Sometimes it pays to believe the best about yourself.

David Conrod, founder and CEO of FocusPoint Capital Group, can attest. He started his career in the application software business, and successfully so, until he saw the kind of money some friends were making at Wall Street investment banks.

“I thought I was better than they were,” Conrod says — somehow without a hint of accompanying hubris — “so I went to business school, got my MBA.”

His advanced degree in hand, Conrod was hired by HSBC Group, which was on a major acquisition binge at the time, buying banks and asset management companies. For his part, Conrod was selling long-only Asian equity products from the bank’s Hong Kong investment management business, a duty that enabled him to develop relationships with large pension funds and state and local governments. Only the largest institutions in the early 1990s were allocating capital to specific southeast Asian regional mandates.

“When I got the HSBC position, I called a friend who was highly successful in the business and he told me to see everybody I could, and I was doing just that, making 80 to 120 calls every day,” he recalls. “I would complete at least 50 calls before lunch, and I was meeting 35 to 40 investors and consultants each  month. I don’t think there was a substitute for that at the time. The business has evolved  since then. People like to hide behind email rather than use the telephone.”

Conrod’s work ethic didn’t go unrewarded.

HSBC had two Asia private equity funds managed out of Hong Kong and were posting good returns as China and the region was opening to foreign direct investment.  The bank also had a NYSE-listed China Fund, and the managing partner would come through New York each quarter and he started asking about the appetite for U.S. investors for Asian private equity. In the early ‘90s, Merrill Lynch was the most well-
respected private equity placement firm. During one visit, the partner visited Merrill, and Conrod’s boss suggested he attend the meeting. This was an introduction to the placement business and the fees being charged for raising private equity funds. Following the meeting, he made the case he had existing relationships with the large accounts that needed to be targeted for an offering this specific. At that time, only the largest investors would consider an Asian private equity fund. He got the nod and spearheaded a $250 million raise, serious money for Asia in the early 1990s. He was subsequently involved in a fund earmarked to invest in India in 1995, followed by a larger Asian fund in 1997, as private equity investing became mainstream.

A bright star had risen over David Conrod.

THE GUGGENHEIM YEARS

Having made his bones in private equity fundraising, Conrod decamped from HSBC near the close of 1999 and joined friends in fixed-
income sales and trading who had a broker/dealer. The founder of the broker/dealer happened to be friends with heirs of the Guggenheim family, specifically the father and the son who owned the brand. In October 2000 the b/d, the Guggenheim family members, and a rapidly growing commercial paper conduit merged to create Guggenheim Partners.

“We grew quickly and I ended up pretty much running the distribution business, raising capital for third-party and Guggenheim-
sponsored funds as institutional investors were embracing alternative investments. We raised several billion in AUM for a number of differentiated strategies.”

Conrod played a key role in launching Guggenheim-sponsored strategies, ranging from aviation  finance, to liquid strategies including mortgage derivatives, and buyouts.

Following the financial crisis, Conrod and a few Guggenheim colleagues decided in 2010 to become independent, and FocusPoint Capital Group was born — though Conrod remains close to many partners at Guggenheim, describing them as “A-plus, highly talented investors.”

The goal at FocusPoint: raise capital for private funds and direct transactions and, where appropriate, acquire ownership interests through LP, GP, or carried interest ownership.

“We were determined to be very pointed in that effort,” he says. “That is where the name FocusPoint came from. We don’t waste people’s time.”

At this stage, Conrod estimates the firm has raised capital for more than 20 first-time funds, which, he notes, requires a lot of work.

“The reason you do it is for the successor funds.”

In today’s market, investors are seeking differentiated asset classes and strategies, commitments to enrich and diversify their portfolios. The strategy cannot be duplicative, but needs to be additive. Recently, says Conrod, music royalties have seen significant interest. When songwriters were sidelined by the COVID-19 pandemic and unable to tour many focused on selling their copyrights.

For example, Warner Chappell Music bought the publishing rights to David Bowie’s catalog of songs for a reported $250 million. Add to that list other musical luminaries including Bruce Springsteen, Paul Simon, Bob Dylan, Stevie Nicks and Neil Young.

“Recently we’ve seen a number of new groups targeting music, but the competitive intensity is driving down financial returns,” says Conrod. “We’ve raised two funds with a group that specializes in film and TV royalties. These are self-liquidating and don’t correlate as no capital event is required for exit, generating low-teens returns.”

