Rahul Moodgal – Master Fund Raiser Returns (EP.408)

0:04Hello, I'm Ted Seides, and this is Capital Allocators. This show is an open exploration of the people and process behind capital allocation. Through conversations with leaders in the money game, we learn how these holders of the keys to the kingdom allocate their time and their capital. You can join our mailing list and access premium content at CapitalAllocators .com. All opinions expressed by TED and podcast guests are solely their own opinions and do not reflect the opinion of capital allocators or their firms. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.

0:44Clients of capital allocators or podcast guests may maintain positions in securities discussed on this podcast. My guest on today's show is my dear friend, Rahul Mudgal. Rahul and I first met 20 years ago in his early days in the hedge fund business. We've been friends and professional acquaintances with mutual respect ever since, but an inflection in both our personal and professional relationships came after his appearance on the podcast five years ago. That conversation, sharing his incredible story from a teacher to a master fundraiser is replayed in the feed. Rahul is a partner at Parvis Asset Management, a $10 billion European equity manager.

1:27He's also my co -founder and partner of Capital Allocators Summits and Capital Allocators University, and is one of the most beloved and respected investor relations professionals in the industry. I asked Rahul to come back on the show to update his thoughts on what it takes to succeed in a far more difficult capital raising environment, what he's learned over the last five years, and how he shares his wisdom to make the industry better through our partnership and the world at large better through his extensive charitable work. Our newest creation, Capital Allocators University for Investor Relations and Business Development Professionals, was Rahul and my partner Hank's shared creation.

2:07Our first cohort will take place in New York on December 3rd and 4th. Capital Allocators University for Allocators will take place the next day on December 5th. You can sign up for either at capitalallocators .com slash university. Before we get going, in recent Spread the Words, I've introduced our newest Capital Allocators University for investor relations and business development professionals. It's a two -day event, December 3rd and 4th in New York City, where we'll help you learn how allocators think, prepare to put your best foot forward, optimize your experience at conferences, and learn what not to do from a panel of CIOs.

2:50I think our CIU for IR and BD is unique in the industry. At least, I'm not aware of another opportunity to level up your professional capability alongside a group of your peers. We're excited to put this together for you and help bridge the knowledge gap between you and the allocators you seek to serve. You can learn more and sign up to attend at capitalallocators .com slash university. Hope to see you there. Please enjoy my conversation with the one and only Rahul Moodgah. Rahul, thanks so much for doing this. Ted, it's such a pleasure. Honestly, just spending time with you is just the greatest.

3:32Incredibly, it's been five years since you came on the show and we'll replay that one to give people a sense of your background and path. And I guess I'd love to start by asking you what happened after that show came out? I never, ever could have imagined or predicted what would happen. The first thing was just the volume of follow -up, reach out, touching base with people I hadn't spoken to for 20 years. it was just insane my emails did not go below 1000 for a year people from new zealand vietnam iceland russia literally every continent reach out it was just unbelievable it was very very humbling ted i should really have realized given your impact and how many people listen to the podcast what might have happened but i never ever would have thought it would have happened to me And it was just amazing.

4:26It was a really good way to pay forward, meet new people, reconnect with people, and just reflect really. It was just the best thing. So it's clear from that volume of reach out that you touched a chord. Other than, hey, everybody out there wants to grow and raise capital, what were the key questions that people were asking? The first thing that everyone asks is, can you look at my presentation? is there a magic source that i need to have in this document that will get me some money the reality is there's no magic source because this is about storytelling the thing that everyone forgets is that this is such relationship business so it doesn't matter if you've got amazing numbers or you've got a beautiful pitch book the reality is if you don't connect with someone it doesn't mean anything so it was a realization that all of those things you've learned over the years which work and the things that don't work yes they're important the detail the depth of the relationship the human contact the alignment of values of interests of synergies is really what matters so it made me reflect a lot back on the things i said on the podcast because this isn't a scientific thing it's an artist thing because everyone is different and their personality needs to come into it.

