Welcome to this week’s edition of Cape May Wealth Weekly. If you’re new here, subscribe to ensure you receive my next piece in your inbox. If you want to read more of my posts, check out my archive.

If I had a euro every time someone asked me if I could help them with their fundraise, I wouldn’t be a wealthy man. But I could probably take out my wife for a nice dinner every month.

To be clear, that is not an unreasonable request to send to someone like us. At Cape May, we want to help our clients holistically, and especially in the case of (former) entrepreneurs, we often highlight that their time and money might be better spent starting a new business rather than becoming, for example, an angel investor. If they do so and look for (additional) investors, we absolutely see it as our duty to utilize our network to help raise capital.

And the same applies for individuals outside our network - think former colleagues, a GP we met at a PE conference, or simply someone who sent me a friendly LinkedIn message. It’s not something we charge money for, but see as a value-add to our network, so if someone asks us nicely, we’re typically happy to pass on the deal to a relevant connection. It’s a way to ‘pay it forward’, or simply an act of kindness (Freundschaftsdienst).

But exactly this fact that it’s an act of kindness, and not something we get paid for, gets often forgotten. People reaching out end up putting me in a place where something happens that should not happen - specifically, having me do anything but forward your email. There has been more than one case where I wanted to help a person, but didn’t end up doing so in the end, simply because they made my life too difficult for what was meant to be a simple warm introduction. 

So to you, dear readers, let me explain how to not make such mistakes - let’s talk about how you can leverage your wealth advisor (or anyone out there like me) properly, including my recommended Blurb.

Before we ‘get tactical’, understand the situation of the person (wealth manager, multi-family ‘officer’, or a comparable intermediary, like a lawyer or tax advisor) finds themselves in. Most likely, they are doing this as a favor to you - it’s not their day job, and they are not getting paid for it. At best, they might be passing this deal on because a (prospective) client has expressed interest in the asset class in which your opportunity happens to be. More likely, they simply do it as a favor to you - they like you, and maybe hope that you will return the favor down the line. ‘Paying it forward’, as I like to say.

With that in mind, how do you best go about asking a friendly wealth advisor to pass on your opportunity in your network?

First, know that they (nor their clients) will want to sign an NDA just to find out about the opportunity. I understand that especially in PE, you might want to not share deal terms (or even specific information about the target) with all outside parties - at worst, someone else might swoop in to make a bid. But as with “idea stage” VC opportunities, no proper investor will take the time to review and sign an NDA just to find out what they might even be looking at. If confidentiality is an issue, draft your Blurb in a way that allows you to share information about the opportunity at hand without breaching your own confidentiality requirements. Think Executive Summary and/or a teaser, followed up by a more detailed presentation after an initial call, and if reasonable, after signing an NDA.

Secondly, understand that they will likely NOT tell you who their clients/contacts are ahead of time. One GP recently asked me be for help, but wanted to know ahead of time to which FOs I was going to send their investment opportunity. And that’s something I simply can’t or won’t do - one, for confidentiality reasons towards my network, and two, to make sure that they don’t later get contacted again by a GP that they maybe weren’t interested in getting to know better. You can of course clarify what type of party NOT to send your opportunity to (i.e. if you’re raising capital for a PE deal, you might not want the deal sent to a FO that does direct PE deals themselves, which is fair). But if you’re scared that your outreach process collapses if an FO gets the deal from you and a warm intro like me, the issue might not be on my end.

With that in mind, let’s get specific about the transaction itself: Make it clear to me what the opportunity is and what the deal structure looks like.

Lastly, get specific on what exactly you are looking for, and NOT looking for. If I am simply passing on your opportunity to potential investors, I don’t need to know what your value creation plan is or how quickly the super-niche market you are active in is growing. But what I do need to know is what type of investor you are looking for (purely passive? Heavily involved? Short- or long-term-oriented), how much money they should bring (25K€? 100K€? 1M€+?), and ideally (extra bonus points for that!) your view on how you think the opportunity fits into a portfolio. For example, if you are a PE/VC fund, let me know how your specific (niche) strategy fits and what your distinguishing factor is. The more specific you get, the more precise I can be in finding the right person for you - and from my experience, a bit of good framing there can make the difference whether a family office takes an interest or not.

