Without a doubt the one thing our clients are consistently looking for is something that we are having extreme difficulty finding. We pride ourselves in being able to provide for our client’s needs, but our inability to meet this request has been extraordinarily frustrating. What is this sought after, desired magical beast that we can’t find? Pursuit Capital
Pursuit Capital, also known as Seed Capital, is equity that is situated extremely high in the capital stack: 85% of the capitalization and above. By definition, this Pursuit Capital is situated so high in the capital stack that it limits the amount of sponsor equity in the deal, leaving the owner/developer very little skin-in-the-game. Exacerbating the “skin-in-the-game issue,” are owner/developers who request aggressive up-front fees to reimburse themselves for their time and expense finding and controlling the deal. The lack of skin-in-the-game poses a significant issue for potential partners who want to ensure that the owner/developer is properly motivated to see the property through to completion. These partners would rather have the owner/developers retain all possible equity in the deal rather than provide up-front compensation or reimbursement.
Pursuit Capital, also known as Seed Capital, is equity that is situated extremely high in the capital stack: 85% of the capitalization and above. By definition, this Pursuit Capital is situated so high in the capital stack that it limits the amount of sponsor equity in the deal, leaving the owner/developer very little skin-in-the-game. Exacerbating the “skin-in-the-game issue,” are owner/developers who request aggressive up-front fees to reimburse themselves for their time and expense finding and controlling the deal. The lack of skin-in-the-game poses a significant issue for potential partners who want to ensure that the owner/developer is properly motivated to see the property through to completion. These partners would rather have the owner/developers retain all possible equity in the deal rather than provide up-front compensation or reimbursement.