How to Raise Capital From Institutional Investors

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Are you struggling to bridge the gap between retail investors and massive institutional allocators? 

Most fund managers believe they are getting rejected because of their track record or IRR, but the truth is far more clinical: they simply aren't "institutional ready." 

In this master class episode of Making Billions, Ryan Miller reveals the institutional mindset to why returns alone never close institutional capital. 

If you want to raise capital from pension funds, endowments, or sovereign wealth funds, you must stop thinking like a salesperson and start thinking like a steward of capital.

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[THE HOST]: Ryan Miller is a recovering CFO turned angel investor in technology and energy.

Transcript

Ryan Miller  

They think like stewards of capital, they are managing other people's money, public scrutiny, investment committees, boards, regulators and headlines. This is why returns alone never close institutional capital. 

Ryan Miller  

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   

Institutions don't reject fund managers because of returns, they reject them because they're not institution ready. See, today is not theory. Today is not inspiration. Today is your field manual on pitching institutional investors. 

Ryan Miller   

So today, I'm going to walk you through how institutional investors actually experience your fund, what silently disqualifies you, and exactly how to rebuild your funds so capital feels safe saying yes. Let me tell you a story that plays out every single day in our industry. A fund manager gets a meeting with institutional investors. They walk in confident. They have their pitch deck, they have their numbers, they have momentum. The meeting goes well. The allocator nods, they ask smart questions, and they say, this is interesting. And then nothing, no rejection, no explanation, no feedback, just silence. That silence is not confusion, it is not timing, and it is not bad luck, that silence is a quiet professional decision. 

Ryan Miller  

Here's what happened internally after that meeting. The allocator went back to their desk and asked one question, where could this blow up in a way that hurts my career? Not will this work? Not is this smart, and definitely not is this exciting, but where is the unexplainable risk? And most fund managers fail right in that spot. See, institutions do not think like your regular investors, if you came up from an emerging fund, they think like stewards of capital. They are managing other people's money, public scrutiny, investment committees, boards, regulators and headlines. This is why returns alone never close Institutional capital. Returns answer upside. Institutions are underwriting downside, and when you understand that now, your pitch starts changing. See, this is why David Swensen famously avoided managers who could not explain how they behaved during periods of boredom, stress or drawdowns. Boring is safe, predictable is safe, explained risk is safe. Surprises can be lethal when trying to raise institutional capital. So if you remember nothing else from this episode, remember this, institutions do not want optionality, they want containment. 

Ryan Miller 

Now imagine if you are an institutional investor, you look at your fund and you see hundreds of small investors, different expectations, different emotional reaction, different liquidity pressures. What do you feel is not judgment. What you feel is exposure, because if something goes wrong, those investors do not call the fund manager, they call lawyers, they call regulators. They cause delays, and delays are death at institutional scale investing. So how do we deal with this? 

Ryan Miller  

Well, step one is a decision, not a document. You decide that institutional capital gets its own lane, not later, not after a commitment, but before. So what this means is you either create a dedicated institutional fund, or you can create a parallel fund or just create a legally clean institutional share class. Depends on what you do, and obviously you'll clear that off with your lawyers, because this isn't legal tax or financial advice, but this is something you could use to talk to them about it. See, the legal form matters less than the intent. No retail friction is allowed in this lane, and your lawyers will help you to set that up. 

Ryan Miller  

Step two, it's the discipline. You set institutional minimums, and you enforce them. Every exception teaches institutions you will compromise under pressure, and you can't have that. 

Ryan Miller    

Then there's step three. It's separation. Institutional LPAs are not negotiated casually. Side letters are controlled, and reporting expectations are explicit. And the pro move here before an institution asks you, say we intentionally separated our institutional capital so there are no retail driven constraints on governance reporting or exits. Let them know that they are in their own institutional Fast Lane, and you are the one with your hands confidently on the wheel. That single sentence signals maturity. 

Ryan Miller  

See, this is the moment your fund stops feeling fragile. You stop wondering if someone will notice something. You stop trying to explain away complexity. You feel grounded, you feel composed, and institutions feel it immediately and that is a big difference. See, institutions are not investing in you. They are investing in what happens when you are not there. This is why governance matters. I'll tell you a story. See, Ray Dalio did not scale Bridgewater by just being brilliant. He scaled it by removing ego from decision making. See institutions trusted Bridgewater because decisions were visible, debated and documented and repeated, and that is key. 

