Jun 16, 2025
Closing an investment deal is often described as an art, not a science. Some investors are quick to commit, while others require a more delicate approach. There's no one-size-fits-all method; each situation demands a unique strategy. This variability is what makes capital raising so challenging, yet also so rewarding. When it comes to closing, think about your own experiences as a buyer. How do you like to be sold to? Consider buying a car, but let's set aside the haggling over price. Imagine you visit a car lot, find a car you like, and a salesperson answers your questions and takes you for a test drive. You're not ready to buy that day, and you leave the lot without the car. What happens next that would make you more likely to return and make a purchase? Here are some approaches, paralleling the way investors make decisions:
The Tactic: The salesperson calls that evening, pressing for a decision and offering a price reduction if you return tomorrow.
Why It Fails: This approach often comes across as desperate, triggering a "fight or flight" response in potential investors. It can be off-putting and push them away.
The Consequences: Even if it works on a few buyers, they are unlikely to have a positive experience, resulting in no repeat business or referrals. They may also experience buyer's remorse, potentially leading to an unwinding of the sale.
The Tactic: The salesperson doesn't follow up at all, leaving you to wonder if they even care.
Why It Fails: This leaves the potential investor feeling that the salesperson is uninterested in making the sale and unavailable for follow-up questions.
The Consequences: At best, the investor must reach out to the salesperson, requiring unnecessary effort and leading to a poor experience. This reduces the chance of repeat business and referrals.
The Tactic: The salesperson calls "just to check in" without a clear agenda or guidance on how to help the buyer move towards a decision.
Why It Fails: While this might work if the salesperson catches the buyer at the right moment, it relies heavily on luck.
The Consequences: The lack of structure and rhythm doesn't provide the investor with confidence in a smooth investment experience.
The Tactic: The salesperson has a predetermined structure and rhythm for following up, with specific questions and a cadence to guide the buyer toward a conclusion.
Why It Can Work: This style feels professional, providing a sense of order and attention to detail.
The Challenges: It can come across as robotic and impersonal. Making a significant investment is often emotional, even if the decision points are primarily analytical.
Which style works best for capital raising? The answer is that each style can be appropriate and is often interwoven, depending on the investor and the circumstances. Consider this example: You meet a potential investor at a charity event and have a brief conversation about your fund. They say it "sounds interesting." How do you proceed?
1-2 Days Later: The Casual Follow-Up
Email: "Hey Jim, it was nice meeting you and (spouse's name) at XYZ charity the other night. I really enjoyed XYZ at the event. I'm following up on our brief conversation about the fund that I manage. I'm not sure that it is a fit for your investment objectives, but I figured that I'd share an overview of the fund in the attached deck. There is more information on our website as well. Please let me know if you have any interest, questions, or would like to discuss at your convenience."
One Week Later (No Response): The Aggressive Follow-Up (Use Sparingly!)
Email or phone call: "Hi Jim, I'm following up on the previous email that I sent regarding the fund that I manage. I completely understand if this is not a fit for you, but I am just trying to close the loop since you seemed interested to learn more. Please let me know if you have any questions. We have several prospective deals that we're looking to close in the next month or so and would love to have you participate. Please let me know if you're available to discuss."
One Week Later (Still No Response): The Structured Follow-Up
Email 1: "Hey Jim, I'm following up my previous emails. No pressure but let me know if you want to discuss."
Email 2 (Spaced out a few weeks): "Hey Jim, attached is an update on the fund so you can see some of the assets we've been acquiring. We have a pipeline of deals that we'll be closing on soon…"
A Month Later (Still Nothing): The No Follow-Up (But with a Twist)
Email: "Hey Jim, since I have not heard back from you, I have to assume that you're not interested in my fund. I completely respect that and don't want to waste your time. So, I'm going to stop reaching out. If you do want to continue to follow our updates or come to an investor event in the future, please let me know and I'll be sure to reach out with that information. Also, if it is alright with you, I'll plan to check in every six months or so just to see if anything has changed. Meanwhile, feel free to reach out to me anytime. I'd be happy to pick up the discussion."
Sometimes, despite your best efforts, you can't find the right approach. In these cases, the best move is to let the potential investor go and preserve the opportunity to try again in the future. If you push too hard, you risk damaging the relationship beyond repair. The key is to provide the structure for the investor to tell you they are ready. You're not driving the process to get them to say "yes" today. You're creating an environment where they feel comfortable saying, "I'm ready to invest. What are the next steps?"
By mastering the art of the close, you can build strong, lasting relationships with investors and achieve your capital-raising goals.
Whenever you are raising capital, you are selling securities. This implicates various laws and other regulations, and also creates potential liability for you, so you want to make sure that you understand the limits around what you can and cannot say while selling securities, the legal limitations on who you can raise money from, and various other issues that your securities counsel can guide you through. If you aren’t already familiar with these legal issues, you should take some time to discuss them with your attorney.
