3 Principles Used to Raise $500M in 2 Years

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How does a real estate fund manager land a $500 million commitment from one of the world's largest insurers when his firm is barely two years old?

Discover the answers with a real playbook from someone who actually did in this  episode of Making Billions with Ryan Miller.

This week on Making Billions, Ryan Miller sits down with Josh Parker, the founder of Ancora, who built a half-billion-dollar partnership with Legal & General, by doing three things that every fund manager, emerging GP, and capital allocator needs to understand: reputation, relationships, and repeatable results. 

Josh breaks down exactly how that deal happened, what the two-year closing process looked like, how COVID nearly derailed it, and why patience is the single most underrated skill in institutional fundraising. 

If you are wondering how to raise institutional capital, how to make a fund institutional ready, or how fund managers maintain conviction during uncertain markets, this conversation is a must listen for you!

[THE HOST]: Ryan Miller is a fund manager, capital strategist, and former CFO turned angel investor in technology and energy. He is the founder of Fund Raise Capital and Aequor Capital Partners, and has mentored over 1,000 fund managers across private equity, private credit, venture capital, real estate, and alternative assets globally.

[THE GUEST]: Josh Parker is Ancora’s Founder, Chairman and Chief Executive Officer. A national leader in the anchor institution and innovation sectors, he has unique investment experience. Over his career he has experienced industry success that includes developing a combined 5 million square feet totaling over $4.5 billion in value. 

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Transcript

Ryan Miller

Most managers will never see a $500 million commitment in their entire career. Josh Parker got one when his firm was barely two years old. So if you're raising institutional capital, you'll hear exactly how he turned a niche real estate thesis into a half a billion dollar check from one of the world's largest insurers using reputation, relationships, and results instead of a long track record. We're gonna break down how he stayed convicted in uncertain markets, made his young platform institutional ready with institutional grade process and clarity, and then protected his leverage when that same partner changed strategies and wanted control. So if you manage other people's money and care about scaling AUM without losing your edge, then this is the playbook.  All this and more coming right now. Here we go. 

Ryan Miller

Before we dive in just a word from our sponsor. When doing deals, we all know that raising capital is the one thing that unlocks everything. That's why I've partnered with  Reef Pass Investors that are actively funding deals right now. So if you're a deals syndicator or founder thinking about launching an M&A-focused buy and build platform, reach out to Reef Pass Investors  at reefpassinvestors.com. They are one of the best investors in the game that are helping you launch a new long-term holding company. So here's what I want you to do. Click the description in the notes and contact them for a discovery call and potentially get an invite to pitch your next M&A deal. Now, let's get back to the show.

Ryan Miller

 Josh, welcome to the show, man.

Josh Parker

Ryan, great to see you. Great to be here. Thanks so much for having me on.

Ryan Miller

Yeah, it's great to have you here, man. I'm a huge fan of you and I'm excited  for what we're about to talk about. So before we dive in, what's the one thing you want people to walk away from this conversation understanding?

Josh Parker

Man, I'm a fan of the podcast, and your listeners get so many great nuggets of information. I think mine is really about how to maintain conviction in periods of uncertainty.

Ryan Miller

Oh man, awesome. Boy, in this market, do we all need that? I would say definitely. So I'm looking forward to learning more from you and on how that's going to go. So, you know, let's let's dive in. So walk me through the specific moves that got that global insurer to write a half a billion dollar check to you, and your firm was barely two years old. What did you even put in front of them to get you to take them seriously?

Josh Parker

Yeah, that's a great question and a good place to start. We were really fortunate to build a partnership with Legal & General, which is one of the largest insurance companies, pension funds, and asset managers in the world. And I'll tell you, it really comes down to building relationships and being consistent and delivering results. You know, that deal, like every other deal I've done based on relationships, based on trust, based on reliability. You know, back in 2019, you know, we're working on deals and we're talking to folks in the market. And I was like, man, it just feels like everybody I'm talking to is talking like it's 2007. And  for anybody that was active in the business then, you remember valuations were high, rent, you know, only grew,  you know, vacancy was never a problem. And it just felt like those same narratives were starting to come up again. And I said, man, you know, we really should think about how to fill the silos up and be ready for any sort of disruption that's coming. You know, frankly, be ready to take advantage of the pricing and dislocation that can  happen. So we started looking , you know, and talking to folks through our network and got connected with a guy named Bill Hughes,  who's sort of a legend in European real estate. He was the head of real assets at  Legal & General at the time. He's since retired. But you know, we had a call and, you know, I kind of told him  about our thesis and what we were working on and what we're starting to build. He said, Josh, I think that's a very clever idea. And I thought, clever, okay. And he said, I'd like to bring some of my colleagues along and introduce you. 

Josh Parker

So we had our first sort of official call with them in  January of 2020, and  little did I know what that one sort of unleashed, but it began a two-year process of closing. Now that was  somewhat disrupted by COVID, and the fact that, you know, from what was that March of 2020 when things really shut down  until September of 2020, we were intermittently speaking and doing things by phone as everything was disrupted. I finally got over to London in September of 2020 through all the COVID protocols. You know, we  just built a relationship  at first virtually and then in person and really allowed them to get to know our business,  allowed them to get to know us. We were fortunate in that  as we were looking around for this, Legal & General had hired JLL to do some analysis of investment strategies in the US that they may want to consider. And, you know, of course, they got back a report telling, they could look at all sorts of different things, you know, industrial, cold storage, data centers, life sciences, you name it. And within that report, our name sort of surfaced. And so kind of out of the gate, we had some relationship and we had some credibility. And really, then what we had to do was build trust. And we had to really open ourselves up to both the kind of the intellectual probing around what it is we were trying to do, but also letting them under the hood and really seeing what we'd done in the past, what we were building and where we could go. 