5:44So that was the first thing. Second thing is, tell me about your story. How did you get into this industry? I want to get into this industry. What do I need to do to get in this industry? And speaking to a lot of young people, particularly people who want to do investor relations, it made me realize that I don't think you can learn this. You can get better at it, but you've just got to have the people skills. I think you've just got to love people. My first boss said he hired me because I used to teach. And when you're a teacher, there are people who are smarter than you and people who are less smart than you.

6:13But it's just having patience and the ability to always communicate and connect to people. And look, you meet people and sometimes you know you're not going to connect. And then there's other people you just hit it off with. Most people would think they're making contact with someone to execute a transaction. For me, it just compounded my belief that I want to have the ability to pick up the phone and call someone in 20 years time. And that's the missing thing. That to me is just trying to emphasize to everyone that is what this is about. It's not about, hey, you're going to buy my fund. The hard thing about all of this is you've always just got to be nice to people and you get inbounds from lots of people.

6:53And look, you can't respond to everyone, but you've just got to be polite and decent because you just never know who you're going to meet. With that frame of mind of how you want to build a relationship instead of sell a product, how do you get away from, well, your job is day to day, come in and try to figure out how to grow a pool of capital? if you'd asked me that question 20 years ago i would have said ted i've just got to try and raise money that's my job but i think the beautiful thing about everyone that i work with or help with or i speak to who wants my input is really just helping them rethink the whole framework of doing this i'm not saying my ways are right where there's loads of ways you can do it but i think why i do things the way i do is because i care about the relationships i care about the quality of the capital.

7:41So I know sometimes it's going to take me seven years to have a relationship with someone. And there's plenty of people that you and I both mutually know. And they always say to me, why do you never talk about your firms that you work? Because I just want to speak to you and understand what you're doing, what you're looking for, what's on your mind. And then if there's something that I'm working with or I found that's interesting, we can do that. I'll give you a great example your timco kathy eiberg was there i know kathy my whole career i met her in 1998 and she invested in two managers i was working with in 2013 and she jokingly said to me recall it only took 15 years i said kathy it doesn't matter we carried on speaking and there came a point there were two managers one i was working with one i was helping and you needed both those strategies at that time and that's the thing that everyone forgets because if you're rude to someone at the first firm you work at or the first firm they work at and then you move somewhere else they're going to remember it they always remember it and people forget that so to me it's about thinking about duration think about long term so it is really hard and sometimes i'm not going to lie to you you meet people 20 times and you want to talk about your manager but you just have to hold back because they have to determine when the time is right and it may never be right and that's just the way it is the key thing is there may come a time when it is right for them and they've moved firm three times, or they want your opinion about something, or there's something you're looking at, that's a fit for them.

9:08I think this is more about growing my network, understanding what people are doing, just having the ability to talk to smart people and see what they're thinking and just gather information. That was interesting. If I get paid to just speak to people all day, I would do it every day because that's what I love doing. In the context of building relationships that turn into commercial relationships at some point in time. I'm curious how you think about different channels. There's a lot of thought today that private wealth will be adopting alternatives and maybe the sovereign wealth funds are a good place to go in the Middle East.

9:45How do you layer on where capital might be flowing with the development of long -term relationships? I did for a long time naively think, well, I work with the best ENFs in the world. Why do I not worry about anyone else? and I had a massive bias towards that and over time it's still a great amazing place to be and I was always still feel that I'm biased towards that but I've also realized there are amazing pools of capital elsewhere as well in the world and part of the enjoyment about working with those pools of capital is you learning about them and what they're trying to build but also you're able to share your knowledge and network with those people and say hey listen I can put you in touch with people who've done this and thought about it for a long time i think the number is 40 trillion dollars from private wealth is going to be fed to become institutionalized over the next 10 years of course the middle east is where everyone is going and they want to build those relationships understand who those people are get access to that capital and there's so many new pools of capital in the world in terms of family offices foundations all the time we're seeing new things you know masterclass just launched with 47 billion dollar new foundation chan zuckerberg initiative was a new foundation so these pools of caps are constantly coming all the time but i will always still emphasize at the end of the day it's all about the person you're dealing with and if you find the right people wherever they are whether a private wealth or a sovereign wealth or an endowment foundation family office corporation if you have a good relationship with those people that's the key thing for me that matters but i'm much more open and i think you and I have agreed with this when we first hit these summits, it was very ENF heavy.