If you have all of that set out, make it easy for me to help you. The easier you make it for me, the more I am inclined to pass on your deal to relevant investors. And ideally, you do that by preparing a Blurb for me: a simple, objective email, outlining the opportunity according to how I described it before, that I simply forward to the relevant parties.

Objective is a key term here. As I mentioned before, since I am not getting paid for this, and since there are regulatory considerations to keep in mind, I prefer to pass on a Blurb that is drafted accordingly and doesn’t make the recipient raise their eyebrows. (For example, if I’m not making a formal recommendation (Anlageempfehlung), I have to keep the wording somewhat factual rather than promotional.) If I know you well, I might add some context in the ‘forward’ part of the email that I pass on to someone else, or might simply share it verbally with the recipient. If you send me a Blurb that is overly sales-y, making it seem like you are our next lord and savior even though you’re just raising money for your new AI venture, that also does admittedly not sound credible.

As promised, let’s make this a bit more tangible. Let me share what the ideal Blurb looks like, and what it looks like in action. (The following is a fictional illustrative example - all names, figures, and deal terms, are purely fictional.)

This is likely not the perfect teaser - after all, I am not a day-to-day ETA investor. But the email covers the key terms for me, including what the deal is and how it came to be, how the capital is spent, what I as an investor have to pay for it (management fee, carry, etc.), how much capital I need to bring, and what the exit options might be. If you were asking for introductions and sent that Blurb to me, I know I can forward it without further ado.

Before we end this newsletter, I want to share a few more philosophical thoughts on the matter of asking someone like me to help you reach investors. They seem obvious to me, but I've been proven wrong more times than I'd like, which is why I want to share them.

Once again, be aware of the situation of the person helping you. They are doing you a favor, so always treat their time and efforts with respect. Some people unfortunately forget that, and don’t see this as the act of kindness that it typically is - they think that the recipient (i.e. person willing to make the introduction) should be honored to be able to share your deal. But in most cases, that’s unfortunately not the case, and you are the one that needs help with reaching potential investors. Either way, being demanding is a surefire way to ensure I don’t help.

Equally important is to take any feedback seriously. That includes but isn’t limited to obvious flaws or unclear points in your deck, i.e. a lack of clear information that allows me to understand what you are doing or what your deal terms are, which you can easily fix. More notably, it also includes deal structures or ‘fundraising plans’ that I personally struggle with (see The HoldCo Conundrum and The Reality of Family Office Fundraising). When clients speak to me about such matters early in their fundraise, they tend to take such feedback well - after all, I’ve invested in plenty of deals in my two family office positions, and I always try to ensure that my feedback is as constructive as possible. In the end I won’t force you to change your deal structure or deck if you think it’s the right way to go, but you can’t expect me to pass on a deal I don’t believe in.

Which brings me to my final point: Don’t see it as a one-time, one-way interaction, but a longer-term, two-way relationship. If you are raising money now, chances are that you will be raising money again, so treating the other party well is the best way to get them to help you again in the future. Keep me in the loop how those introductions work out, especially if it was to one of our clients. Even if an intro doesn’t result in an investment today, it’s nice to hear if the opportunity resonated with my contact or not so I can take that into account for future opportunities.

And finally, think how you can return the favor to whoever took the time out of their day and opened their network to you. While I am happy to make an introduction without asking for anything in return (anything else would feel sleazy to me), I would still be happy if you found a way to return the gesture. That could be as easy as a genuine thank-you email, take me out for a nice lunch, or even better, think of us the next time someone is looking for a wealth manager.

Looking for a wealth advisor who brings more to the table than just portfolio management?

Our network, our deal flow experience, and our ability to connect clients with the right opportunities and people - they are all key parts of what we offer. We’d be happy to tell you more.