Josh Parker

I'd say  you know, the lesson that really came out of that process, particularly working with such a large  institution, you know, 190 year  history at this point, patience and  adaptability. You know, patience is absolutely critical anytime you're raising capital, but it's doubly critical when you're in the situation  that we were in as a young company working with a very large firm.  I think the lesson we went on to learn is about adaptability and  how you,  how you have to manage that. Because we spent so much time, you know, really building that relationship and building that trust with them. We felt like we had partners that we could navigate through just about anything with. And that came to pass. We can talk about that. I I think again, the key back to the initial point is as a manager, you've got to be super focused on what it is you do and not be swayed from that. You've got to maintain your thesis, you've got to be willing to interrogate it yourself, you've got to allow it to be interrogated, you've got to be able to defend it. And then you've got to be able to execute it repeatedly and adapt as the situation changes. And I think because we approached it like that, we were able to convince them to one, make their first investment in the US, make it in a very young firm, and make it at a very big big level.

Ryan Miller

Brilliant. And I think that puts you guys now at around $4 billion AUM, is that right?

Josh Parker

Yeah, we built up, but you know, so this kind of goes to part two of the story where what happens when things change. So we started building up and got to about two and a half billion with Legal & General in terms of what we were managing in stabilized assets and development platform. After about 17 years at the helm, the CEO of  Legal & General decided he was going to retire about two years into our relationship. And anyone who's ever worked with a large institution knows that those large institutions have to go through a significant process in order to replace somebody of that stature and with that kind of tenure. And, you know, so they came to us and ultimately it was we've got to select a new CEO, then we've got to develop a new strategy and all the things that a large business has to. And they came to us and said, you know, things are changing for us. We're not sure that we want to be invested in this space, and we're not sure that we want to be minority anymore. We're really gonna go for full control positions. And I said, look, I don't know that I want to go and work for you, especially if you're not sure you want to continue doing the very specific thing that I've built my career doing. And we had a very adult conversation and ultimately worked out to sell them our GP position and the assets that we would have done together and buy back our operating company position and then just do things separately going forward. We've still got a very good relationship with that team and still look at some deals together. But being captive to them and investing off of their balance sheet, you know, we've pulled that back tremendously. So that takes us now back to you know $600 million-ish or so in AUM as we kind of build back up with multiple investors on a go forward basis. 

Josh Parker

The thing about getting into a relationship with someone, if you take the time on the front end to build the right framework of the partnership, when things have to change and you have to unwind those things or you have to go different directions, it becomes a lot easier. Again, if you have built the credibility and the trust, if you have a strong relationship, when it comes to navigating those changes, it's just another day at the office. It's just another part of building a business and growing a business and making investments. And so we were incredibly fortunate to to partner with such a top-tier firm and allow them to help us grow in that way. I mean, it, if it was a bit of a unicorn situation. I don't know if we'll, you know, we're not two years old anymore, so we don't have that going for us. But you know, a relationship like that comes along once in a while, and it was, we benefited tremendously from it. And I hope they did too.

Ryan Miller

Brilliant, man. So you guys scaled and now you are around $600 mil. Now, with that being said, and that's amazing, that's incredible. What does a firm need to build in, say, in terms of track record, structure, team, proof to be institution ready? Because you pulled it off, which is amazing. You're a young firm and you got a huge commitment, but what do they need to be institutional ready before a partner that size will even consider it?

Josh Parker

Yeah, raising institutional capital for anyone who's done it, for anybody who's attempting to do it, knows that that track record is incredibly important. And the way that you demonstrate that really is different in almost every situation. So we, in that situation, like we had a very nascent track record as a young firm, but we had a substantial track record. You know, I've been in this business for you know going on 25 years now, doing roughly the same thing. And so we're able to point to direct investments that I had made or led as a principal, and before being a principal as a key member of a team, and before that, you know, the journey that I was on. And so I think what folks have to be able to do is transparently unpack who they are and how they've gotten to where they started, to where they are now. 

Josh Parker

Because what you know, allocators of capital looking for is that consistency and that reliability. There's no proof that what you did before will mean you can deliver the same thing again. You know, every disclosure and in every investment deck will blare that right up front. But the trajectory that is demonstrated by the track record is super important. So I think the ability to sort of you know roll out of bed in the morning and raise half a billion dollars doesn't come from just sleeping well the night before. It comes from you know working your tail off for many years ahead of that. I think in terms of what investors really want to see out of folks, in addition to that track record point, which again, I'll just say every investor is going to look at that a little bit differently. There's no perfect track record, there's no perfect way to get there. It's really just about being transparent and forthright about where you've come from, how you've gotten there, and where you're going. 

Josh Parker

I do think investors want to see a certain level of discipline within a firm in order to make an investment. So one of the benefits of partnering with Legal  & General for us is we were in a startup mode, going into a scale-up mode, and we're able to borrow from them a substantial amount of process and risk framework and underwriting criteria and things that you know, as a small business, as a small manager, you're doing these things, but you haven't necessarily written them all down into SOPs and that sort of thing. So it created a discipline for us to have to take everything that we've done, sort of put it up against a trillion dollar asset manager's process and integrate some of the best thinking. And, you know, to some degree it changes a little bit of the entrepreneurial mindset to the institutional mindset, but we were incredibly mindful of maintaining our entrepreneurial approach. 