11:27And more and more people have realized, actually, I've got things to learn from a pension fund and from a sovereign wealth fund and from a fund of funds. And everyone thinks about things in a different way. And if we bring those ideas and those frameworks together, we can all be better and learn from each other. So I'm becoming more open to that than I had been historically putting my hand up. What's changed in your thought process over these last five years? it's such a good question there so this is year 26 of me doing this the first thing i will tell you is i'm not going to swear but it is bloody hard it's harder than i've ever ever known it to be so it requires much more patience you have to do much more of the work for investors because investors are busy right now they've got a lot of issues in their portfolios a lot of them are dealing with governance issues, structural issues.

12:22They've got team issues. A lot of people working hybrid. So it's understanding that. They've got inflation. They've got China. They've got interest rates. They've got illiquidity. They're not getting any payouts. And if you're dealing with people who have had healthcare plans during COVID, they're getting hurt. Some of the endowments are not getting the overseas students they were getting. So income's down. So it's really just trying to be aware of what people are thinking about, worried about, and all that sort of thing. So for me, it's being even more patient than I was before. Any investor that I've managed to build a relationship with and work with post -COVID is taking between 18 months and seven years.

12:59Now, that's an investment. And I've aligned it to people and saying, if you want to build a very good friendship with someone, it takes time. So talk about you and me. We've known each other for 20 years. But since I came on the podcast, you and I speak to each other every week. So sometimes it just takes time. But when the time is right, the magic's there. It just happens. I think of it in the same way of building a relationship with someone. You just have to do it when they're ready. That's the first thing. The second thing is I sometimes feel people have given up, particularly in the strategies I work, on equities and fundamentals.

13:36So you're not just trying to talk about the manager or the strategy you're working with. You're trying to actually understand how people are thinking about investing. When talking about equities, is it passive? Is it active? are we going to do satellite are we going to do core tracking error people are just much more thoughtful much slower in their process and they're breaking down what they're doing a lot more because a lot of the institutions particularly ones i speak to have very mature portfolios they're new cios and new organizations who've come from organizations that have mature portfolios they have that depth and that knowledge and they really want to understand every single part of what's going on in their portfolio it's an age -old thing that someone said at one of the events that you and I hosted recently and said, is this a treasure hunt or is this a jigsaw puzzle?

14:18And I think about it every time now. And when I speak to someone, I say, is this a treasure hunt for you or is it a jigsaw puzzle? And if it's a jigsaw puzzle, it's easier to say I'm going to fit in or I'm not going to fit in. If it's a treasure hunt, then you can say, well, let's talk about what you're looking for and what you find. So I just think the framework, the generalizations that I had before about doing this job are just all gone. The one thing I'll tell you is that as people use more and more technology and go more and more digital, I'm going more and more analog. And I'll spend more time on the road.

14:56I'll spend more time talking to people. I'll spend more time going to events because I still believe at the end of the day, this is about human relationships. In that environment where you just know it's going to take longer. How are you able to add value to the people you're talking to so that they'll want to keep talking to you as you're waiting what could be a really long time? I think about it all the time. In COVID, I started saying bits of research. Clients were reaching out saying, hey, have you got any research on this? Have you got any research on that? And once over a few weeks, I'd send something out.

15:28Then it became once a week. It's now daily. And it's literally anything and everything that I think is interesting, I'll share. So I believe I'm trying to help them across their portfolio. These are not just investment pieces. They're pieces about culture, about team building, about structure, geopolitics, all sorts of things. So that's one way. The second thing is always connecting good people with good people. I just love doing that. So someone says, hey, I'm having real problems with my team. I can't incentivize them more. I can't get them to come into the office. or I'm really struggling to understand if I should build my team by asset class or if I should make them generalists.

