Capital Raising Masterclass: How to Win with Family Offices

"RAISE CAPITAL LIKE A LEGEND: https://offer.fundraisecapital.co/free-ebook/"

What if I told you there's a hidden world of investors who can fund your dreams, but nobody teaches you how to access them. 

See, in the next few minutes, I'm going to reveal the exact playbook that turns emerging managers into multi million dollar fund leaders that secret institutions do not want you to know. 

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[THE GUEST]: Jim Curry is a co-founder of BuildGroup.

[THE HOST]:  Ryan Miller is an Angel investor, former VP of Finance, CFO of an insurance company, and the founder of Fund Raise Capital,  https://www.fundraisecapital.co where his strategies helped emerging fund managers and deal syndicators to report raising over $1B following his strategies.

Transcript

Ryan Miler  

My name is Ryan Miller, and for the past 15 years, I've helped hundreds of people to raise millions of dollars for their funds and for their startups. If you're serious about raising money, launching your business or taking your life to the next level, this show will give you the answers so that you too can enjoy your pursuit of Making Billions. Let's get into it. 

Ryan Miller  

What if I told you there's a hidden world of investors who can fund your dreams, but nobody teaches you how to access them. See, in the next few minutes, I'm going to reveal the exact playbook that turns emerging managers into multi million dollar fund leaders that secret institutions do not want you to know. All this and more coming right now. Here we go.

Ryan Miller  

Welcome to the show, man

Jim Curry  

Ryan, I'm really happy to be here. It's good to finally see you in person, and you have a real radio voice. I gotta tell you, I love hearing you talk.

Ryan Miller  

Yeah, I got a face for radio too, man. So this, this is exciting, and we, you know, thank you for that. You're, you're awesome, and I've really enjoyed our time getting to know each other. And we've been very fortunate to be in the top 2 or 3% in the world. I think we're number two or three in the world for private equity shows.

Jim Curry  

That's awesome.

Ryan Miller  

So we rank on a few, but that's awesome, it's all because of amazing guests like you. So let's, let's jump right into it, man. So when you're raising capital from family offices, you've done well, I mean, you built a firm, you've done a lot in business. You built it up to 500 million AUM, and now really raising capital, as I always say, without capital, it's just a bunch of smart people having coffee over zoom. It's like, what are we doing here? Someone's got to put money into the deal. So whether you're a fund, a syndicator, an entrepreneur, at the end of the day, nothing happens unless we get some money in the deal. So how do you win when raising capital from family offices?

Jim Curry  

Yeah, great question. So you know, family offices are, luckily, an asset category that's really grown up over the last decade or so and have become more sophisticated. I think, especially for emerging managers, it's a great category after so your question of, how do you win with them? I think you got to make a real focus on it. I think family offices and going to them is a different strategy. They operate differently than institutions. They diligence differently than institutions. They make investment decisions differently, and ultimately, they interact with you differently. So for us, when we started this, it wasn't intentional. We actually initially looked at raising traditional investment funds, traditional institutions. We sort of stumbled onto family offices that just felt right, and went from there. And I think it's been a really good model for us. But again, I think the overall the overall secret, and I'll talk more about it, is you just got to make a decision that you really want to go out to family offices and build your strategy around that. And I think that one reason why all of our funds have come from family offices and know from institutions is just that. I think we tried to do both approaches, it would have been really hard. 

Ryan Miller  

So what would you say is the difference? Just a quick high level overview for people who are trying to raise capital and just figuring out, do I raise it from everybody? Do I do institutions or family offices? What's your position on the difference between raising from an institution versus family office? 

Jim Curry  

Yeah, so institutions, just to clarify for everybody, I think probably people know what they are, but in my world, the way I think about them, they're endowments. They could be operating on behalf of hospitals or universities or anything along those lines. They are run by agents, which means these are people who, every year get judged on the performance and get a bonus at the end of the year. They're always looking for new opportunities. They tend to have good access to deal flow. Institutions are by far the most popular people to raise from for a lot of different reasons. That's historically, where the most capital has been but institutions are long lived, so if you get an institution on board your first fund, you're probably gonna have them through all your funds going forward, if you do a good job, family office a little bit challenging on that, I'll come back to that. 

Jim Curry  

Family offices take a whole lot of different forms, and so I gotta kind of talk about those. Some of them look like institutions, or they might look like an outsourced CIO model, where a wealthy family or series of families have hired a staff of ages to kind of manage their money for them. Now you can also look at it, and within that, there's even subtleties to that. Sometimes those things are the family's completely hands off. They're not involved in the investment decisions at all. They're letting them go and run, they might give them some themes to invest in. They might be interested in certain types of technology, certain types of markets, but they let them run free. There are others where they're the front end on doing the diligence, but in the end, family members make the decision, or the family office makes the decision, so they operate differently that way. Then there are family offices that are run by the families themselves, and in a lot of cases, those will be the people who made the money. Some cases it's second generation. In some cases, it's multiple family members from all branches of the family that are involved in it. And even then, the decision making process can be very, very different. And we have all flavors, our investor base comprises from small family offices that are, in essence, one or two people that are run by family members, all the way up to very large institutional like family offices. In some ways, there are similarities in every single one of them. The families are key part of it, regardless how you go about it, but, but there are different, and it's important to know the differences when you're doing your research. 

Ryan Miller  

So knowing the differences now I'm curious, because, you know, I have my experience, and you have yours, and I think there's a lot of intersection on that. But one of those is I use this analogy. So I've, I've taught lots of people on my philosophy on raising capital, and I was doing this, this big event, and I asked, Who here is laid paving stone? And everyone said, Yeah, okay, you know, few hands raised up. I said, What's the last thing that you do when you're done? And one guy says, go drink a whole case of beer and forget it ever happened. That's not what I mean we're talking you know, it's funny joke, but I said the last thing you do is you put on sand and you fill in the cracks, right? And for those landscapers out there, maybe I'm doing it wrong. So the metaphor of that is, well, what fills in the cracks, and often, what I've found, and I'd love to hear your opinion on this, is what fills in the cracks of a solid pitch, especially to family offices, it's a good story. You ever had any experience with that, or is that right or wrong? Or what are you seeing when you fill in the cracks because you have all the blocks and here's our thesis, and we're going to do this and achieve wonderful things in your name and whatever is you're declaring to this family office. But then there's these subtle things that lock it all together that sometimes gets missed and I'm curious if, how does that fit into pitching family offices?