Josh Parker

I think the most important thing that we did, that we continue to do is our framework around communication. Yeah, clarity is incredibly important in being able to scale. And when you go from doing, you know, deal-by-deal, raising capital to having programmatic joint ventures, discretionary capital, maintaining clarity throughout the organization, throughout your investment process, throughout your investment committee about what you're trying to accomplish is key. We use Patrick Lincioni, who wrote, Five Dysfunctions of a Team, I think is maybe his most famous book, but he wrote a book called, The Advantage, which brings together a lot of thinking from some of his other books. But the key point that he makes throughout it is communication and clarity and how critical they are to a successful organization. And so there's a whole framework in his book around meetings and around communication cadence and the purpose of meetings and the type of meetings. And we really took that to heart and adopted. All our, you know, all of our team utilizes that as a way to keep ourselves focused on what needs to get done and our main priorities. It's really what allows you to scale and perform in a repeatable way. 

Josh Parker

And then I think the last thing that's critical for folks in scaling a business and managing institutional capital is having very clear core values around the company. So you can have an investment thesis, which is sort of you know correct me if you will. But as you build that team out, having core values that not only are understood but articulated but practiced is super important. I would say the most important core value. I guess I'm not supposed to force rank our core values, but I think one of the most important core values  at Ancora is creativity and curiosity. And I think those two things go hand in hand. It's the way that we best serve our capital partners, it's the best way we serve our university clients, it's the best way we serve our tenant customers, it's the best way we serve the communities in which we work, and it's the best way that our colleagues you know can really collaborate. Collaboration is another core value of ours, but I go back to creativity and curiosity every time. As an investor, as an investment manager, you have to maintain curiosity, you have to be constantly open to where the market is going and what's happening around you and all the data points that can feed into making good investment decisions. And then you have to be creative. You can't just do it the way everyone else is doing it, or you're not gonna be able to generate alpha. So those two things go hand in hand for me. And I think you gotta have that track record. You've got to have clarity and communication throughout your organization, and you've got to have very strong core values if you're gonna scale and manage institutional capital up.

Ryan Miller

Brilliant. So clarity throughout the organization. So this, like you said, this is how to stay we'll say certain during uncertain times when you're in asset management, and a lot of those things are coming up. What you're saying, it's maybe not the silver bullet, maybe it is. But what you're saying is one of those very important things are those values, but also creating clarity throughout the organization. Because a lot of people will just say the CEO needs to be clear on the vision and you know whip the people and get them in line, and not my management style, and I don't suspect that's yours either. But I think what you're saying is no, from top to bottom, everybody needs to be clear. And I imagine that gets everybody pulling in the same direction, which leads that really does show up in the financials. I'm a recovering CFO, so I, you see it all. You can't hide it from the CFO. So all of those things come out, and it's all just by making sure as a leader who's leading this investment fund that you're able to create clarity and have clear lines of communication. Did I get that right?

Josh Parker

Yeah, that's right. I mean, I had a boss years ago who you know maintained the ethos that the beatings will continue until morale improves, and you know, it was a very sort of top-down, you know, you must perform. And you know, it's a training ground, it has utility, but I sort of like you, I think ascribe to the management approach that what you've got to do is bring people along on the journey. 

Ryan Miller

Yeah. 

Josh Parker

And you know, this idea about maintaining your conviction and periods of uncertainty is super, super important. We talk about that a lot. Like, you know, you can be uncertain about something, you can question things. You know, we question every assumption, but we don't get lost when the answer is not immediately clear, new markets move and change, voices are coming at you from every angle at all volumes, delivering incongruent messages. So it's okay if you're not 100% certain. Just don't let that uncertainty get in the way of your conviction. And if you are maintaining open communication and clarity of purpose, you can navigate those periods.

Ryan Miller

Yeah, brilliant. So, you know, that makes me wonder then how because you've done phenomenal at raising capital and not only running a great firm, but raising capital. So, how should a fund manager run what we'll call it the courtship and the diligence process with an institutional investor that's as big as the ones that you pitched? How do they do that without losing that leverage or momentum? What would you recommend?

Josh Parker

Well, look, raising capital, first and foremost, patience. It is, it is a very long and winding process. It always takes longer than you think. Even you know, even the best firms, if you look at the period of their fundraise, we're always navigating different cycles and markets, we're always navigating changes in leadership at different allocators. I mean, just, it's patience. You have to be patient through the process. And that means a couple of things. That means just knowing that it's gonna take time and that you're gonna have to continue working at it. It means don't get discouraged, you know, being patient through a lot of conversations. We call it kissing frogs. Like you're gonna kiss a lot of frogs when you're raising capital. And folks, that you really want to be your investor, you think you would be perfect for each other are gonna find a way to say no. And most investors are paid to say no. And so you're gonna get a lot of no's. 

Josh Parker

I think, you know, when you're in the process, I think you've got to maintain a posture of over-communication and you've got to be quick to respond when you get requests for additional information. And, you know, sometimes investors have other things going on. They're not just focused on you. And so there's gonna be periods where you know they might go dark or the next meeting may take you know four weeks. I think you don't let that be a completely dark period. You want to communicate, you want to send articles, you want to drop a note of something that occurred to you or something you saw that they did, or if you know one of the other investments they made has gone well, and you, you know, some you saw some news on that. I think you just again back to that relationship building, you want to take a posture of overcommunication. I, you're not gonna be able to communicate as in-depth with everyone. And so I think you just kind of learn. I always say to folks, like, if I know after the first meeting if somebody's gonna invest with us, like you just you can tell if the energy is right. And it doesn't mean you're getting a yes in that meeting, and it doesn't mean there's not gonna be twists and turns, but I've I've always been able to tell if we were ultimately gonna get to a deal with each other.