16:06I love that because I always get the opportunity to connect them to other smart people. And then thirdly, it's just connecting them to managers or ideas where they're investigating, hey, I'm looking at Asia. I don't know if I should do country specific or I should do general things. Well, hey, look, I'll put you in touch with a few people who are allocators who I think are really smart and then here's a few managers you should speak to and just get what they're thinking let me help you i spend a lot of my time doing that i would probably say more than 40 percent of my time is spent doing that but i love that because i hope i'm adding value on both sides increasing all of these people's individual networks the idea is this industry does well if we all do well if we all help each other then we're all better off there are people who have sharp elbows and we all have sharp elbows sometimes, but if we all help each other, speak to each other, communicate, we're all going to do better.

16:59And so I try and install that. I think it goes back to me wanting to be a diplomat when I was younger. And I think I effectively try and do that in this industry. What are some of the things that you either avoid or you see other people do that gives you shivers down your spine? Oh my, Ted, I sometimes sit next to other IR people or peers of mine, and we'll be sitting with two or three investors and they'll say, so are you going to invest? I want the earth to open up and swallow me. I would never, ever ask an investor, are you going to invest? It's just not what you do. And I have some of our investors who send me emails that other IR people have sent them.

17:42They've clearly said, I'm not interested. Seven emails later, they're still getting the information. it's just that continuous hounding they don't have a conversation they think adding people to their mailing list is going to get them in the door i never add anyone to the mailing list unless they ask me so number one is that it's just maintaining the respect the space and understanding that number two there's certain questions you never ask are you going to invest with me do you like me how do i compare did i do a good job you don't ask those questions you follow up more elegantly if you want anything else let me know thirdly i think people in my position always forget investors know where we are if they're interested they'll come and find us when the time is right the opportunity is there or something of course you can reach that someone say hey i'm in new york do you want to have a coffee so i try and use that as a means to build a relationship with someone understand where they are what's going on the organizations the frustrations in their portfolio things like that it's just maintaining that space and that dialogue and then just don't tell people about the same things that they know about all the time there's a whole ocean of managers that everyone knows where they are who they are everyone's invested with them i think more and more even though people are not going to invest with ideas that you send them they're interested they want to learn this is not just about allocating it's about learning i think someone put it in perspective, we spend 95 % of our time doing research and 5 % investing.

19:09So if you can give someone an added idea, a unit of discovery to put into their ocean to swim through and decide, and they can learn from that, then it's a good thing. So that's how I think about it. I want to push on that first point you said, because there's definitely a balance between, as you said, not wanting to say, are you going to invest? But then somehow asking for the order. In sales, you have to ask for the order. There is. But do you know what? I will tell you honestly, if anyone ever calls me a salesman or a marketer, not that I've ever hit anyone in my life, I'd punch them in the face because I hate being called that.

19:49If someone says to me, what do you do for a living? I'll say one of two things. I build people's organizations, I help them build, or I'll say I make people's dreams come true because that's literally how I feel when I meet someone and I can help them turn their vision into reality. The whole process of this is what people get wrong. So the typical thing is you'll reach out to someone and say, hey, I'm coming through town. Can I come and see you? They go into meeting, they give the person a pitch book, and they just start talking. Very little time is spent on understanding who that person is, how they think, what is that organization doing, where are they, how do they think about risk, volatility, lockups, correlation, where are they now, are they at reset, are they wiping the slate clean, are they adding.

20:34When you spend the time doing that, then you really understand if you're a fit. And I'll quite honestly sometimes say, listen, I don't think we're a fit. And sometimes people say, no, no, no, I want to learn more. And other times they'll be like, I agree, because then you understand is this worth the effort and maintaining the relationship focused on this manager not just generally because i always want to maintain the relationship so i think that's the first point to think about the second thing is i typically do the opposite of what everyone does i very rarely go and start talking about a manager i'll say these are the reasons people don't invest with us and people go what and i learned the lesson in 2007 when i was at TCI, we had a platform of managers.

