A tour of the cages

It is, perhaps, a bit like dating: the way limited and general partners first get together. It certainly seems to draw on a range of emotions and involve rites and rituals that can be as subtle (and protracted) as any other interpersonal relationship.

The two sides to this drama both have changed (the dating metaphor encourages talk of ?growing up?) although one side – the GPs – have received more than their fair share of scrutiny. The other side have not been so closely examined. There are plenty of different characteristics to be found amongst the buyside. It goes without saying that not all LPs are the same, and you may well bump into some that can be quite tricky to deal with. For those currently dating (aka fundraising), here are a few types to watch out for.

The demagogue: this is an investor who has spent many years investing in private equity. Savvy (and they know it), the demagogue will have seen it, heard it and said no to most of it all before. As one placement agent puts it: ?A GP goes into a meeting with [the demagogue] and leaves with his head messed up: what was his business? Why was the team planning to invest in that way? Why hadn't he realised that there were plenty of others doing exactly the same thing??

The slave to process: an LP who insists on a GP following their institution's rules of engagement to the letter. Their due diligence questionnaire must be completed in its entirety. The negotiations over the LPA must conform to both written and unwritten principles propounded by this investor. And the timescale for reaching a decision will be the one that suits them – and no one else.

The stonewall: this is the investor who gives nothing away. The GP goes into the meeting with the investor and starts to present. No flicker of response is forthcoming. The GP continues. Still nothing. The GP, beads of sweat now clustering on his brow, finishes the presentation. There's a polite thank you and good-bye and then the GP is back in the cab wondering what exactly just happened.

The professional virgin: arguably a more common phenomenon when private equity's popular aura amongst the investment community was more fragrant than today, the professional virgin is the investor who will always take a meeting. And they'll always subsequently report that the investment committee is still pondering the opportunity. And then they will always say no, not now – but maybe next time.

The prevaricator: a close relative of the professional virgin, the prevaricator will say neither yes or no to an investment proposition. Maddeningly, there just isn't an answer at all. As the GP tries to induce the investor to tell him of his decision, he will try and take comfort from the notion that no news is good news until he reaches breaking point and finally walks away in frustration.

The nomad: this is a professional who travels across the institutional landscape, appearing in short order at various different firms. Now exacerbated by the length of time it takes to raise a fund, GPs find themselves presenting to this same individual at several different firms – the record so far is for a venture capital fund to have presented to the same person at five different institutions during their ultimately successful fund raise last year.

The chameleon: a corollary to the nomad, the chameleon is an investment institution where the individuals a GP deals with change in unnervingly rapid succession. The contact, the pitch, the follow up and the close may well be with four different people who each had replaced the previous – making the time and effort required all the greater on the GPs part.

The list is obviously not complete – and again, there are plenty of institutional investors out there who to general partners' delight fail to exhibit any of the above traits. But the broader point can still be made: any temptation to regard the community of institutional investors who you want to turn into investors in your fund as homogenous, predictable, orthodox or rational should be resisted. It's more complicated than that.