Other differentiated strategies targeted by FocusPoint include sale-leaseback and the extended-stay and the select-service hotel sectors. “Human self-storage,” says Conrod.

SWEET EMOTION

Parting people and organizations from their money is an onerous endeavor, one that requires “patience and perseverance,” according to Conrod, who cites those characteristics as keys to the successful raising of private capital. Ultimately — whether conscious or subliminal — investor decisions are largely emotional one. Yes, historical performance matters, but in most economic climates, there is no shortage of funds boasting impressive financial returns. That brings other variables into play.

Conrod likens the emotionality of the decision to buying an automobile: Any choice will provide dependable transportation, so buyers base their choice on styling, visual appeal, status and other emotional factors.

“I tell GPs, whether they like it or not, they are in the automobile industry. They are selling cars. Each GP is a smart, clever guy or gal, and LPs could probably pick any fund and it will probably be okay,” he says. “The decision, ultimately, is an emotional one, just as when you wake up one morning and you know the car you’re going to buy, and you justify that decision. There are a lot of similarities with an experienced LP. They’ve met hundreds, maybe thousands, of managers. It’s pattern recognition for them.”

But the value-add in capital raising is in managing the process between seller and buyer. People do business with people they like, people who jibe with their sensibilities — the kind of dynamics that likely lead to repeat business with those clients.

“We have developed relationships and transacted with hundreds of limited partners over the years,” says Conrod, “and you develop a trust and understanding of the limited partners’ goals and objectives.”

Such value-adds are critical, in Conrod’s estimation, because LPs are inundated daily with hundreds of emails and attachments from people seeking a call or meeting. A pre-existing relationship immeasurably boosts the likelihood an LP will read an email attachment containing the presentation and rationale.

Pulling together the team for a specific fundraising assignment at FocusPoint involves interviewing a lot of marketers, and the question Conrod wants answered for a prospective marketer is this: Name 10 LPs with whom you’ve  transacted. Do they have 10 names, or are they “tap dancing” to that question?

“You can quickly separate the cream from the milk, so to speak, with that question,” he observes. “I let them know that we know everyone, but who knows you?”

Conrod appreciates poignant questions coming from the other side of the interviewing desk as well. During the fourth quarter of 2022, FocusPoint hired a senior marketer who had raised billions from institutions. He was considering joining FocusPoint, but not before he conducted a thorough analysis.

Unbeknownst to Conrod, his candidate started calling investment consultants to get an assessment of FocusPoint managers, asking questions such as: Is this a good group? Would you back them? Would you support them?

“I guess he got the answers he wanted to hear,” Conrod says of the three-month courtship. “He is going to be very good for us.”

The aforementioned patience and persistence are essential because the sales timeline often takes 18 to 24 months.

“It’s a long fuse,” he says. “The fastest-ever deal for a new group — from executing an engagement letter to taking on a new assignment to the first close — was about 90 days.”

STAR POWER

Representing a general partner that dazzles is another powerful inducement. One of the new GPs FocusPoint has launched is two MIT sorority sisters, one whose family is originally from Sri Lanka, the other whose family is originally from Thailand. After MIT, the former became a teaching professor at Cornell Medical in New York and then the senior medical practitioner at McKinsey & Co. The other studied computer science and electrical engineering at MIT before going the venture capital route in Silicon Valley then running the internal VC program for Applied Materials (a Fortune 500 manufacturer of equipment for the semiconductor industry), and more recently was with In-Q-Tel, a Virginia-based VC investing capital from the CIA and DARPA (the federal Defense Advanced Research Projects Agency). The two women have come together to establish a venture firm focused on funding healthcare technology startups. Early commitments have come from a large pharmaceutical company, funds of funds and family offices.

Conrod’s enthusiasm for his new client is palpable when remarking: “When investors take a look at their pedigree and profile, and what they have accomplished before putting this fund together, we’re going to see significant investor demand.”

THE ANSWER IS NEVER ‘NO’

Conrod’s own pedigree started with a history degree from Kenyon College and an MBA from Columbia. Professionally, he got started in the software business at Intelligent Bank Management (operating under the name InBank), selling application software to community banks, a package capable of running a small bank with up to 50,000 accounts on an IBM AS/400, a workhorse minicomputer the size of a giant filing cabinet. This was during the heyday of community banks, when about 14,000 of them were operating nationally.