21:15And honestly, Ted, I did two groups of 12. The first group I sat down and spoke to, and I fell asleep at what I was talking. No one invested. I went to the second group and I said, I'm going to do something a bit different here. I'm going to talk about the reasons why people don't invest with us. Eight of the 12 invested. And I was like, okay, this works. Now, you have to change it up time and again, because it has to be interesting few but also not everyone buys into that strategy so i think it's about understanding the relationship and who you're engaging with and then you know how to take it forward and also what areas that are going to push the right buttons to see if there is a point of engagement that's going to happen or not so i think about when you build a relationship with someone a friendship or a long -term relationship with someone the key thing is do you have the same values do you have the same interests?

22:06Are there things that bring you together? And even though this is a commercial business, I always think those things matter because I hope that I can be in a position where I love everyone that I work with. When you work with these organizations, you spend so much time with them. You travel with them. You eat with them. You talk to them. You socialize with them. And when you have to manage money for amazing institutions who are doing amazing mission -based work, it's actually not a right. It's a privilege and it's an honor. And to be able to have that, I always want to respect that, but also to spend time with these people and learn and help them is really what's great.

22:40I think about all of that in a really big way. And it's really, I think, how I lay the basis for building these relationships. Are there any other lessons or answers you find yourself giving repeatedly to people who have reached out over the years? I always give people three pieces of advice. Okay. So number one, how are you different? You've been on the other side, Ted. you've seen this everyone thinks they're different and i see the same things time and time again a young man reached out to me yesterday and he's clearly smart got great track record and i just said to him every single point you've listed there it could be any fund in the world and he went bright red and i said listen you say you're different because you're fundamental bottom up i said so is everyone else you say i'm aligned because i'm invested alongside so is everyone else i have long -term time horizon so does everyone else so you have to take a step back I can really think about how you're different.

23:34Number two, and this is what gets people. I'll say, can you talk about the mistakes you've made and the lessons you've learned? And people freak out. And they'll either say, oh, when I was at Goldman Sachs, they cut the risk at the wrong time. I'm like, no, tell me about you. Because all of us have done things in our life, which we'll never do again. Because we've learned. Don't run before you can walk. Think about things before you do them. Whatever it may be. So don't buy highly levered companies. So make sure you know the management before you invest in the stock. it's those things and those ultimately shape your philosophy and your process you don't realize it but they do because it's how you invest because there's certain things you'll never do again so that always gets people a number of people have said to me they blame another organization or another person in the organization or something else i've never made a mistake but if someone does the work on you they're going to find your mistakes and if you lay those mistakes at the beginning they're going to respect you a lot more and they'll move on from that that moment much easier.

24:28And the third thing is have a vision of what you're trying to build. Because I believe today more than ever, when investors invest with a manager, they care about what that organization is going to become. What is that manager trying to build? You can make an investment mistake and it will hurt you. You make a business mistake, it will kill you. So what are you trying to build? Are you going to have one strategy, five strategies? How many people are you going to take on? What's your assets under management? What's your capacity? what's your infrastructure going to be and then they can understand hey this is great because more and more that operational due diligence part is an increasingly important part of what everyone's doing but also it's a bit that matters that's going to keep the business going and i still think more and more that structure is more important than strategy structure of your team structure of your culture structure of your fund structure of your organization structure of your compensation all those sorts of things are really good and i always leave everyone with a tagline And I'll say, the three things that kill you are any Lampard's initials, ESL, ego, speed, and leverage.

25:28Don't have an ego. Don't rush. And think about leverage. Relationships, actual leverage, implicit leverage, all those sorts of things. So as you're sharing this wisdom, we've talked about sharing it more broadly. This idea that you had of creating a capital equity university for people in that seat. and would love to hear your impetus for that idea and what you hope we're going to do with that. Look, Ted, this is a really interesting thing that you bring up. And for a long time, I thought about who am I? I speak to lots of people, but I also want to help people if I can. And so thinking about Capital Allocators University has been a really amazing culmination of lots of years of thinking, hearing, listening, understanding, and putting all the things together and saying, right, what could we do, the ancillary skills that we can remind people of to help them become better at what they do or remind them that they do have those skills, but they should use them more.