Josh Parker

 I think the other thing you've got to do is just you've got to be ready to talk to a lot of people, and especially if you're in a niche sort of business or platform, you're gonna have to do a lot of educating because you know, allocators traditionally like to work in major food groups  and you know, kind of put things right down the middle of the fairway, but they they want to do something different than that. And so you just, you have to be ready to to educate and talk to a lot of different team members and a lot of different people. I think it was also an opportunity, and we're not particularly good at this. You know, you know, you're very good at this. And I, part of the reason I love being able to come on and talk to you is like getting out there and broadcasting ideas and talking about the way you do things and talking about your thesis, it just gives an opportunity for that to land on people in different ways. And there's some folks that I think very highly of, very, very good investors who are very big, particularly on LinkedIn at sharing the way they're thinking, the way they're going about things. And I just love the transparency with which they approach it. And I wish I had more of the personality that that you know could come up with the pithy thing to say and and post on LinkedIn. But I'm always amazed when folks can very cleanly distill what they're thinking about or what they're doing and kind of put that out there. So it's instructive to me as another investor, and I and I think it's instructive to the capital allocators that ultimately invest with those folks because again, you're just you're letting people into the way that you think, the way that you do things. It's another way of communicating without having to wait for a formal investment process. Obviously, you got to be careful with you know the, all the rules around raising capital and and public communications, but you know, as long as you're as long as you're keeping your nose clean there, I think putting putting your story out in a lot of different ways can be very helpful.

Ryan Miller

Yeah, I couldn't agree more. And you know, I've actually never said this on my show, but I'll say it now. There's really a couple of reasons why I started the show. One of them was what you're talking about, is to say, I feel like I'm quite good at this. I was at a point in my career, I'd finished being a CFO, and you've achieved a certain point of the ladder. And all I wanted to do is help. So as the saying goes, you spend your first half of your career building your resume, and the second half building your legacy. And I was like, you know what? A big part of high finance is you've kind of alluded to it, I've said this before, is reputation, relationships, and results. Those are your most valuable assets in your possession. And I started my show just to get better at what you talked about, which was clarity in communication, is to say, I want to get better at that. I have a lot of concepts that come out very mathy, which it puts people to sleep. And so you just put in the reps. And I've had people say, I've heard your first show and I've heard the latest. Did you take a speaking class? Because you're entirely different. And it just comes from just being in the game long enough. 

Ryan Miller

But really, the other reason why I did it, and this is real talk, is not only to get good at communicating and helping people to understand how I think and operate, is also to build a legacy. I always thought, this is very sentimental, but what if something happened, right? We, I'm a father and a husband, and what if you know something happened and I wasn't able to teach my kids the things I wished. And so you come out with a show, and which I did, and to say, what are the lessons I would want my kids to do that? And even if nothing happens, I get to see what I look like before all the wrinkles and dad bod took over in my life. But you know, that's on a personal note. Now, the whole part of that, and I loved what you said was you have to get good at social media, right? Or broadcasting how you're thinking, because investors want to know. Yes, they want to invest in deals. Of course, that's how we monetize trust is we use deals to monetize the trust we've earned between you and a potential investor. 

Ryan Miller

But the other thing is how do they trust is they have to see things that maybe  don't show up on the pro forma. They have to see things that maybe aren't exactly in the pitch deck, things that are outside of maybe the accolades of your career. And I think coming on this show and many others or doing a show, it's a great way to help people understand if there are investors or just maybe friends. But either way, you are allowed to go on there and be careful with the rules. And obviously, you want to talk to an attorney before you start spewing anything about investments. It's not what we're doing, but really go on there and help people just get a window into how you think, maybe things you value. You can even get a sense of is this guy kind of a jerk, right? I, it's a great deal, but he would be a total pain in my butt. I don't want to fund someone who's going to stress me out. I want to fund someone who takes away stress, not adds to it. And so, I know I'm hammering away on this one, but I want to make it clear not necessarily to you, but to people listening around the world, that it's okay to open your mouth. Obviously, make sure there's certain areas that you got to check with local laws and and soliciting. But I think just helping people to understand how you think, that's hard to do. And if you're able to provide that to investors, potential investors, and give them a window into your philosophies, even if it's a newsletter, it doesn't matter. Open up how you think and perceive deals. Would you agree with that? Anything else you can add to that?

Josh Parker

Man, a hundred a hundred percent. You're starting a little misty eye there. You're talking about giving a legacy for your kids. You know, we four four great kids and all doing you know really cool things. And and yeah, you you you you we probably don't you know think enough about what we're learning every day, and sort of stopping and reflecting on that and and you know putting that back out there you know, to our family, to our friends, and then out in the world. And this point you're making, I think, really is about authenticity. And you know, it can be hard to be authentic in a world where you feel like you're always on and you know the judgment that can come back out of the digital sphere is intense. Certainly in the investment world, you know, you're constantly being judged for you know your performance and your thinking and so I think it's hard for a lot of folks. And I mean, certainly been been hard for me at different points to to feel like everything's not going well when you're not totally successful, that you want to open yourself up and and sort of expose yourself to sharing ideas that may be imperfect or putting things out into the world that can get critiqued. 

