In my conversation with Richard Wilson, who is an investment advisor for millionaire and billionaire families, he laid out a 5-step process that has allowed him to raise over $3 billion in private capital. The 5-steps are (1) analyze (2) position (3) architect (4) execute (5) iterate.
Step 1 – Analyze
Richard finds that many people skip the first step. They come into the investment space without understanding their competition, without listening closely to the potential investors, or not even knowing if the investors are interested in the asset class they want to raise capital for. Others try to raise capital when they aren’t experienced or “mature” enough.
Before starting, you need to know what is going on, in regards to your marketplace, investors, and competition. That comes through analysis. A deep analysis enables you to emulate the best practices. This is the most simple and common sense step – look around through networking and research to determine what is going on in your specific niche. Do not rush into investing without conducting a thorough analysis because if you do, the subsequent steps are not going to mean HULT PRIVATE CAPITAL anything. This is the foundation that you will launch from; don’t skip it!
Step 2 – Position
Positioning means that you know what you want to stand for and how it sets you apart from the competition. Richard provided a beautiful analogy to explain positioning:
In Rio, Brazil during the most recent Olympics, you would have found over ½ million people on the beach at once. If you Google Image search “Rio Beach Olympics,” it will look like a massive blob. It would be impossible differentiate from person to person, so you wouldn’t know who was the tallest, oldest, youngest or sharpest looking person. If you were a real estate investor attempting to position yourself on the beach in Rio, how would someone know if they could trust you with their money? They wouldn’t. You would be a generic face that is only provided them with your title, so why would they trust you?
Instead of positioning yourself on a Rio sized beach, define a “sand box” that you want to play in that only has 1 or 2 main competitors. Also, try to position yourself at the top end of that niche or in the most profitable, easy-to-move-in, or the one with the most low hanging fruit.
It is really important to not position yourself by trying to be everything to everyone. Figure out the valuable “sand box” that, no matter how long it takes, you will have the conviction to become the dominant force in and reach the top. It must be worth any amount or magnitude of work, even if it takes 5 to 7 years to get there.
Ironically, by having that conviction, combined with having a long-term vision versus a short-term vision, you will actually get to where you want to be faster. When you are all-in, your passion, conviction, and long-term mindset will be projected onto others. You will come off as the person that knows their stuff, is connected, has the off-market deals, and has the ability and focus to actually execute and follow through.
Step 3 – Architect
This is the most critical step and is also the step where the most people get lost. Many people might have a niche or two that they want to go after, but they don’t have conviction. As a result, they never architect. Even those with high conviction, another common mistake is that they stick to the old school money raising methods. (i.e. call through their lead list, reaching out to their network, cold calling, etc.)