A Beginner’s Guide to Fund-Raising

Vincent Taurassi, a Sentinel Capital Partners lawyer with a gift for numbers, shares the most important things to keep in mind when preparing for the formation of a new private fund

Vincent Taurassi, Sentinel

“Sometimes people are surprised when they see I can read a complicated funds flow,” Vincent Taurassi says with a laugh. “They aren’t expecting me to have a full appreciation for how the money is moving in a transaction.”

As Taurassi will tell you, math is not a common undergraduate path for most aspiring lawyers. His background in numbers has served him well, though, in a career that’s found him ascending from law firm Kirkland & Ellis to investment juggernaut BlackRock to Sentinel Capital Partners, where he currently serves as general counsel and chief compliance officer.

It’s a journey he wouldn’t have imagined as a student, when he found himself struggling to figure out how best to translate his math skills into a career. It was his father, a law clerk, who inspired him to see what the legal world had to offer. “Up until my junior year of college, I really thought being a lawyer meant you sat in a courtroom and litigated in front of a judge,” he says. “After some research, I realized there was tremendous potential in the avenues of transactional and corporate law.”

He has since found that the logic of math contributes to the methodical, integrative thinking required as a business lawyer. “Being a lawyer with a deeper understanding of mathematics is an incredible asset in the financial services industry,” he says. “Your colleagues and clients appreciate it. You understand the underbelly of the transaction, and it gives you a leg up in negotiating against your counterparty’s legal team.”

And he’s doing plenty of negotiating at Sentinel, a private-equity asset-management firm. In his role, he’s a key figure in the firm’s fund-raising efforts. “I am involved from day one in the planning and strategy—as well as in the drafting of marketing materials and ultimately negotiating with investors,” he says.

Due to an intense regulatory framework promulgated by the SEC, he also meets with potential investors to engage in what he calls “operational due diligence,” which essentially boils down to a discussion regarding the company’s financial, legal, and compliance operations. Though some might find this process invasive, Taurassi embraces it. “If that meeting goes well, you stand to develop an excellent rapport with the investor,” he says. Also, this feedback loop with investors allows Sentinel to ensure their policies and procedures are on par with market practice. This two-way flow of information is invaluable.

This is one of several tips Taurassi has for attorneys involved in fund-raising at their own firms. Below, he outlines a number of other measures that he considers to be the most essential.

Think Proactively

“Thinking proactively before your internal fund-raising process has even started is very important,” he says. “You want to be prepared.”

This involves gaining a familiarity with securities laws both in the US and abroad and then training the firm on such matters. It’s extremely important to ensure that everyone at the firm knows, from day one, not to speak about the ongoing fund-raising with an investor, a media outlet, or even a family member without first consulting with the general counsel.

Don’t Cherry-Pick

Honesty isn’t just the right policy here; it’s also in your best interest from a legal standpoint. While it may be desirable to flaunt your successes when putting your marketing materials together, you’ll be setting yourself up for trouble if they don’t create an honest portrait of your firm’s track record.

“For instance, you can’t just show people your five best investments,” Taurassi says. “You have to show them everything. You can’t mislead people into thinking you’ve only ever made successful investments.”

Value Your Partnerships

It’s not uncommon for there to be a negotiation tension between general partners and investors when it comes to documenting the new fund’s partnership agreement, but it’s important to see the forest through the trees. “Things can get confrontational,” Taurassi says, “but remember, tomorrow this investor is back on the same side as you. It really is a partnership, and you need to treat your limited partners with respect. You may butt heads on a point, but an air of reasonableness today can help build a more productive and amicable future relationship.”

Be Responsive

“I always teach responsiveness as a vital attribute for aspiring lawyers,” Taurassi says. This one’s simple: When dealing with colleagues or investors, respond quickly and efficiently to emails or other inquiries. Even just letting them know that you’ve received the message but won’t be able to respond substantively until a later time goes a long way. Let them know you’re there for them and that they are always on your radar screen. “I think a lot of people don’t realize how key responsiveness is to establishing healthy working relationships,” Taurassi says.

Photo by Mario Reynoso