Josh Parker

But you know, if what you're thinking about is the long game and you're back to building the idea of relationships and trust and credibility, there really is no no no better way than to do that. I mean, it's interesting. We've got a member of our team, Pete Isaac, who runs our client strategy team. And Pete's an incredible storyteller. And even though I have a background in theater, like I'd sort of gotten away from storytelling and just very like in the numbers and whatnot. Pete's like, no, you gotta you gotta tell the story. You gotta remind us, you know, our clients, our capital providers, you know, all the different pieces that are in our business, like why we're doing this. And he's absolutely right. And and I think your your point is is spot on about you know taking you know the reason you're in this business, the reason that you're confident in yourself that you can be successful, that you can build a team, that you can manage capital, and and putting that out there into the world. I couldn't agree more.

Ryan Miller

Man, I love that. Thank you for that.

Ryan Miller

Hey, if you're finding value out of this discussion, could you do me a huge favor? Could you just take a second and hit that like or subscribe button? It costs you nothing, but it tells the algorithm that this is valuable information and it helps us to get it to more people. Thank you. You're incredible. Now let's get back to the show.

Ryan Miller

We talked about it a little bit earlier. I just want to shift gears on this. So we talked about doing a 50-50 joint venture. That was some of your original funding that you've done. And I'm curious about that because everybody wants control, right? So it, I'm fascinated on this opinion. When it comes to term sheets, everybody's what are the control things and restrictive covenants? There's all kinds of things that go in there. But my question for you is why might a fund manager choose a 50-50 joint venture, like where it makes sense. Why would they do that instead of say just a traditional blind pool fund? And how does that change the economics for the GP?

Josh Parker

Yeah, look, I mean, control is an illusion for both sides. I mean, you know, control control is really about accountability and who's responsible for certain things at certain times. But when it, you know, control really only matters when something's not working or something's going wrong. And when something's not going well, you know, you both better be in it together and rowing together. It doesn't really matter who's in control at that point. So I I think that's always interesting when you get into negotiating those things. And and you know, there's some approach that folks take. So, yeah, just well, this is the way we've always done it, or we did it on the last one. But we always really try to get to like, what are we trying to accomplish together? And let's build a structure that achieves that. That's true both, you know, at the capital formation level, but it's also true at the deal level when we, when it comes to you know partnering and structuring deals  and all the way down to to leases. 

Josh Parker

You know, I think if every investor relationship and deal structure is going to be unique to the circumstances at the time. And again, that could have to do with macro things like where we are in the cycle, or it could have to do with you know the maturity of the business or the type of investor. You know, some investors want control, but they don't really have the capacity to execute it. And so you have to come up with something that uses your capacity to deliver the oversight in a way that allows them to have the governance control, but feel like they're in control because you are giving them information transparently and regularly and and they feel like they've got a hand on the steering wheel. 

Josh Parker

You know, structure for any type of partnership really needs to follow the thesis and the investment opportunity. So you can't go in, you know, committed to a structure first. You really need to be able to explain and defend why the investment thesis and the investment opportunity need a certain structure to be formed around it. And you know, for us, forming a joint venture in the deal that we did with Legal & General allowed us to be much more opportunistic than, say, a fund model. Because traditionally, in a fund model, you're gonna have a mandate that you agree to and a time period in which you're gonna deploy capital and then a time period in which you're gonna return capital. And when you're trying to scale up a platform, particularly in a new thesis, that can be overly restrictive. While discretionary fund capital sounds nice, like now you're on the hook, right? And so having something where you have a governance model where you can maintain communication around what's happening and then be responsive to that and adaptable to that, I think is super important. And that really was what worked best for us in that relationship. And you know, for all the capital we try to form, we're really thinking first and foremost about what is the current opportunity we see for investment, what is our thesis underlying that opportunity, and what's the structure that's best going to serve it in this moment?

Ryan Miller

Brilliant, man. So that makes me wonder then, mechanically, how does a manager structure a deal so a university or a hospital anchor de-risks it enough to clear an institutional investment committee? Is there, I've heard the phrase " death by committee”, that can happen sometimes, but in those, and I know you guys do university deals a lot, you do hospital deals a lot, you guys work in a lot of big stuff with big investors. So how does all that work?

Josh Parker

Yeah, so it's you know, you're kind of getting right to the heart of our thesis. So, you know, Ancora specializes in investments with universities and other anchor institutions. And the thing I would say about our space is if you've worked with one university, you've worked with one university. You know, they're all a little bit unique in the way that they operate and their governance structures. And so we think of universities as our client who we want to form a partnership with to execute a real assets opportunity, whether that's real estate or infrastructure or something operational around their business. And so the first thing that we really have to do is understand what they're trying to accomplish. So we don't come in and say, we have this kind of capital, we have this kind of deal structure, and we build this kind of building, and we can put one right here. We come in and say, what are you, what are you trying to do? What are your mission and strategic priorities? Where are you in the life of your institution? Where are you in the life of your strategic plan and your leadership team's journey, and really try to unpack. We, our client team, we think of them as much as some combination of data scientists and cultural anthropologists. It's really trying to get under the hood of the university and understand what they need. 

Josh Parker

Because the better we know them as our client and ultimately as our partner or anchor tenant in a project or groundless or whatever the whatever that relationship ends up being, the better we know them and what they're actually trying to accomplish, the better we can structure that deal and the the better opportunity we have to generate alpha and create great returns for our investors. 