Jim Curry  

Yeah, great question. So first of all, you've been into institutions, and you know how they work, right? So you walk in, you have a very standard pitch deck for every single one of them. It starts off with your faces and all the great things that you've done, followed by your metrics and how great they are, and then a thesis, and then, you know, some pipeline information, all things like that. But the meetings are all very, very similar, and they come back, and they'll typically tell you, here's what our portfolio allocation looks like right now. To venture it's either something we're underweighted to or overweighted to. And here's our process. They're very, very standard meetings, family offices. They do care about performance. In the end, they're trying to really find a good manager to back, but in the end, they care about the relationship. And the thing that really seems to really get them interested in it are stories. They're business managers, typically, they build businesses, they're involved in running businesses. They like to hear stories about businesses and so one of things I discovered early on, we were raising money. I use the standard pitch deck, right, Beautiful PowerPoint. I designed a lot of the graphics on it, you know, lots of numbers, lots of thesis. And then I had my the companies that we're in, we had three companies that we were contributing into the fund. We had a pipeline. And when I got to that part, and I started talking, there's, I started noticing family offices got very engaged, and they would start asking about the customers. They'd say, okay, well, this company looks interesting. We might be able to use them like this in our business, tell me more about this. And I found that, because I'm an operator, ex-operator, I was way more engaged. And so we would start talking about the business. We talk about the founders, they would make connections to them. Oh, that sounds like a really interesting founder. Tell me about it. Is running a software company? Is it good to come out of the sales organization? Do you want them out of the product organization, they ask questions like that. So tell me about this. How does channel work in it? So they love stories. And so I changed our pitch a lot. Now you have to tailor it in a lot of cases to what they're interested in, I'll get to that in a second. But in essence, I flipped it around. I would start my deck with, let me tell you about the companies we're working with. Oh, I think they're really interesting, and that would build into the thesis, and I build into our results and that was the way to go about it. And then the end, that's the way to get them really engaged and feel like you have a good relationship, and they felt like they were part of the story. I think that's really important. 

Ryan Miller  

I love that. And you know, so okay, I'm glad that we have very similar intersections on that. You know, from early on, when I started to appreciate this lesson and kind of learn the differences between retail institutions. I always call family offices, kind of that bridge between retail and institutions depending on the size. But there's a couple things that I've learned. Number one, I started to create a, what I call a story bank. And so just a weekly, weekly thing, I'll just look back on the crazy stuff from childhood or future or friends or whatever it is, and just allow just keep that handwriting and create a story bank. I would say that was probably the number one thing that really helped me. And then the second one from family offices and I'd love to get your opinion, is, I always say, if someone asks my opinion, you say you want to think in turn. When you're pitching a family office, you want to think in terms of conversation more than presentation. Even though it is a presentation but if you come in, which I've done, and I made that mistake early my career, where you come in and you present like you did in like, grad school, it's great, they're gonna get a lot of sleep that night, probably in that meeting, if you present, like put them to sleep. But when you have those stories, it keeps it engaging. And so when you really get good at that, and you could keep a story bank, and then you say, I'm going to use this to when I present my thesis, and all that, you present it in a way where there's better flow, where it feels like more of a conversation than this wooden presentation. Is that, have you found something similar as well where?

Jim Curry  

Yeah, let me I'll give you an example story they used all the time. So our model is set up on this concept of long term investing, right? Our fund does not have an expiration date on it. We can hold things for a long period of time and for family offices, that actually seems to resonate really well. But the story I would tell is about my previous experience, but the company called Rackspace way great investors. We had Sequoia and Norwest involved with us, and we went public on August 8, 2008, I bet you remember that you're very well, right? I do. 

Ryan Miller  

I do long story. Yeah. 

Jim Curry  

Yeah, I know your story. And it was the last IPO before the market crater, before Bear Stearns happened. It was a mess. And we were growing 60% we were profitable. We didn't need the money and we were forced to go public because that was their model. We were in funds that were from the mid 90s, they were shutting down. They needed liquidity. Now. I always felt sorry, because I remember our first trade was supposed to be at, uh, 18. It actually came in at 10, and within a short period of time, we were at 4, and we were basically a $400 million market cap company with 600 million in revenue, and we were growing and profitable. Was crazy, right? 

Ryan Miller  

Yeah. 

Jim Curry  

But that's what happens those distributions are made, and all those investors sell. And you flash forward, two years later, we work $10 billion and I look at things like that and say, and I always create the story of, would you ever arbitrarily make an investment and say, I have to sell this under any conditions 10 years from today? Would you do that? 

Ryan Miller  

No.

Jim Curry  

I wouldn't do that and then I tell that story and why is that story important to what I was doing? I was raising the permanent thought, right? And so being able to tell that story helped connect to it. They can all relate to it. So you don't have to tell story. I talked about, you know, stories out of my portfolio companies, but I always found stories out of my past, out of my network, that would connect to them and they would relate to and they always found that really, you know, showing that experience matters, but being able to personalize it for them and get them to chuckle at it. It's important.

Ryan Miller  

There you go, I was engaged. I could picture myself there and watch the trade not be what you wanted or what they would want it. And what a wild ride and great story, because it really brings people into your world, and it fills in the cracks, right? So you have spreadsheets and cap tables and all of these things that you're and, yeah, cool. Like do that, whatever your financial advisors tell you to do. But what we're saying is, there's, they want to get an essence of saying, I'm not just buying balance sheets or cash flow or whatever it is they're looking at. Yes, they are, but I'm also buying into you. Are you going to be someone? Are you someone that is aligned for us? And you know, as an executive as well, you're saying, yeah, sometimes the people I bring on to create value in the companies and the relationships that I have, are they gonna be pain in my butt, or are they gonna be pretty awesome to work with? Are you gonna create problems for every solution? Are you gonna create solutions for every problem? I don't know, right? I can't make a decision to solve a spreadsheet. So I just want to underscore the value of what you're telling people, because they couldn't agree more, which is, you got to fill in the cracks, because that space needs to be filled, and you do that with stories. Absolutely love that. So, so moving on with what are some principles that you can teach and perhaps help emerging fund managers and deal makers to raise money from family offices? What would you say?

