Mid-market private equity funds build internal value creation teams to support portfolio companies with critical functions like hiring. These teams leverage established processes and headhunter networks, enabling a new CEO to build an executive team far faster than they could alone.

To win highly sought-after deals, growth investors must build relationships years in advance. This involves providing tangible help with hiring, customer introductions, and strategic advice, effectively acting as an investor long before deploying capital.

Initially, ReSeed expected to mentor operators with limited experience. However, by demonstrating its ability to reliably fund deals, the firm attracted highly experienced professionals from private equity and top MBA programs who were previously too risk-averse to join an unproven platform.

The initial capital for a new fund-of-funds doesn't come from cold outreach to institutions. The process mirrors an emerging VC's first fundraise, relying on a personal network of operators, VCs, and high-net-worth individuals who already believe in the founder. The strategy is to work the existing network outward, not pitch institutions from day one.

A clever strategy for first-time fund managers is to raise smaller checks from a large number of operators and domain experts. While harder to execute, this turns the LP base into a powerful, built-in expert network for diligence and support, converting a fundraising challenge into a strategic asset.

To differentiate, CAZ eliminated management fees, getting paid only from a share of profits. They also messaged that they were the largest investor in their own deals. This created powerful alignment, assuring clients they only win when the client wins.

Shifting to a performance-fee-only model meant unpredictable revenue. The firm consciously went into the red, relying on its balance sheet and shareholder support to survive for four years until the investments matured and generated profits. This was a long-term bet on their own performance.

Despite a 13-year stellar track record, CAZ Investments saw little growth. An angry acquaintance confronted the founder for not sharing an investment opportunity, sparking a revelation: stop waiting for clients and proactively communicate your value. This led to exponential growth.

A common misperception is that large firms build extensive fundraising teams because their scale allows them to afford it. The reality is the inverse: these firms achieved scale precisely because they invested in professionalizing their investor relations and capital-raising capabilities early on, creating a flywheel for growth.