Josh Parker

You know, when we work with the universities and these other large anchor institutions, we're again taking that same approach like we take with our investors and build the relationship, the trust and the credibility. We want to be really clear on what the risks are of the potential deal, what the rewards are of the potential deal, how those are going to be allocated. And we try to look at it from a perspective of if we can build the deal together, we can de-risk the deal sort of at the global level and then have a smaller amount of risk that we then need to allocate amongst the parties. So every one of these deals has complexity to it, a little bit bespoke, goes back to our creativity and curiosity value. But it's really about trying to align the capital that we can bring, the expertise we can bring with the goals of our Ancora institutional partner, and then you know, put it in a situation where as they go through their governance process, you know, through whenever the leadership governance is, whatever their board of trustees are, they see that they're they're gonna be better off working with us than anyone else. I'm always confident about that. But even on their own, you know, a lot of these universities have plenty of financial resources. It's not that they need our capital. Some universities are a little more capital constrained, but it's really about showing them that you know the combination of capital and expertise, we call it sort of a capital plus solution framework, is gonna leave them in a better off place. 

Ryan Miller

Perfect. Yeah, I couldn't agree more, man. So a lot of the stuff that you do, it has certain duration. And some investors want in and out, I want cash flow, I want a quick turnaround. Other people, like one I know, Brookfield or infrastructure, 75 years, right? They love long duration stuff. And so it's not only enough to have a good deal, and tell me if you agree or not, but it's also timing of cash flow and the exit. So a good deal also doesn't just mean how much money do I make. Obviously, that's part of it, but it's part of it. The other one is, is that a good fit for me or my family office or our institutions or my career as a portfolio manager who's about to make this decision? So there's so many things that come in, but I want to really drill down on duration a little bit here. So, how does a fund manager align long duration institutional capital with longhold assets? So they're never a forced seller, if you know what I mean. How does that work?

Josh Parker

Yeah, it's a good question. And there's a lot more art than science in that. You know, the science of it that you know that that you're talking about is matching, you know, what what the pension and insurance companies would call matching adjustment capital. So, you know, they look at the liabilities on their balance sheet and they need an asset to match it. And the more perfectly you can match those things, the better capital allocation you've got and the better pricing ultimately you're gonna get. So a lot of that is about asset selection and investor selection and ensuring they're both aligned. So, you know, if your investment thesis is around taking advantage of a demographic shift in a market and you know, merchant building apartments and flipping those while you've got a period of rising rents, you don't need to be looking for that type of capital from a long-term insurance company investor. 

Josh Parker

Now, if your thesis is this is gonna be a really durable market over time and we're gonna be able to preserve capital and generate you know coupons, then then you're aligning to that longer term capital. So somebody's just understanding what type of asset you have, what type of investment strategy you have, and then and then the alignment of that investor to it. You know, you threw out a couple of different like family office, pension bond insurance, you know, they,  different investors have different priorities. You know, some could be very focused on IRR and fast multiples because that's the way they're compensated, or that's the way they've got to generate a return in order to make up for a period without growth. 

Josh Parker

A lot of those investors that we talk to who think about long, long duration and long-hold assets, which is really what aligns best to the way universities think and operate, are most worried about capital preservation, you know, predictable income growth and that duration that you talked about. So you know, you're you're you're needing to think about how those two things are gonna line up. And what you don't want to do is find yourself in a situation where you're forced to act. And so you need to be thoughtful about even when we're doing a development project with a university, it may be a build-a-suit or it may have some level of stabilization risk. We're gonna fund that with a you know a bucket of capital that's looking for more of an opportunistic return profile, even though it's been a de-risk opportunistic return profile, you know, something that we know the capital wants to cycle in and out. And then we're gonna set up a framework for fair value transfer into a longer vehicle. 

Josh Parker

You know, I think one of the things we're spending a lot of time on right now are setting up what we're calling Uni-REITs with our university clients, where we can create a capital framework and a structure that lends itself to that long-term ownership where we can cycle investors in and out without having to necessarily sell the assets. That comes with all of its own complexities, as people are seeing in the market with non-traded REITs and BDCs and the need for continuation funds. So, you know, liquidity is you always think you can manage liquidity a little better than you can in a long-term structure like that. And so you just have to be sure that when you go to put those together, the legal docs that you get in place, the disclosures that you put in place are going to be able to clearly articulate what the asset is like and therefore how the investor should be thinking about it. So the matching is sort of a holy grail, and it's kind of what we're always looking into. And it's part of the way you best match things is you price them accordingly. And then you just have to be very thoughtful about any time you're you're getting into a deal, and and particularly for us, we're working with a university client and matching that with the capital that's available, that we're not we're not using the wrong capital at the wrong time and putting ourselves in a situation where we're gonna be forced to act at the wrong moment.

Ryan Miller

Brilliant. Yeah, so that duration matching is a big part. This is a part I know you know this, and a lot of people are surprised to find out, but I have a community where I teach people how to raise capital at  Fund Raise Capital. And a lot of people are like, I got a great deal and it's gonna make people a lot of money. And I was like, well, that's a good start. That is the starting line, but duration matching is a big one, and then continuation funds as a contingency, or you kind of roll them into the next vehicle. What are you gonna do if the duration doesn't match? And then tax planning. So we got yes, it needs to be profitable, but it also needs to be in the time frame that your investors expect. Because if you get the capital, and even if they fund it, but the duration is off, and somehow that did not get covered, you're gonna be a little upset if you got a 20-year investment and they want it to be out within three or five. It's gonna be a problem. And then tax issues, and so, you know, and I know you know this, but a lot of people, folks that I'm fortunate to talk to in this industry are surprised to find out that it's not enough just to send deals to investors. And obviously, you've done a massive deal when you started out. You don't want to be a deal drug, you want to be a solution architect. And some of those things are timing of cash flow, obviously profit profile, your buy box, tax issues, inflation. 