Jim Curry  

Yeah. So I think the first thing is they are, they are all different, right? You could seriously take the same pitch deck and go to UT and Harvard and CalPERS and do a minimal amount of research and be fine. It does not work that way with family offices. And so to me, you have to do a whole lot of research on them. And sometimes that's hard, sometimes it's easy. The way I say those first thing to figure out is, what is their thesis? What are they trying to do? Lot of family offices are there specifically to support charitable giving, right and so that matters, right? Understand what those charities are, how do they think about stuff? Some of them are there to support regions. They might be really focused on really supporting the state of Texas and things in Texas, or they might be focused on low income areas of Texas. There's different there's all kinds of different strategies around regional investing. They might be very interested in supporting things that are around their business. So if you made your money in construction, maybe you want to invest in construction tech or anything related to that, right? Where they feel like they can bring their expertise. So do the research, right? One of the best ways to do the research is to try to do an intro meeting with them without an agenda. And so I tried really hard in my initial meetings, actually not go in and pitch. I would go in and talk about what we're doing. So, you know, one of the secrets to fundraising, in my mind, is you're not fundraising until you really are ready to ask for the check, right? So I reach out to them, I say, here's my background, here's what we're looking at building. I'd love to come talk to you about and see if it's interesting to you. And I would use that opportunity to really learn about what they did. So there's the family, and then there's individuals, everyone in the family, oftentimes, I mean, if you look at the Waltons, are a great example. They're involved in all kinds of different stuff, right? So you can't look at them generically, you need to understand each one of them and what they're really passionate about, what they care about. 

Jim Curry  

I often spend a lot of time learning about the kids and what they're trying to do, because what I found is, oftentimes they're interested in tech because of their kids. So a question I would ask, if you have a kid that's 13 or 14, I bet they're learning Python in school. They go, they are learning Python, I think it's really exciting. You gotta be careful, because that often would come with what you hire him as an intern. It's which I would say, I don't do a lot of Python work right now. We're doing a lot of Excel work, but, you know, if they want to do that, that's fine, but, but take the time to learn about that, right or just about them. That's before you actually try to learn about how they operate, right? So then that comes to that question of, how do they operate? What, how they go about making investment decisions and again, as I said before, they're all very different, right? Sometimes it's an investment committee, sometimes a single individual, sometimes there's outside advisors they want to bring in to look at stuff. Sometimes they actually will hire people like Cambridge Associates to come in and do that kind of work. But one thing I find is they're very open about it. You ask them how they make decisions, they'll tell you that. They'll let you know the process of it and what I've also found is they can be really quick. Institutions are slow. Family Offices, if you tell a good story and they're interested in doing it, they'll jump into it right away. Another thing is talk to them about where they failed and succeeded, you know, understand what's worked with them and what's not. So take a really interested with them and, like, tell me when you've had good investments, when you've had bad investments. What did you learn from them? What can I learn from them? And part of it is also getting people in the mode of like, you're going to help me build my firm. This is my first fund, I'd never raised a fund before, so I was very direct. Them about this is a new company for me. I haven't done it. I would love your feedback. What have you seen works? Well, what doesn't work? Well, you know, what can we do here to make it work? And in essence, you know, we built this farm around a lot of that feedback that we got out the door. So, you know, do your research. Look at the family, look at their mission, look at the individuals. Get a first meeting with them, then understand the structure and the process and go from there. You know, basic sales technique, don't try to close in the first meeting, don't try to close in the second meeting. Spend a lot of time learning, a lot of time asking questions and building that relationship and going from there. So yeah, I mean, that's how that's the basics on how I approach it.

Ryan Miller  

Awesome. So just a high level on do your research with the family members. Do your research on current, former businesses that they've invested in. And I would say maybe the third theme on your brilliant advice is just learn how they're structured, right, so.

Jim Curry  

Yeah. 

Ryan Miller  

One example might be, do you make decisions by committee, or is it just one patriarch or matriarch of the family that just says thumbs up or thumbs down, are we in or not? How do you guys make decisions? I love that maybe even charities that they invest in can give you a bit of a clue of things that they care about, and often that could be part of their legacy. And so this isn't necessarily to manipulate or do anything funny there. You're just all investments rely on trust, and a big way to build trust is alignment. And so you're saying, oh, they they actually do love tech, and I'm offering a tech investment, or whatever that might be. Oh, they love, they invest in sustainable agriculture, in their charity in third world. Hey, that's cool, this is an ag tech fund and so you can really find these angles and really just show alignment. So I think we're talking a lot about the difference between pitching institution versus family office. And while alignment matters on all investment theses, I would say, alignment in the spirit of the deal between kind of the shape of your soul, of your fund, and the shape of their soul as a family office, do these things blend well together? Anything else you can add to that? 

Jim Curry  

Yeah, let me give you a couple of stories from from the fundraise process, right? So we had one fund that I spent a significant amount of time with, and frankly, they were forming their family office at the time and trying to figure out their kind of process for making for making decisions. But one of the first things they did for me is they had me meet with the heads of the charities export, and they told me, I'm meeting with them because their intention is all the investment returns are going to go into the people in this room. And by the way, you know, speaking of inspiration, when you're sitting there, you're hearing all these stories about what you're trying to support, that was, that was, you know, for me personally, that was rewarding, but I understood, okay, these guys really care about this. And actually, by the way, there's important points that. So I'd go back and say, okay, from that perspective, we're a permanent fund. We might hold these things for a long time. How do you think about your cash flow requirements? So like, oh no, no, we're not worried about whether you give us distributions in years. 2, 3, 4, 5, 6, 7, 8, this is going to be long term. We just are making sure that this, everything out of this is being allocated into those. So it but it did give me a question, which my first concern was, have you use this for cash flow to fund these things on an annual basis that might not be the right, you know, we might not be the right fit. And another firm that I met with that very much, the investor as well, that said, hey, we actually want you to help us support businesses in our community that may be tech or tech enabled services that might not be your thesis, would you agree to sit and help us look at those as well? They may remain things we want to invest in, but we'd like to get your support on that right. And by the way, family offices take more work. We should dig into that too. But it made clear, like part of the relationship was they expected me to give them some of the knowledge back. And then I had another one that was very direct about we want you to look at opportunities in this region. All you have to say to us is that you will spend your time sourcing in this region as well, and in those opportunities, if there's an opportunity for us to put more to work, we'd love to do it. So these are all different, right? They're different than what you're gonna get for most institutions who don't have those requirements, and you gotta dig into them as you go. I could probably give stories like that on every single family office we worked with, but they all have reasons that they want you to support it. 

