Ep. 152: Alex Russ, Head of Americas & Hilary LaBrash, Managing Director, Evercore PFG

Let's dive into, um, you know, in terms of just where we're at, you have to create urgency and scarcity.

So what are the most effective ways to create urgency and scarcity, but don't do it with, in a way that's gonna damage trust with the LPs, and also on the, the GP side with false expectations? How do you do this?

Yeah, well, I mean, fundraising is effectively, it's a momentum machine, right? Um, and we're fond of saying, and, you know, e- everything revolves around the first close, right? Um, so your entire process really, uh, the way we think about it, your entire process in terms of how you approach a fundraise should be engineered around getting that right, right? And it- we- w- let's define what w- we, we view success in a first close.

Um, and I'll tie this back to creating a sense of urgency.

But w- we define success of a first close as if you can cover 60 to 70% of your target, um, in a first close, everything, that kind of drives everything from there.

Momentum, credibility, scarcity, outcome.

Um, uh, because if you don't...

You know, on the other hand, if you don't achieve that, if you don't achieve scale in your first close, particularly in this environment, right? Uh, where we talked about the, you know, how long it's taking funds to get raised, which LPs know, right? Um, if you don't hit that sort, th- those sort of numbers in a first close, then the, the, the, the, the challenge is you get stuck in what we think of as the doldrums of fundraising, right? If you have a sort of a sub 50% first close, the message it sends to the market, to investors, right, is, um, that they've got time, right? And, uh, they've probably, they can take their time.

They've got a lot of runway before you run out of allocation and get to the final close.

So when we talk about, like, driving scarcity, uh, and creating momentum and a sense of urgency, it's not complicated, to us anyway.

In our experience, it's, it's all around engineering the most successful first close possible, and everything flows from there.

Um, so how do you do that would be the follow on, right? You know, and a couple ways to think about what are the, w- what, what are the levers that are in your control.

One of them is, uh, fund size, right? And when I say fund size, I mean the target that you set for your fund on the cover of your PPM, right? And that's one of the biggest levers.

And, you know, and so again, this is sort of basic stuff, but something we see quite a bit.

You know, GPs, uh, you know, instead of think- picking a number that is the right, purely the right number for the strategy that you're, um, pursuing or candidly more like the number that you think you deserve based on your team size and your track record.

Instead of, instead of coming up with that number in a vacuum, our advice is always, like, look, why don't you work backwards and start, you know...

Remember where I started, which is you got, if your, if your goal is to hit seven- 60 to 70% plus of your target in a first close, well, one thing you could do is just realistically reverse engineer that and kind of figure out based on if you're on a fund two or fund three in the case of an emerging manager, um, what's your assessment of your existings.

If you're a first time fund, you know, um, what kind of anchor commitments and warm relationships can you line up? And then kind of back into, well, what's a, what's a number on a...

W- what's a, what's a cover target that feels appropriate where I can confidently...

You know, and it's never gonna be 100% confidence, right? This is, uh, this is a risk game and it's a leap of faith, but where I can make a calculated, take a calculated, uh, leap of faith that I can hit 60 to 70% of that number.

So again, um-

Let's-

... just being really thoughtful-

Let's talk about-

...