Ryan Miller

There's so many areas that you adjust as someone who brings deals to people for a living, and you guys do that. And so, not only that's why I wanted to ask about duration, because I know this isn't your first rodeo, and you guys are excellent at what you do. And so let's say now we're at this place and you've been here, man. Once a giant partner is in, what reporting and government, governance discipline should a manager run to keep them confident enough to fund the next deal? So it's not enough to just pitch them once and get the deal. It's enough, it's a really big compliment to say, what else do you got going on? When you have people that you've done business with, they still line up on your next deal or your next fund. Now we're talking you've done something really well. You've already talked about clarity, you've talked about communication, duration, matching, anything else. How do you keep them engaged to just keep investing with you for years and years and years?

Josh Parker

Yeah, well, I can't communicate clearly enough. Overcommunication is never a problem with your investors. I think the more you can talk about what you're doing, give them visibility into that. Investors, allocators, they want to feel informed. They want to know what you're doing, they want to know that you're focused on it. And so I just think that that's the key to repeat business. 

Josh Parker

I, one of the things that we try to do and that I think much managers aren't doing enough is communicating what they're not doing, right? So, you know, sometimes showing investors deals that you've passed on can be important. Now, again, if you've got an open process with a JB or something where you know you're kind of looking at all the deals together, you're gonna go through that. And I think that's one of the things we learned is sometimes, you know, when we'd sit in an investment committee or in board meetings, and you would see our partners build confidence in members of our team when they saw them explain why they weren't gonna continue pursuing something. So if something shows up on the pipeline, it looks really interesting, maybe we do a little due diligence and we come back and say, we're not going after it. Well, why not? And being able to articulate why you didn't pursue the deal, why you passed on it, I think can be really instructive about the way you think as an investor and the focus that you can maintain and the discipline that you can maintain. Because that's what investors want to see when they're re-up because they want to see that you're still focused and that you're still disciplined. And if they've allocated capital to you and then you've gone off in, you know, in 10 different directions, you're not you're not going to get a re-up. And sometimes showing them what you're not doing underscores what you are doing really well.

Ryan Miller

Brilliant. You know, I was in due diligence. It was for $450 million, and I was with a trillion dollar fund. And I did that exact thing. So you're making me feel good about myself. I mean, you've been in the game a lot longer than I am. And what this does, for those who are who are listening to us, what this does, I think, Josh, is number one, when when we were doing it and we said, Yeah, we want to buy these companies, we're gonna do this private equity roll-up and it's gonna be sexy, and all these, you know, wonderful adjectives that you're throwing at it, and they're  like, yeah, cool. Do you have deals? And oh yeah, oh yes, sir, we have deals. And I didn't kiss his butt that much, but I'm being silly, but it was a real conversation where they said, Do you have, do you even have deals? Like, okay, this is great. Like, can you actually pull this off? 

Ryan Miller

So I sent him a stack of deals, and in there at the back was like, here's some deals that we declined. They don't fit. The reason is exactly what you talked about earlier, which is you have to give them an insight of how you think. How do you approach deals? And how you approach deals isn't just the deals you do, it's also the deals you don't do. And that part also, I think it's lost quite a bit. But this is an opportunity that you're talking about is to say, it's okay to let them know we are not doing this, and here's why. And that also helps. I didn't even have the lens that you're talking about. That's brilliant, is they say overcommunication is not a problem, especially in your firm. But going through that, that also is an opportunity to, as investors, ride this wave with you all the way to the shoreline or to profits, whether it's IPO or some sort of liquidity event. They've also learned how you think and things that you walk away from, whether it's dishonest founder or you know, the guy kind of had something that made me uncomfortable, right? What are those walking away points? I love what you talk about. So communicate, but also give people insights into how it does it or how you do things. And then ultimately, that is an asset over time with existing investors to help them re-up in the next dealer or the next fund. Would you, did I capture that? 

Josh Parker

 Yeah, yeah. You went through it. I think the, well, I, I'll let you I'll let you in on that point, I think you're right.

Ryan Miller

Okay, we got it. All right, let's toss that one out, man. That's awesome. So what so we got the we're we're building assets, we're giving people insights into how we think as general partners. Now, how does a manager build the operating muscle to deploy a mandate at the scale and the pace that we're talking about without any execution falling apart? What have you seen here?

Josh Parker

Well, look, I'll say it again, communication and clarity. You've got to be consistently building that clarity throughout the organization. You know, the execution thing, it's about people, it's about process, and it's about particularly now the technology that you're using. And the firms that are gonna be most successful right now are those that can build a brand for themselves and those that can invest in great technology. And that's you know, that's all about putting yourself in front of the right investors in the right deals and putting yourself in a position where you can have the best operating margins. 

Josh Parker

I think the, you know, the flip side of that, if you will, is what can go wrong? What can make it pull apart? And it's bad hires. You know, you have to, and it's hard to do, but you have to hire slow and fire quickly. A lot, you know, some people are good at hire fast, fire fast, but you know, it, you have to be really deliberate about hiring and move through that process slower than you think. You know, it's what happens is we think, oh, we're growing, we've got a need, we got to get somebody in there, we've got to add a person, and and you you don't go through your process, you don't spend enough time making sure it's a cultural fit, you don't really scope the position out correctly and and sometimes you'll get the wrong person. Sometimes you do it all right. You'll get the wrong person, which takes me to the second part, which is like when you figure out you've got the wrong person, make a decision. You're not doing yourself or them any favors to keep them around if they're wrong. I think you know the wrong hires, bad hires are the number one place where scaling falls apart. 