Ryan Miller  

Yeah, yeah, I love that. And you know, one thing that's surprising that I started to learn, and you completely confirmed it, is a lot of family a lot of fund managers, they find out that most family offices, they don't have access to all the best deals. I thought they were just this cathedral of capital that you go and they got access to everything, and they're making it work, and a lot of times they do, but maybe not to the degree that a lot of people think. And I think that's good news, especially for an emerging fund manager who has the background and you can recruit a team, and they really put something very cool together, I think this is good news. What have you found, as far as pitching deals to family offices, and they have certain selection criteria that may or may not have the best deals. I mean, what are you finding when you show up as a guy with some deals, or at least a thesis? How does that go when, when speaking to family offices?

Jim Curry  

Yeah, great. Great question, right , so I think in I didn't know this, we started raising family offices, right? My assumption was, if you have billions of dollars, you can invest in whatever you want. Turns out that's not the case. And one of our initial investors said to me very early on, we don't get access to the quality deal flow as far as funds go, they just won't take our checks. They're already oversubscribed. They've got their institutions. A lot of them don't really want to work with family offices unless there's a connection to their industry in the companies. So if you've been a CEO one of their companies, and it got sold, sure they're gonna let you invest in the Fund. But if you're, you know, a real estate tycoon and have nothing to do with tech, you're not going to get into a great West Coast fund, right and so that was surprising to me, and what I learned really quickly was, especially in the world of VC, the way they get into it is they make bets on emerging managers. It's a real thing for them, right and a lot of emerging managers would assume that the, you know, the challenges with families are the same as with institutions. Institutions, some specialize in emerging managers, but most really don't spend a lot of time on them, but family offices do. And by the way, I think this is a big reason the relationship matters to them. A lot of emerging managers don't have a lot of performance history to look at. You got to get a real judge for them based upon how they act. You know, what their other experiences are, where they're going to work, but they do bet a lot on emerging managers. And in fact, I think if you went now and looked at, you know what, what most emerging managers are raising probably is for family offices. 

Jim Curry  

And so the one thing you notice in it is they do worry about the adverse selection problem of, hey, if this is a club that wants me to I want to be in it. So that is something they spend a lot of time looking at, because they do get a lot of folks in there that have no business raising capital. And my answer that is usually to them, but my guess is, you know that, right? When you look at them and you get they're like, yeah, we feel like we're pretty good judge of that, which may or may not be true, but they do get a whole lot in to look at. And for them, it's making sure that that's important and so how do they deal with that? Oftentimes they deal with that by saying, hey, I want you to eat so and so, right? And there's this takes two flavors. One is, I don't know anything about tech. I like you, but I want you to meet my friend, Bob, or Sue or whoever it is, and I want to get their opinion right. It's pretty clear up front, that's what the case is. And then other cases are saying, hey, I like what you're doing. I'm going to bring my syndicate together and see if we can get something here, because I want to work with you, but I want more people that are engaged with it, right? So I would say almost all the family offices that we talked to were very interested emerging managers and and they want to bring other people into it and get involved in it, because they want to help validate that you're a good team to invest with and so I think that's the good news. And again, you know, I raised this money, you know, it's been 10 years now since we raised it. The number of family offices out there is, you know, exploded from where we were back then, which makes the challenge even harder. There's more family offices looking for deals, they can't get into the deals, there's actually less funds being raised right now. I think we know that a lot of funds are essentially not going to raise new funds, so analytics and stuff, family offices also understand this is the time to get in. You know, one of the things that is always frustrating, I'm not a portfolio I am an investor. I guess I am a portfolio manager. But, you know, I don't talk in terms of like, I've got 20% in this and 30% in that, I don't think that way. You know, I run I basically invest in one category. You talk to institutions a lot of what they'll tell you right now is, oh, we're overweighted to tech. You know, we haven't had liquidity in tech. We've got no dpi, coming back. You know, we're not making tech investments right now. And you can tell them all day long of like what SaaS multiples are now 3 to 5 times, or not 10 to 15 times. There's quick quality company, and they're not, they're not, they're not interested in that story. Family Offices totally get that. And they look and say, no, we know now's some time to get and we know now is going to be a good finish, and we're really interested in putting money to work. So you know, in this market, it's actually good to go talk to them about it. But like big institutions that challenge the app is liquidity right now and try to work through that but, but that's the big difference with them. I think there's a real opportunity with emerging managers in general, but for right now, it's a really good time to go do it.

Ryan Miller  

Well, that is an encouraging note for if I've ever heard one man, so thank you for that. You know one thing that you and I have spoken before this interview, and it was interesting. And I think people would really like to hear this is about how family offices typically operate in networks, that was a very interesting concept. I wonder if you can unpack that a little bit for me. 

Jim Curry  

Yeah, you know, it's interesting when we talk to institutions. I didn't ever and I talked to institutions today. I don't feel like you ever really get into talking to other institutions. In fact, to some extent, they're competitive with each other. It's not the same way with family offices and again, I just brought up the example of how they use you for validation. But they also this is how they get deal flow. So if you sit down with a family office and go through what they have, you ask them, tell me about your deal flow, like especially direct investments, where do they come from? It's always other family offices and in fact, by the way, that becomes a whole other interesting story in terms of how you can also create a sourcing proprietary advantage if you have the right family offices involved, because they oftentimes do get access to good quality stuff, especially in their region, but in essence, they share deals with one another. So it's not just about validating things. They share deals with one another, and they build really strong relationships around that. 

