A commitment is the last stage of a funnel whose losses multiply, so size the list from the money and then check the diary can carry it.
Divide the capital you need by the average ticket to get the number of commitments, then divide by the product of your stage conversion rates. On an illustrative first close of 150,000,000 with 15,000,000 tickets and a funnel that converts 4.5 per cent of names into commitments, the manager needs 10 commitments, which means a screened list of 223 investors and roughly 200 meetings and diligence sessions in the diary.
Worked in full in Raising a Real Estate Fund by Julian R. Sterling, with every figure reproduced in a free workbook.See the book on Amazon →
Fundraising plans usually start from the target and stop at a list of names that "feels right". The arithmetic runs the other way: a commitment is the last stage of a funnel, every stage loses most of the people who enter it, and the losses multiply. The calculation below sizes the list from the money, then checks whether the diary can carry it.
| Input | Value |
|---|---|
| First close target | 150,000,000 |
| Average commitment (ticket) | 15,000,000 |
| Screened names granting a first meeting | 40% |
| First meetings leading to a second meeting | 50% |
| Second meetings entering due diligence | 50% |
| Diligence reaching a soft circle | 60% |
| Soft circles converting to a signed commitment | 75% |
| Diligence sessions per investor / sessions per week | 3 / 6 |
The rates are illustrative. A manager with a realised track record and existing relationships will convert better at the first two stages; a first-time manager will often convert worse. The method does not change.
Commitments needed = first close ÷ average ticket
Overall conversion = r1 × r2 × r3 × r4 × r5
Names needed = commitments needed ÷ overall conversion, rounded up
In Excel, with the five rates in B3:B7: =ROUNDUP(B1/B2/PRODUCT(B3:B7),0).
Commitments needed: 150,000,000 divided by 15,000,000 is 10. Overall conversion: 0.40 × 0.50 × 0.50 × 0.60 × 0.75 = 0.0450, or 4.5 per cent. One commitment for every 22.2 names screened. Names needed: 10 divided by 0.0450 is 222.2, so 223.
| Stage | Rate | Investors |
|---|---|---|
| Screened list | 223 | |
| First meeting | 40% | 89.2 |
| Second meeting | 50% | 44.6 |
| Due diligence | 50% | 22.3 |
| Soft circle | 60% | 13.4 |
| Commitment | 75% | 10.0 |
The 223-name list yields just over ten commitments, 150,525,000 at 15,000,000 a ticket: the first close with almost nothing to spare. Keep the decimals in the model: rounding each stage to a whole investor is how a funnel quietly stops adding up.
The list is one constraint. The time to work it is the other. Each first meeting, each second meeting and each diligence session takes a slot. On the funnel above that is 89.2 first meetings, 44.6 second meetings and 22.3 investors in diligence at three sessions each, 66.9 sessions: 200.7 in all. At six sessions a week, that is 33.5 weeks of meetings, about 7.7 months, before counting the weeks investors spend waiting for their own investment committees.
The list and the diary bind together. Doubling the meetings per week does nothing if the list is too short to fill them; lengthening the list does nothing if there is no time to meet the extra names. Size both.
| First meeting rate | Ticket 10,000,000 | Ticket 15,000,000 | Ticket 20,000,000 |
|---|---|---|---|
| 30% | 445 | 297 | 223 |
| 40% | 334 | 223 | 167 |
| 50% | 267 | 178 | 134 |
The ticket matters as much as the conversion. A manager whose realistic ticket is 10,000,000 rather than 15,000,000 needs half as many names again: 334 instead of 223. If the average ticket slips to 12,500,000 halfway through, the same 223 names close 125,437,500, and the list has to grow to 267 to hold the target. Small tickets are not a fundraising detail; they are the size of the list.
Start from the money: 150,000,000 at 15,000,000 a ticket is 10 commitments, and at 4.5 per cent overall conversion that is 223 screened names and 200.7 meetings and sessions. Replace the illustrative rates with your own as soon as you have them, and check the ticket assumption hardest. The free workbook for this case runs the same funnel on a calendar, and the article on first close economics shows what the timing of those commitments does to the management company.
There is no reliable public benchmark, and rates vary with track record and relationships. In the illustrative funnel, 89.2 first meetings produce 10.0 commitments, about one in nine. Measured from the screened list, overall conversion is 4.5 per cent, one commitment per 22.2 names. Replace these rates with your own as soon as your first meetings give you data.
Count the sessions, not the names. On a list of 223, the illustrative funnel generates 89.2 first meetings, 44.6 second meetings and 66.9 diligence sessions, 200.7 in all. At six a week that is 33.5 weeks, about 7.7 months, before investment committee timing is added.
Directly. At the same 4.5 per cent conversion, a 150,000,000 first close needs 223 names at 15,000,000 a ticket, 267 at 12,500,000 and 334 at 10,000,000. If the ticket falls mid-raise, the same 223 names close only 125,437,500.
This article is one calculation from Raising a Real Estate Fund. The book takes the same case from first principles to the decision, chapter by chapter, and every figure it prints is a live formula in the free companion workbooks.
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