26:32And so thinking about this, the idea has been to create a capital allocated university for investor relations and business development people. We're going to be doing the first one in December in New York. It's over one and a half days. Alongside yours truly will be a certain Mr. Ted Seides, Jen Prosek, who is the best PR person in our industry, and Ron Biscardi, who has built the best cap -in show platform and actually event in our industry. The four of us will come together, share our wisdom and knowledge, and put perspective on the things that people are worried about, the things that people don't have a safe space to ask, and just bringing all the different aspects of our experiences together.

27:18You know, I've always been on the manager side. You have done both sides. And now with your podcast, your reach is just infinite. Ron has built an amazing platform and Jen works with the best allocators, the best managers. So four of us together, fantastic four, I like to call us. I think we really will have an amazing time and we've already got great sign up. I think it'll be a really wonderful safe space for people to talk about things and really put their hands up just to openly have discussions, white boarding, teaching and sharing our knowledge and compounding knowledge, allowing people to network and say, how do you think about this?

27:55How do you think about this? What would you do in this situation? I think it's a great opportunity for people to come together. I really feel excited about it as well as nervous. But being able to bring people together is always a good thing. And look, when you do investor relations and business development, there's a lot of sharp elbows. People think, oh, if they're going to invest in that manager, they're never going to invest in my manager. It's not true at all. We've all got so much to share and learn, whether it's about investors, whether it's about regulation and compliance, whether it's about presentation skills, articulating your messaging, using technology, all of it's important.

28:30This program for IRMBD professionals is the most recent thing that we've done in bringing people together. I'd love you to walk through the path to some extent of your coming on the podcast and what's happened since so we can share the breadth of what's happened. It has just been insane, hasn't it? I mean, you and I have known each other for 20 years. I get asked this question all the time. How you and Ted know each other? I said, well, Ted was my client and was a day one investor in the last fund we launched on the TCI platform. And we hit it off and things went tough on that manager. And I remember calling and saying, Ted, you need to redeem.

29:09And you did. Very few people would say that, but I just care about integrity and doing the right things so much more than I care about anything else. We always maintain a relationship. And you said to me, come on the podcast. And I remember I was so hesitant to do it. I thought, what have I got to add? And I did it. But the best thing to come of that was how close you and I became as friends. I mean, I literally say to everyone, you're my brother from another mother. What I loved about it is that we just started talking about ideas and throwing them around and saying, hey, these people are saying this, these people are frustrated with this.

29:44And we just started to create capital allocators summits. Effectively, they were online seminars. The first one came actually from the University of Rochester, who I work with and said, we're trying to do some work in the DEI space. Can you introduce us to people? And I thought, nah, forget the introducing to people. Let's pull together content. Let's use our network and bring great minds, great allocators, greatly experienced people in this space, people who are actually building firms that do this. And we did that. And on the back of that was born IADEI, institutional allocators for diversity, equity, and inclusion, which today has 800 institutions across the world that quarterly sifts through minority -owned, minority -led organizations in a certain asset class, and they screen them and they allow them to pitch.

30:30So it's been amazing. Second ask came from six CIOs who were newly positioned who were struggling with the same things. How do I allocate different pools of capital? How do I build a team? How do I build culture and we pulled together a day of content now what results in that is a group of 30 female cios from the uk the usa and canada who meet on a quarterly basis and put the world to rights very open vulnerable took about all their issues i remember saying to ted there's something here and we talked about other events and summits and conferences in our industry and people would always reach out when they were at those events and i said ted people are saying these events are too big they have no input to the agenda they have no idea who's coming it's somewhere it's difficult to get to and it's almost like you and i were playing verbal tennis we said well let's take a shot and think about this and turn it on its head i remember we reached out to 50 cios and said hey if we do something will you come and they said yes they were all the way from hawaii to new zealand It was unbelievable.

31:39And we put on our first summit and we had 80 CIOs come and 40 legendary GPs. I still pinch myself every day that that actually happened. And we're now about to do our fifth summit. It's been incredible, Ted. It really has. Really on the back of coming on the podcast, you and I have now built three businesses, Capital Allocator Summits, where we bring together investors and managers. The managers are picked by the investors. So they're determining who's in the room. We always share who's attending ahead of time. We always send the questions out ahead of time. So we do small group discussions. We really want people to understand how their personal life has impacted how they think about investing.