What return do investors expect?

searcher profile

January 14, 2022

by a searcher in Chicago, IL, USA

Hey all,

I am in the process of compiling marketing information with the aim of pitching investors once completed.

I'd like to understand where to find information regarding expected ROIs and deal structures relating to investors. What do junior capital equity partners expect as a return?

Any help in this area would be much appreciated.

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commentor profile
Reply by a searcher
from University of Texas at Austin in Austin, TX, USA
Definitely depends on the size of the business you are targeting, but consider 20% to be basement expectation and 25-30% to be more interesting. This will also depend on the class of investor. Drs. and Lawyers who don't typically work with HF's or as LPs in PE deals will be excited by 20%+ (their options are public equities or RE deals).
commentor profile
Reply by an investor
from University of Texas at Austin in Austin, TX, USA
Depends on the size of the deal but I'm seeing 20%-25%+ IRR over 4-8 yrs with a 6-8% pref, and promote to be paid after investors receive 100% of capital. Your competing against S&P and alt market so risk/reward needs to be competitive.
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