Jim Curry  

In fact, I have at least two family offices that run, I mean, I guess you could call them, you know, kind of investor conferences, where they bring together their network of family offices together to have a conference once a year and talk about the trends they're seeing and so forth. So they operate that way and if you were to go through our investor base and look at it, there's a heat map. I could put one family office in the center of it, and that can radiate out to others. And I'd say we have probably five networks, really, within our base, where I could say these five family offices are responsible for 100% of our fundraising, directly or indirectly, I didn't expect that. Usually it's regional, usually it's the people they know within that region. Sometimes it's sector specific, so again, if you're a family that made a lot of money in construction, you probably have a lot of other people in that space, or an energy or you name it. Sometimes it's random, but I don't think I have any single I do have, obviously, single family offices that invested, but they are all part of a network, and one of our, one of our larger family offices, I would say, probably accounted for indirectly, for about half of our initial fundraise. So I think that's one of the nice parts about it, too. I think when we were raising money, we actually didn't know what our final close was gonna look like. We our first close was our final close was 330 million. But four months before, we thought we raised 100 and then all of a sudden, these networks just came in. I just started really populating in, and I didn't expect that at all. So yeah, I think that's a really good piece on how to think about raising money. If you do it right and that you get them engaged, you're gonna find they bring in, one of the point I would say on this is, you know, you oftentimes say, hey, these guys can only write a million dollar check. I'm trying to raise $300 million why would I talk to them? So those million dollar people introduce me to $20 million people, right, because oftentimes they're the grinders. They're the ones that are really out there trying to get access to good deals themselves. If they're small, they can only write smaller checks. It's harder for them, even in the family office network, get good stuff. So they work really hard and so, you know, you want to tell people like, you know, prioritize things by the check size they can write. But the way to think about it is the check size their network can write. So again, doing the diligence and understanding who the people are beyond just that one family office feels they might know is usually really useful.

Ryan Miller  

Oh, man, prioritized by the check size their network can write. That is pure genius, right on. Man, that is amazing. So we're talking about, kind of the front end, the beginning of the experience. We're filling in the cracks, and we're telling stories, and we're we're pitching our thesis, and guess what, it actually works. So now we get a check, and now you're managing someone else's money, and then that, then their networks of money. Now often, and I'd love to get your take on this, often when you get capital, different people like, different cadence, right, different communication cadence. What have you found, as far as once you have the money, you're doing deals, you're writing the checks to just like you said you would. How does that work for your own back office, what should people be prepared to if they are raising from family offices? How should they prepare after the money lands, how do you structure your business to make sure that that relationship continues to be strong?

Jim Curry  

Yeah, let me just say one thing up front, because I was sat negative for a second, these investors are the most fun to have. They're very engaging, they're fun to go to dinner with. They're fun to hear their stories about their business. Getting to know their families is a joy, right? All that, but it's a lot of work, and it's a lot more work than you get with an institution. So the way to think about this is to get the first check. By the way, the leading up to the first check is typically pretty easy. I would say that I should let your face that it's different than institutions, but you don't find them digging through your data rooms the same way an institution would and going through everything. They're very focused on the people in the stories and more about what the opportunities are they have in front of you. They don't necessarily have a whole lot of document feedback. You're not going to be going back and forth with lawyers all day long and trying to get things revised. That process can go pretty smoothly, but once you have them on board, the maintenance is a little bit higher. So one of the first things I would tell you is tell you is these things are, these offices are very focused on cash flow, and when that's when cash flow is gonna be required and when it's gonna be coming in, because, again, sometimes they're funding very specific things. It could be charities I brought up, it could be a family wedding, it could be anything, right, and so I get asked this question all the time, and I have to answer it, you know, what do you expect for your cash flows. And you know, our documents say 20% over 5years, you know, annually. And they're like, okay, but what is it really going to be? I get these calls all the time, and so I spend a lot of time trying to help them kind of model through that. They also are really interested in what's going on with the company, so you sell a story, they want to know how things are going. And so we provide a whole lot of updates on how our companies are doing and again, you know, we I want to try to do that as much as I can on a you know, we do it on a regular basis cadence, we send out anywhere between monthly and quarterly updates on what's happening with the companies. But I get follow on calls, some that connected with them, some they want to learn about. I spend a lot of time talking to them about what's going on within the companies I'm involved. The other thing to keep in mind is they themselves don't always have sophisticated back offices. 

Jim Curry  

You know, I always tell the story we have a someone that's the top 200 wealthiest people in the world, and he is the one who always calls to confirm why instructions. You know, it's a, yeah, I think one point I said to him, I go, don't you have someone else who could do that and he goes, he goes, not that I can trust. Okay, got it. So they don't necessarily have sophisticated back offices, and so that can mean, you know, dealing with documents, deal with taxes, dealing with changes can can sometimes be challenging. You got to kind of work through that. And they go through changes on their end, these are families. They'll go through divorces, they'll go through changing generations who are running things. They'll move things from one entity to another. If you have international families, that has a whole other level of complexity to think through. So there's all that kind of stuff to deal with as well. But the one thing I always, you know, tell people to remember, is they did invest in you, right, so we have a, we have a great CFO. She sits right next door me here now, she's awesome, and I love her, and she talks to him, but they want to talk to me, and they want to talk to my partners. And so you know, one thing I do on a regular basis. We try to do this three or four times a year. I go on the road and I go meet with them, and I don't have an agenda, I just, hey, let me take you out to dinner. I find oftentimes that they actually use as an excuse to get together with their buddies. And so, you know, I'll suggest, hey, you want to do an individual meeting? You want to grab lunch, like, hey, why don't we do a dinner? Do you want to invite so and so they're coming, oh, yeah, why don't we pull a group dinner together. They use it to get people together. I always ask him, did he bring some people that I don't know as well, but I do a lot of social interaction time with them, and I think it's really important because, again, they are backing you as a team. They bought your story, they bought what you're doing. They can't be pawned off to other people in the organization. So it does take more work in that respect and, you know, I think if you get to the point where you treat them like institutions, where you send them just to your CFO and you expect them, you're not gonna have a good long term relationship with them. 

Ryan Miller  

Wow. So that is real intel from the front lines. Brother, I appreciate that, so.

Jim Curry  

Real time I've gotten two texts on my computer from family offices. Sitting right, I had to shut it down.

Ryan Miller  

Yeah. So there you go. You're constantly hit up and that's a cool thing, man, it just shows you, know, these people don't, we would imagine, they don't spend time on people. They don't want to, and so the fact that they want to keep seeing you, odds are, obviously you're managing part of their portfolio. There's a business relationship there and that makes me curious of like, what have you seen, or what have you done to create that alignment between your investors and you and you guys as general partners? How have you created that alignment and does that even matter? 