Josh Parker

And it's hard. Like hiring the right people at the right time is to me the hardest part of scaling because there's you know, Jim Collins talks about this in good to great, you know, having the right people on the bus, in the right seat. And I think you should add to that at the right time. Because a scaling business, you know, that's going through investment cycles, that's building its AUM, is going to need different things at different points. And so somebody who is right today may need to migrate to a different position over time, or someone who's incredible in the business and you think highly of and you'd love to have them on your team, it may not be the right time for you or for them. They may not be in the right season of their career. You know, they may be too senior for the role that you need. And it's very easy to just think you can solve problems through addition and you just think, well, we'll just hire the next person and we'll fix that. I think you know, that to me, I know you asked the question in a positive way of like, what do you need to do to build? But I think the thing you need to avoid is going sideways in your hiring practices. Like that, that is if you're going to deploy a mandate and really scale up a business and make significant investments, your execution will fall apart if you don't obsessively focus on getting your hires right and then immediately correct when you inevitably get it wrong.

Ryan Miller

Brilliant. You know, I couldn't agree more. People are a massive part of where scaling really happens or it falls apart, you know, to your credit and wisdom. And I remember back in the day where, when I was a CFO of an insurance company, that was a big part of something that I saw. And so we came together on that. And people was one of the core three pillars. So I did the classic, you know, your first hundred days, then you present your strategy after you found whatever. And it really came down to three key areas it's people, process, and technology, PPT. And so I won't go through that. That's all that deserves its whole other episode. But for the sake of our conversation, people is a massive part of running this business. And I think too often, especially when you're starting, you're busy, you got a lot of things to do, and you're not getting enough time to hire the right people to do it. So half the time you look around and  say, who, who can I, who's gonna help me with this? And you're like, uh crap, it's me. It's me again. I gotta figure this out. And then eventually you get things going, and then you're still somewhat busy during this transition time, but finding the right people. And when you're busy, it's tempting to do the opposite, which is bad advice, which is, you know, just just go in. 

Ryan Miller

But what you could be doing, if I'm following your logic, is saying, yeah, but if if you don't appreciate how important the growth of your business to get you out of this part of the firm's life and this part of your life where you're just squeezed, it really does come down to the right people who love working at the company because they got the right process and you don't have silly technology. And so they all do work together, people, process technology. But the people, I would say, and I totally agree, are at the core of a company, a firm, a fund's ability to scale or not. And so you can hire the right people, but subject them to a BS process. You can have a great process, but you put the wrong people through it. You can have the most amazing technology, but nobody knows how to use it. And so there's a lot of things that you have in place, but it always comes down to the performance of the people that you hire. And so taking your time to get this absolute critical key foundational variable right, I think is what you're saying here, is one of the most important things right up there with clarity and communication. Would you agree?

Josh Parker

Yeah, and absolutely. Again, I'll just say take the time to get it right, but then act quickly if you inevitably get it wrong. It's a really, it's okay to make a mistake. Just don't compound your errors.

Ryan Miller

Yep. That's right. You know, it's something I've told my baby since we were a kid. It's okay to make a mistake, it's what you do next that really matters. And so do you shift blame, do you try to get out of it, or or do you take responsibility and fix it? That's really what I'm saying as a father is to say, look, I make mistakes all the time, so does everybody else. I really try my best not to, but sometimes it happens. And when it does, the thing that will really make or break how this will actually exist in your story is what do you do after? So don't worry about being perfect, but worrying about being responsible, response able, able to respond to a mistake, move fast, clean it up, and then move on. So I love it, man. You're I we're we're drinking the same Kool-Aid here. So this is good stuff. So for my final question for you, brother, this is great, man. For a manager listening with a fraction of your AUM, what's the single concrete move that they can make this quarter to start attracting an anchor partner of their own?

Josh Parker

Well, look, it's been great having this conversation with you and digging into this, some of this stuff. And I and I that probably forms what I would say is the move to make this quarter. And that is, you know, this, the conversation we're having around authenticity. I think this is a moment where you can sharpen your story and then you can go socialize it through as many channels as you can. You know, getting yourself out there, being who you are, being transparent, being vulnerable, putting that out there and letting investors see it, I think is gonna pay off. 

Ryan Miller

 Brilliant. Awesome, man. I love that. It's a great funnel. So final words, anything else you'd like our fans around the world to know, maybe ways to reach out to you, or maybe any way that they want to get more Josh in their life.

Josh Parker

Yeah, no, well, please please find me on LinkedIn. I try to post along the way, but I really enjoy following along with folks that I'm connected to and seeing all the great things that they're into and love to be connected to your audience and and all the great things that they're doing in their businesses. You know, we're we're we're in uncertain times right now in the market. And I just would reiterate to folks, you know, don't let the uncertainty get in the way of your conviction. You know what you're good at. Get out there and do it, and you're gonna see results.

Ryan Miller

I love it. So just to wrap everything up that we talked about, make sure that you're very clear, not on just pitching deals, but the duration, the people behind it, and that you're solving those problems. The other one is to be clear and communicate well and often with your investors if you want to just keep starting over on every fund, or can you roll that forward? So be very good at clarity and communications. And then finally, make sure that you take your time to invest in finding and training the right people because they are an absolute key in scaling. You do these things, and you too will be well on your way in your pursuit  of Making Billions.