Ryan Miller  

So here's how you institutionalize that in your own fund or your deal or your financial firm. So first you define decision. Authority. You clearly document who votes, how votes work, what happens when people disagree, and this removes ambiguity which institutional capital cannot stand. Next, you standardize the decision flow. Every investment goes through the same process, not because it's rigid, but because it consistently creates trust. And if you've been following the show, you know trust always comes before the transaction. So here's what you do. You document why this deal exists, how it could fail and what would trigger that type of event. Then you document the decision itself, not necessarily for compliance, but for memory. And the pro move here, when asked a hard question, you say that was debated in our Investment Committee. Let me walk you through how we thought about it. You see, I was fortunate enough to learn at the feet of someone who built a DECA billion dollar Real Estate Fund, and that was one of his ways of actually selling people, is he would bring them in, and they could be an observer on the Investment Committee. And he knew that when big investors could see how they made decisions and how they debated and went through it in a healthy way. They knew that everything was scrutinized. So you can use your investment committee and your decision and voting. You can use that as a competitive advantage, if you do it right. See that sentence shifts you from fundraiser to operator, and they love investing in operators. So this is where anxiety will leave your body. You're no longer defending intuition, you're showing a repeatable process. And so the grind will build, but the process will scale, so your fund now feels bigger than you, and institutions stop testing you for weak spots. 

Ryan Miller   

Hey, thanks for listening to Making Billions. If you liked this episode, could you do me a huge favor and go leave a review? This helps us to get the podcast to more ears, to help people raise capital, learn fund management strategies and serve our mission to help fund managers and deal syndicators to gain greater hope and focus as they build their empire. All right, let's get back to the show. 

Ryan Miller   

See institutions, they don't leave because of a bad quarter. They leave because of surprises, especially the ones they don't want. So reporting is not an obligation, it is a rhythm that your fund goes through. And so standing up your reporting and showing that you're completely transparent when your institutional investors start looking at how decisions are made and how you report, how you communicate, is absolutely critical. No shortcuts, no cut corners. This is vital. Then at this point, you decide, every quarter, without exception, you communicate, you report numbers, context and what you're watching and what has changed and what has not especially what has not changed. See, silence creates anxiety, consistency creates patience. And the pro move here during a slow or a flat period, you communicate early and say, here is what did not change and why that matters. See, this is where capital now becomes patient. Emails feel calmer, LPs feel easier, your business becomes quieter. See, quiet is what institutions love, and quiet doesn't mean not communicating. It actually still means you communicate, but you show that all is well, calm waters, and you still communicate, disclose, to build that cadence and that rhythm. 

Ryan Miller 

Now, at this point, institutions are always watching how you behave under pressure. Do you rush? Do you oversell? Do you get defensive, or do you stay steady? See David Swensen, he passed on many brilliant managers because they could not stay calm when they were challenged. So you can expect that when you pitch an institutional investor, they are going to mess with you, not always, but likely you will have at least one who will try to mess with you, stress you out, probably yell at you during a pitch, but they are that is part of their due diligence process, is to say, do you lock in? Do you freeze? Do you flee? And I would say the best defense to that is over prepared and communicate. Get your mind, your body and your spirit in the right place, and your reports all in the right place, so that they can see it. And here's the thing, you want to expect, long timelines. You want to normalize rejection, treat diligence as collaboration and not interrogation. And what this changes? Well, you now stop chasing approval. You start projecting stability, because you've built it and you're now becoming institutional ready. 

Ryan Miller

So let's bring it home. Institutions do not fund brilliance. They fund calm, predictable execution. So when you build this way, your fund becomes easier to explain. Your life becomes less reactive, and your confidence becomes real. You stop chasing capital, and capital starts watching you. So if institutional capital is part of your future, you need to know whether you're actually ready for it. So I built an Institutional Ready Checklist that shows you exactly where you are strong and exactly where you are leaking trust. So what you do click the link in the description to download it and remember trust comes before transactions, and when you're prepared for institutional capital, 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.