To achieve quicker PACT signings, it's crucial to implement strategic targeting and streamline the interaction process with potential Limited Partners (LPs). Start by identifying the right LPs based on their investment size: small (Angels and High Net worth Individuals, $100k - $1MM), medium (High Net worth Individuals, Small Family Offices, Corporates, $1MM-5MM), and large (Sovereign Wealth Funds, Endowments, Large Corporations, Medium to Large Family Offices, $5+MM). The time it takes for these LPs to sign can vary, with smaller LPs typically taking 1-3 months, while medium and large ones can take 3-12 months or even longer due to their extensive due diligence processes.
To facilitate a faster signing process, consider the following steps:
1. Streamline Interactions: Minimize unnecessary friction in the PACT signing process, as PACTs are non-binding letters of intent and should be treated as flexible and momentum-driven.
2. Leverage Intimate Events: Invite LPs who have already signed PACTs to intimate events and encourage them to bring a potential LP friend. This can lead to better conversion rates through personal interactions.
3. Optimize Communication Strategy: Develop a consistent and informative communication style, avoid sounding desperate. Your tone should be inviting and confident, focusing on providing information rather than overt selling.
4. Structured Meeting Process: Arrange LP meetings strategically. Aim to get a PACT signed by the second or at the latest, the third meeting. Limit the number of meetings and always move towards signing a PACT. Use statements like, "I would love to know your interest level in investing, we're looking for a $500k-$1M position, before I send you XYZ I would love for you to sign a PACT."
5. Control Access to Materials: Implement a policy of "No PACT, No Access" for most small and medium LPs. This helps to ensure that only serious prospects have access to detailed materials and data rooms.
By focusing on these strategies, not only do you maintain a clear and efficient pathway towards closing, but you also respect the time and commitment of potential investors, making it more likely for them to engage positively with your fund.
