Brad Briner on Fundraising: "The Problem is Not the LPs, It's the GPs"
Brad Briner is a Managing Director at Morgan Creek Capital Management, a funds of funds firm based in Chapel Hill, North Carolina. Today I chatted with him in preparation for our upcoming panel at Buyouts South. I wanted to share some of his comments on the fundraising market, including what emerging managers need to get their fund raised, why some funds are oversubscribed while others fail, and which types of investors will be active this year. What's the biggest trend going on in the fundraising market today? We've seen the re-inauguration of the oversubscribed fund. The success of a handful of funds closing oversubscribed suggests that there remains an appetite for private investment strategies. It also shows that the problem is not the LPs, it's the GPs. By that I mean, there are so few GPs out there that have (1) an institutional track record, (2) haven't shot themselves in the foot in some way in the last year, (3) are raising a reasonable amount of capital, and (4) have momentum after a first close. If you have all of those things, you will see oversubscription. When I first saw it I was stunned, but it makes sense now. But lets be clear, LPs are hiding behind the fact that they claim to have no money to invest.