Jim Curry  

Yeah, so well, let me talk one thing I think it's really important to understand about them on the connection of businesses, is they, they really do want to help your businesses grow. And so we have a company. We have company called fixed software, I can talk about that. We've exited it, we sold it to a company called Rockwell Automation. They're probably they basically built SaaS software for maintenance professionals at manufacturers, and that was their business. And early on, I presented it to our investor base, who was one of our first investors, investors who contributed, and we have some folks in the energy sector, in the oil field services sector in particular, and they looked at it and said, a lot of what they do can support how we run our oil field services operations. Could we look at that, and fast forward to when we exited the company, it was probably the biggest vertical that they had, and it came out of our base. And so I learned really early on that you should actually get them engaged in working with their portfolio companies, because they want to help when they can. And by the way, this is a reason why you also want to raise from family offices that are not just in tech. You want to raise it for people who can be customers, right, and really kind of use your products. So that's one way I get alignment, right, which is, how do I get them aligned and supporting the business? 

Jim Curry  

Now, what do they expect from me in return? So the you know, when I started raising it, initially, everyone told me, you know, GPs are expected to contribute 1-2% of the fund and go from there. And I've always thought, well, you know, look, first of all, I'm going to be doing this full time. I actually want to put as much of my capital into it, because I believe it or not, I believe myself. I believe my own stories, right? So we already kind of weighted towards it, but I learned really quickly that that is an expectation. They really do want to see that you have skin in the game in a way that's different than institutions and so if you look at our first fund, 10% of the funding came from us. A lot of that came through our initial three contributions. So we threw it, we had three companies. We funded ourselves, we contributed in but there's a high level of expectation that you're going to be economically aligned with them, right and for them, economic alignment means, oh, we, we know you're going to make money on the on the on the override, but we want you to also see that you've put real skin in the game of your own personal equity into because you really believe in it and why is that right? So, you know, someone brings you an opportunity, if it's so great, right? Because I pitched things as being great all the time. I'm sure you do too, Ryan, if it's so great, the first person they asked me is like, why are you backing up the, why are you backing up the truck? Now, of course, there's a sophisticated answer that, like, I can't back up the truck every single time, I don't have that. But they would say, look, if you're not really willing to write a meaningful check to this is it really mean that somebody really believe it? And I do think that's unusual, that's the state for family offices, so, you know, do I think you can get by with doing less than 10%? Absolutely, but I don't think you should expect it's going to be 1-2%. They do want to see that on an ongoing basis and so, yeah, that's one thing to think about. The other thing I would tell you is, in the fundraising process, they are going to push you really hard on, you know, are you 100% committed to this? You know, not to worry about you being distracted on other activities, you know. How should I think about what your next fundraise is gonna look like, you know, is that gonna distract you from the outcomes on this fund? So, you know, will institutions ask those questions, they will, absolutely but family offices really care about it, because they do realize they're betting on you and they're expecting it to come out, come out when needed. 

Ryan Miller  

I love that. So the alignment really comes by putting capital and having some skin in the game. Perfect. I can see that for sure. And the other one was just encouraging them, if they like it and they want to, as I like to say, if you want to geek out a little bit on this business or one of our portcos, by all means, roll up your sleeves, get your hands dirty a little bit. We'd love to have you in certain degrees, but be prepared for that, and just make sure that you create a good experience in there. And so if they're helping you with certain portcos, and you got some skin in the game, that's what I'm hearing of, just making sure that you're aligned, not just in the beginning over a steak dinner, but throughout the entire relationship. There's a method to that. I love it. 

Jim Curry  

Yeah, it's not a passive relationship, right? Institutions, I would say, are more passive, right? You're reporting to them. You're getting reports. They're judging you. It's both ways. It's you want something from them help the portcos, if you guys are backing and say they want something from you, which is show a high level of commit to what we're doing.

Ryan Miller  

Brilliant. You know, it's one thing to raise capital. It's another thing to profit and work in the markets that we've been entrusted to work in. So I'm just curious, from your perspective. I mean, what are from your vantage point, you see a lot, I know you deal a lot on the tech side. What are you seeing right now in the market today?

Jim Curry  

Yeah, so I'll talk about the fundraising market for a second and this is not going to be a surprise to anybody. It's hard, right? The fundraising market right now, especially for VC, is challenging. And a lot of that, you know, there's really two components to that. I think some of it is just, you know, the market is uncertain right now, in general, and the other there is that people aren't yet sure how to read what's going on with AI. So on the fundraising side of family offices, in particular, liquidity remains a real challenge. And I think that you go to conferences now in the VC world, which love going to conferences, but I do go and listen to hear what's what's happening and DPI is the new thing, everyone's talking about DPI, you know and why is that? It's because things that you've invested in private alternatives over the last five to seven years have not really paid anything back. And so family offices, like anyone else, have liquidity challenges, and part of for them is like just having the capital invest. They want to do it, but it's just hard to know when they're going to be able to have the capital go and invest in it. 

Jim Curry  

And then on the AI side of things, you know, to a certain extent, the market has been pre standard 20 years, SaaS investing model for a long time, right? And so the question is, what's your flavor on SaaS investing, whether it be VC or PE, now do you think about that? AI is creating real both opportunity and concern, right? And so a lot of folks are looking at this and saying, not happen to don't matter. Read this opportunity is AI going to basically eat this SaaS world? And, you know, am I stupid to be investing in someone that's really looking at SaaS opportunities, right? And I've had a lot of conversations around that. Luckily, we have good examples within our portfolio of where SaaS companies have leveraged AI to really accelerate their capabilities, but that has created a lot of challenges. I spend a lot of time talking about what's going on with the market and how it's going to affect SaaS. 

Jim Curry  

And then the last thing I'd say is there are just a lot of funds out there right now trying to raise, and a lot of those are existing funds who are out there trying to raise their new rounds of capital that they haven't been able to do the last couple of years because the market hasn't really been there. New emerging managers are trying to do it. There's just a lot out there, so there's a lot of noise, which makes it hard. Now, I do think that's changing rapidly. A lot of people are deciding not to raise. A lot of people are shutting down, but there's still a lot of noise in the market you kind of have to navigate through, so that's kind of the fundraising market. The SaaS market itself, and investing is tricky. It's a really unusual market right now. So I look at, kind of how I think about, you know, the number one thing I care about, which is really not valuations, it's growth. You know what's going on, you know, spending is not great right now, especially if you're doing enterprise or mid market. SaaS, spending levels aren't great, people have been sitting on their hands for a bit. You know, we used to talk about replacement cycles. This is in the hardware world, right, when you can't run same hardware for three to five years without replacing it. I do think we're at the very tail end of an innovation cycle, where people have sat on their hands last two or three years and tried not to invest, but the innovation is too good now, and I do think we're starting to see it kick up again, back in companies wanting to invest, because they've missed out all of these latest tools come out. So anything that's changing early market is showing that there's some growth coming back in, which is good. 