“Most of these banks were paying data processing fees to a third-party, and our pitch was, ‘Buy the IBM minicomputer, our software, and reduce your costs greater than 50 percent.’ No programming staff was required, and it offered increased flexibility and improved management reporting.”

A valuable lesson Conrod learned at InBank — which was eventually sold to a Nasdaq-listed company that offered an integrated online banking system — was the word “no” did not exist when selling software. The correct answer was “probably!” Such was the alchemy of the software business and its programmers churning out applications on demand, though he acknowledges that strategy doesn’t apply to selling financial services.

It was after that assignment that he pursued his MBA from Columbia as part of his mission to move into the financial services sector.

MARRIAGE COMES INTO FASHION

Conrod met and started dating his future wife, Nina Garcia, in 1992, around the time he was graduating from Columbia and she was finishing her education at the Fashion Institute of Technology in New York City. They married in 1997.

Garcia and her sister hail from the South American coastal city of Barranquilla, Colombia. Nina Garcia was sent by her parents to a U.S. boarding school to safeguard her from drug cartel kingpin Pablo Escobar, whose reign of terror was running full throttle at the time and would eventually snuff the lives of about 20,000 civilians, in part by blowing up a commercial airliner and a building equivalent in size to the Pentagon. Numerous judges, politicians and law enforcement officers were assassinated.

“It was a dangerous place, so her parents made the decision to send their daughters to the U.S.,” says Conrod.

Today, Nina Garcia is editor-in-chief of Elle, one of the world’s largest fashion magazines, and for 20 years has been a regular judge on the TV program Project Runway, where clothing designers pit their skills against one another in a competition to showcase their work, build their reputations and win prize money.

While she can be effusive when a designer produces a stellar ensemble, Garcia has been known to lacerate when their concept or execution falls short.

One competing designer was caught on camera fretting, “I’m scared of Nina. I don’t think she likes me.”

Another Project Runway competitor, who failed to impress, was told by Garcia that his apparel looked “like seaweed that came out of the swamp.”

“Thank you,” he inexplicably replied, to which Garcia riposted, “That was not a compliment.”

Conrod sometimes finds his wife in the closet filling a large refuse bag with his clothing. When he inquires as to what she’s doing, Garcia replies, “Just doing some editing.”

“I have experienced that on many occasions,” he says, always deferring to his wife’s sartorial judgment.

Despite having a fashion celebrity wife, Conrod says he’s attended only a couple of fashion shows during their 30 years.

“It’s her business,” he says. “I don’t need to be sitting in the front row at a fashion show, although in the 1980s when the Victoria’s Secret shows were happening, my wife would get calls from my friends asking if she had extra tickets.”

Conrod and Garcia have two sons, a high school sophomore and a sixth-grader, named Lucas and Alex, respectively, both of whom are fluent in Spanish, a useful skill for the frequent trips the family makes to South America. Conrod, by contrast, dubs his facility with the Spanish language “up and coming.”

The Conrod/Garcia boys are also skilled with technology, their father says.

“They’ve got the entire house booby trapped. They know when we’re on the way home. It’s scary. Lucas is very good and knows three or four programming languages. I didn’t think I would ever do this, but I have already purchased two 3D printers, so he’s programming things, designing them, printing them out. He took a CAD 3D software engineering class one summer to design a race car that had to be structurally sound  to withstand a crash. He’s pretty skilled and certainly thinks I’m completely obsolete.”

EARLY MOVEMENTS

During his childhood, Conrod bounced from Washington, D.C., to Los Angeles and Boston before settling in Chappaqua, N.Y., about 35 miles north of New York City by the time he was nine, and close to Armonk, N.Y., headquarters to IBM, a company to which his father devoted the first 10 years of his professional career.

He was accompanied through childhood by a brother and identical twin sisters. Today, their parents, ages 95 and 93, live in Fairfield County, Conn.

“My mom just renewed her driver’s license at 95. She still drives everywhere, and most weekends during the winter we see our parents in southern Vermont. My 12-year-old told her if she makes it to 120, she can set the world record.”

IN RETROSPECT

Now sporting a long track record of successes, Conrod no doubt is still thinking ennobling thoughts about himself. Self-esteem aside, his victories have also come on the strength of a commitment to patience, perseverance and a relentless work ethic — and that gives any executive plenty to feel good about.

Mike Consol (m.consol@irei.com) is senior editor of Real Assets Adviser. Follow him on Twitter (@mikeconsol) and LinkedIn (linkedIn.com/in/mikeconsol) to read his latest postings.