DEER ISLE: Insights, Flows & Investment Trends

A Capital Seeker Who Understands Us!

True Conversation with a head of a Large Capital Provider (think billions under management):

Capital Provider: We expect to get to know potential Capital Seekers over time and many who are asking us for capital for the first time – don’t understand how we work.  However, one stood out because they understood what we needed.

Deer Isle: What did they do right?

Capital Provider: They approached us directly, not asking for capital but saying they wanted us to get to know each other over 2 to 3 years because they knew that we take our time, and they knew they were too small for our portfolio. 

This initial statement was refreshing and caught our attention. 

This capital seeker, true to their initial approach, remained in contact, offering written updates, calls, meetings and now, 2 years later, we are making an investment even though the investment size is still below our traditional minimum.

Too often capital seekers are not willing to invest the time and effort to develop an understanding.  They have a quick meeting and if the Capital Provider doesn’t indicate interest – they don’t hear from them for 2 to 3 years.  When they do hear from them again – they are no further along in developing their relationship and they get the same negative answer. 

Capital Provider Interest: Venture companies in strong industries with strong teams who have a supportable plan to profitability.

Private Equity: Sports and sports teams are the flavor of the month (year?).  In addition to the news about JP Morgan setting up a Sports Investment Banking group, we have talked to at least 2 major family offices who have bought women’s professional sports teams with the matriarch side of the family being mostly responsible for the investment and investment success.  Go Caitlin Clark!

Real Estate:  Is there an end in sight for commercial RE problems?  Another sign of the problems that we have heard is that Title Insurance searches in the NY area are down 80%.  Certainly, an indicator of activity – only 20% of pre-pandemic activity.Venture Capital: Continuing to hear about companies with business models that are developing with significant progress, but not yet profitable being offering term sheets with 90% down rounds.  There is no mercy for those who are building out their businesses but are missing projections.