Jim Curry  

Cap tables, we really haven't had the capitulation trade on them yet, right? That's starting to happen, you're, you know, I think a lot of the data we've seen on exits have been, exits have been occurring below 1x for a lot of companies. But people are still trying to resist taking down rounds, to great extent, avoiding all that. We just need all that to wash out to make the market more investable. By the way, that has a negative effect on funds and a positive effect. You know, they're getting DPI back, and then, you know, family offices and institutions want to see capital coming back, even if it's at a loss, but once you recognize that also makes it hard to raise again, right? So I think there's, there's good and bad things about it before and investing putting follow on rounds into companies like we do, it's a little bit harder. We need to, we need more of the clear out of the cap tables to happen. And then there's just a lot of AI kind of whitewashing, copycatting going on right now. You know, there you pick your category, you know, agentic AI as one that I, you know, find both intriguing for consuming but hard to invest in. So like, I'll give you an example, I'm looking at AI alternatives for SDRs, you know, the guys that have to qualify leads as they come in the door. I can, I can send you 50 companies that are building agentic AI to address that most of those are going to wash out right there's a whole lot of garbage out in the market right now. There's a whole lot of SaaS companies who say they're really leveraging AI on the products doesn't work yet. So, you know, that makes it a little bit of challenge to work through right now as well. But, but in general, I feel like we're at the front end of what is going to be a good market, but that's where we are today.

Ryan Miller  

Oh man, that is, that is brilliant. And, yeah, I'm very familiar, we'll say with the SDR dialer, so we're testing our own as well. And you're right, there's a lot that just doesn't quite get it, but it does, at least we can take that as a signal to say, okay, maybe there's garbage, but at least there's investment going on in this area. Maybe we take a peak, or you don't, but either way, you're right. There's, there's a lot of churn in the market, and we just got to see what settles what blows away, how is this coming together? Now, from your opinion, this is what you're seeing. But where do you see the smart money going in the future? That's kind of my my next question is, where do you see the next opportunities? Just from your opinion?

Jim Curry  

Yeah. So you know, my entire thesis has been around workflow SaaS investing, and I don't want to take you through a history lesson of our fund, but, but I tell you how I got here. So when we started this thing in 2015 invested on our own before we raised in 2018 it really was focused on looking for what we call data enabled SaaS companies, right? So if you go back 10 years ago, data science was still a relatively new concept, but the best SaaS companies were figuring out the best SaaS workflow companies were understanding that, like, we have a very valuable asset here. That asset is the data that comes out of our workflow, and we're the only ones that own it, right? Salesforce got this very early on, right, but a lot of the SaaS companies did, it took them a while to understand that, hey, no one else has this data. If a human or machine depends on us for this job, this data must be valuable, and they were the best. Companies were starting to figure out, okay, well, how do I start to transition my product from being a workflow product to an insight product? So how does it start to be something that someone doesn't come to orchestrate through their job, but to tell them where to spend their time in their job, right? And so that was our first thesis, and our first round of exits were really tied to that, which is companies that was successfully made that transition, really were focused on trying to become insight products that happened to translate really well into the world of AI. AI, in a lot of ways, shouldn't a lot of ways, it is just an evolution of data science and sat on top of it. And so my belief is there are 1000s, 10s of 1000s of SaaS companies out there that are ripe for AI enablement.

Jim Curry  

And when I say AI enablement, I mean on the front end, right? How do you, number one, use it to make your product better? How do you really use it to drive unique insights and work help orchestrate a workflow? But on the operational side, how do you also use it to bend the arc of growth and grow faster and lower marginal cost? And you know, a lot of funds are spending time looking at kind of the back office side of things, and I am too, right? I'm spending time figuring out how you can use it for coding, how you can use it for customer support, but I am most intrigued, I said we talked about SDRs, I'm most intrigued for how you can use this to actually go faster, right? I don't think we're that far away from a world where you can grow fast and not need to raise a lot of money, and so I think that's going to make VC a more interesting space. But right now, the SaaS market is really good because people are looking for those pure AI plays. They're looking at the seed stage in particular for stuff that's further along, of course, they wanna invest, but SaaS is to grain stain is just out of favor. And so I've spent a lot of time looking at stuff in sort of that three to 8 million AR range that really is a position to leverage AI, because they've got great data assets. The thing has changed for me now is I'm also looking at on the operational side, are they really ready to adopt this, and what they're doing on their go to market, I think, grow from there. So I'm really excited about that. 

Jim Curry  

And again, you want to talk about storytelling with family offices. I go in and talk about this, and I talk about how it's different, right? So I have to explain why SaaS is interesting. But then I also get really animated because I give them operational stories. Let me tell you how I used to do things, right, let me tell you what things used to look like when I built a go to market function around humans. Now let me take you through the three stages here. Stage one is human. Stage two is Iron Man, I use Iron Man because, like, it's a human enabled with powerful technology. Step three, I was like, is the matrix, the good matrix, but it's the matrix, right? How do you kind of run it that way, right? But I kind of walk them through it, and I give them very tangible examples, and they really understand it. So I think it's changed for me is before I was just really, I'm a product person. I product person, I was really betting on what AI is doing on the product side. I'm now really focused on looking at opportunities, working operationalize it really quickly as well. So I think there's a lot of opportunities there. I personally don't invest in seed stage of stuff right now because I think that market is overheated, and a lot of stuff in the AI world I'm around is overheated as well. So I try to find things that don't go talk about AI first, that talk about SaaS first. And within that, I try to look for ones that are saying, well, I know where SaaS when we talk to you about the work that really doing to bring AI and our product offerings. So that's where we are. Multiples are outstanding right now, I think this vantage is going to be really good for the you know, for anyone who gets into it. And hopefully your listeners are successful raising their own funds so they go out there and take advantage of it. Because I do think we're in a because I do think we're in an interesting window for the next two or three years. And as much as people talk about AI, I would encourage people to look at just plain old SaaS as well. 

