclusive to close friends and investors only.”
“Although [Peter Peterson] didn’t enjoy finance in particular, his strength was his range of contacts in business and politics. He could get anyone on the phone. He was 21 years older than me, but we had developed a close working relationship. We complemented each other. He could bring people together and nurture relationships; I could originate and execute deals. He was a thinker, tolerant and reflective. I could be confrontational if necessary.”
— Stephen A. Schwarzman, What It Takes
Learn from your peers and mentors
Every business interaction can either build or erode the strength of your network. Be selective about the relationships you nurture, and always remember that how you handle yourself will determine whether people want to work with you in the future.
“The private investment professionals who have contributed a great deal, both in capital and in strategic expertise, clearly have much to share with people who want to understand how businesses succeed or fail. Choosing to absorb what these successes or failures teach is akin to adopting mentors for our own careers. … Their ideas, their habits, their ethics, their successes, their failures — we embrace the best of these winning qualities because we want to emulate the people who embody them.”
— Robert Finkel, The Masters of Private equity and Venture capital
“Monitoring involves providing management advice and helping with the fund’s network. … Mentoring will be most fruitful when the management of the portfolio company realizes the value of mentoring and appreciates the advice. Already before the acquisition, the private equity fund will signalize the advantage of mentoring and a regular exchange of ideas.”
— Daniel Burmester, Private equity: How the Business of Private equity Funds Works
“A venture capitalist can get ahead of the fundraising process, especially with respect to building a network of prospective [limited partners (LPs)], by building relationships with venture capitalists and LPs early. Get warm introductions through friends and colleagues who know senior-level venture capitalists and LPs. Attend conferences focused on venture capital fundraising and attend annual general meetings (AGMs) to increase success.”
— Winter Mead, How to Raise a Venture capital Fund: The Essential Guide on Fundraising and Understanding Limited Partners
Build a better network
Building relationships is crucial for PE professionals — and so is an organized, robust pipeline management system designed to safely house the complex network you’ve curated. DealCloud helps you manage your pipeline and offers relationship intelligence technology to help you increase deal sourcing, business development, fundraising, and related functions. With DealCloud, you can leverage the reach and strength of your personal connections and your firm’s professional network.
Ready to implement a system that’s custom-built to meet the unique needs of your PE firm? Schedule a demo of DealCloud today to learn more about how you can improve your relationships using pipeline technology.