Ryan Miller  

Brilliant, yeah, and they will be successful. So we have a community called fundraisecapital.co where we teach people how to do it. Our first year, they raised a billion dollars. So I don't know it sounds pretty atrophy, like a proud Papa. I feel like we taught some excellence in the capital raising industry. But even if, no matter what you know, there's still more to learn, and you are certainly teaching me a lot today, my man. So this is brilliant, before we wrap things up, and just as we round third base, I'm wondering if you could leave behind, say, two or three deep competitive advantages that people can just really think about possibly implement. Just really bring this home for people from all of your experience, what would you say? 

Jim Curry  

Yeah. So first of all, I think family offices are a great investor base, I really do. And you know, my intention would be to continue to build this out along those, those are suddenly, I won't, initially, eventually, potentially. Institutions in but I really enjoy working with family offices. So I think that for for funds, you got to decide you want to make a commitment to that, because I do think it's a path, and I don't think you should think about it as a fill in to an institutional round. I think if you want to go family office, go family office. For them, you know, family offices, keep in mind, they're great for emerging managers. We talked about that, while performance is important if you're a new manager, they really care about the stories and other experience as well. They're not going to necessarily ding you because you don't necessarily have good results yet, or a way institutions might and you know, again, they're Business Builders. They're looking at it, you're building your firm. They're going to be excited about hearing your stories, they're going to they're not professional investors. They understand that you're an entrepreneur or trying to do a thing in your space, they're gonna be very excited about engagement with portfolio companies. So going all in on family offices, I think, is a really good way to go for people that are ready to make that commitment. But I always talked about they take a different approach, you know, you need to be ready to do skin in the game. And again, there's different forms of skin in the game, but in the end, it's going to come down to money. And you know, I, you know, I, you know, again, when I was raising this thing, I talked about percent of net worth, you know, and let them know, like, I'm really into this, so they're going to care about that. So you got to be ready for that, you won't have that as much institutions. You need to make sure you can match your strategy to their mission in some way, you know. You need to make sure that the things that you are doing are meaningful to them and meaningful to the things they support. And it's not just on a, you know, global, global basis, you have to do it office by office. And the deeper research you have to do up front. And the relationship building is required. It takes a lot of time, so you have to be ready for all that. So they're great to start with, in fact, that was great, but they definitely require a different approach. 

Jim Curry  

And then the last thing I'll just say is they do have really unexpected benefits that I'm still uncovering. And one of them is, again, they become great customers for your portcos, if you get the right ones on board. They can also be industry advocates, they can help you get into other opportunities with your companies, they're really good at that. They have their own network of private deals, at least one of my deals, well, one, one deal was 100% sourced by one of my family offices. Others have been influenced or indirectly sent to us. So they're great source for proprietary deals. In essence, you know, we're all looking for proprietary sources. If you have an investor base that owns deals, there's your proprietary source and they love to share the networks. You know, they like to get out there and help you. They you know, some ways I feel like I'm being paraded a lot of times around in front of a in front of folks, but they do love to share their networks and have them engage. So they have a lot of benefits. So again, they're great base, you got to commit to them. You got to be ready for the different challenges they provide. But there's a lot of great benefits you can get out of them. And, you know, a lot of fun. I mean, they're just, they're it's enjoyable to sit down with people and hear the stories about the businesses they're building or have built, and relate to them and, you know, I would say now to great extent, I've added 20 plus mentors to my list of folks that I call in all the time for advice.

Ryan Miller  

I love that. That's, that's mentors code for a really smart friend that won't let you get away with any nonsense. So at least that's what I call it.

Jim Curry  

As they should, as they should, yeah, no, they call, they call you on it all the time which is great.

Ryan Miller  

As they should, if you're trying to grow and you ask them to join their journey, it's like they're okay, don't waste my time. You're gonna do it or you're not. So I love it, and that's that's a great mentor as well. So before we wrap things up, any final thoughts, any ways people can reach out to you if they want to learn more anything at all? 

Jim Curry  

Yeah. So jim@buildgroup.com I'm happy to chat with folks. I run our IT, so if you just send it to dog@buildgroup.com it comes to me too. I get the catch alls, so you don't have to get that perfectly, right. But I love talking about this. I actually have spent not at the scale you have Ryan, but I have helped some emerging fund managers think through this. I'm, you know, one of the I'm always pleased to do is for investors that are interested in me with our investors. I are, sorry, funds that want to meet our investors. I'm always happy to do intros. You always tell people, you got to explain me what you do, how it's differentiated, and I'll try to figure out the right person, but I'm always happy to help with that as well. And again, this is one of the benefit family offices expect that, right, the first thing they're gonna ask me is, which would you invest in this fund? So be ready, because I gotta always answer that question. Again, talking about skin in the game, but, but, yeah, no, reach out to me at jim@buildgroup.com, I'm here in Austin, beautiful Austin, Texas, little bit hotter than Edmonton, but if anyone's ever here and generally want to meet, I'm more than happy to chat with them.

Ryan Miller  

That's incredible, man. So just to summarize everything that Jim and I spoke about, prioritize raises based on checks from a network, not just checks from the one person. Second one is be ready to work closely with the family. They want to hear from you, and that is awesome. The other thing you mentioned was, be sure you're well aligned throughout the relationship, not just at the beginning of the deal, so that is a fallacy a lot of new managers have. Then, well, just raising capital, it is challenging at times. That's challenging for those who don't know what they're doing for sure, but family offices are looking for deals from emerging managers and deal syndicators. So don't forget, they don't always have access to the deal level that you might think, and so they might be praying to God to meet you right now. Family offices, they're great for emerging managers. Be ready for their unique approach, and just appreciate that some may end up becoming a customer and heck, even a friend. You do these things and you too will be well on your way in your pursuit of Making Billions.

Ryan Miller  

Wow, what a show, I hope you enjoyed this episode as much as I did. Now, if you haven't done so already, be sure to leave a comment and review on new ideas and guests you want me to bring on for future episodes, plus, why don't you head over to YouTube and see extra takes while you get to know our guests even better, and make sure to come back for our next episode where we dive even deeper into the people, the process and the perspectives of both investors and founders. Until then, my friends, stay hungry, focus on your goals and keep grinding towards your dream of Making Billions.