15 Steps to Fundraise a New PE/VC Fund

Raising your first fund can be one of the biggest challenges you face as a firm. From building a backing of strong connections to empowering LPs with data-driven insights, no detail can be overlooked. 

But, thanks to a recent guide released by TechCrunch, there are 15 steps the best firms follow when raising funds. We’ve summarized them here to help you tackle the challenge and lay the groundwork for a high-performing fundraise.

  1. Build Your Backing

    The more backed you are, the more investable you are. Before you begin soliciting your fund to LPs, network, network, and then network some more. The more people on your side, the more feedback you gather, and the more awareness you gain. This helps ensure your fund will have an interested audience, along with a network that can help make valuable connections before you launch.

  2. Set Up a Data-Driven Deck

    Compile all of the information to support your pitch (a tool like Altvia can help by centralizing all alternative and traditional data across your industry and firm), and put together a strong marketing toolkit, complete with a data-backed pitch deck, website, and social media presence to prove your credibility.

  3. … a Data-Driven Digital Presence …

    Make sure your entire team has a professional digital presence, including an up-to-date LinkedIn profile, and leverage their following and shareability to spread awareness of the metrics you want to share (ie: the size of exit, number of people you managed, budget, etc.).

  4. … and a Data-Driven Due Diligence Process

    Set up a data-informed due diligence questionnaire for easy LP access, including details on return history, legal documents, a fund organization chart, portfolio construction model and one-pagers, and the resumes and case studies of key personnel and past investments.

  5. Provide Answers to FAQs

    No matter how unique your fund is, chances are you’ll have some commonly asked questions from LPs.

    Prepare answers in advance, and compile your FAQs into a single document so you can arm LPs with responses to the questions they care about most from the start.

  6. Self-Evaluate

    If your fund doesn’t stack up to the track record of successful first-time fundraises  (industry-standard strategies that have landed investors before, experienced founders, target AUM of >$50 million), you may want to reconsider your strategy.

    Be honest with yourself…can you really raise money from investors, or should you be focusing on family offices and/or high net worth individuals?

  7.  Recruit Resources

    If your budget permits, recruiting additional resources can help accelerate and better operationalize your fundraise. Whether you leverage a part-time hire or AI/tech, additional help can empower you to then refocus time and effort on other areas of the business, while ensuring every aspect of your fundraising efforts have the time and attention to detail needed to succeed.

  8. Aggressively Maintain Your CRM

    The key to any successful private equity fundraise is organization and transparency within the firm. Arming every team member with access to your CRM, including transparency of interactions with potential investors in every stage of the pipeline, is critical to building and maintaining relationships.

  9. Tap into Your Network

    Remember how important we said it is to network in Step #1? Now that you’re at a more active stage of your fundraise and have your data-driven resources together, it’s time to tap into the network you’ve built to solidify your backing.

    While you’ll likely receive a lot of “nos,” this is your chance to ask for feedback and referrals to grow your audience and reach new potential investors.

  10. … Including Your Digital Network

    In-person meetings are great, but organizing 50+ of them can be time-consuming, and ineffective use of your time. Incorporate a few virtual events in your networking strategy to help you exceed your reach and gain exposure to new people and opportunities you may not have had access to otherwise.

  11. Secure Speaking Slots

    Build up a database of investor-focused events, and contact organizers to secure speaking slots. Even if you’re just introducing a sponsor or keynote, you’ll be growing your presence among a captive audience, who could also be future investors.

  12. Control the Meeting Format

    Once a meeting with an LP is secured, make sure the time is productive for both parties. Begin by asking the LP if they’d like to go through the deck page-by-page, or if they’d prefer to jump in with initial questions.

    While discussing, pause regularly for questions and make sure the format is conversational; no one should speak for more than two minutes at a time without checking in for feedback or dialogue from the other party.

  13. Do Your Own Due Diligence

    While the LP will be running their own checks, you should also know as much about the prospective LP as possible to help your firm tailor the pitch, and know what to expect before entering a partnership.

  14. Keep Your Legal Counsel on Standby

    A lot of paperwork goes back and forth during onboarding, so make sure to have your legal counsel ready to review every document that comes your way before officially entering an agreement with an LP.

  15. Keep Up with Quarterly Reporting

    Finally, after your first close, quarterly reporting is mandatory. Within 45 days of the close of each quarter, provide detailed reports on key metrics for LPs to keep them in the loop (just be sure they are compliant with your Limited Partnership agreement). 

From centralizing your data for decks and reports to integrating a powerful CRM to fuel conversations during every stage of your deal funnel, Altvia’s PE/VC-designed software can help ensure a smooth and seamless fundraise.

To learn how we can help your firm throughout every step of your first fundraise, start a conversation with our team.

A traditional crm was built for general ‘customer’ scenarios

Software platforms have made the world a better place by making work a better place. Indeed the world is better off when people enjoy their jobs even marginally more, and workplace applications on big CRM platforms like Salesforce.com have done that and much more.

But the potential that platforms like these offer presents diminishing returns: once the platform provider has engineered too many industry specific components into its platform, its usefulness for other industries begins to be threatened, and with that so do the usefulness of the component tools built into the platform.

So it is with the CRM category that Salesforce.com has defined: it is generic enough to work for many industries, and yet still offers the potential for others to round off the edges and nail more vertically-oriented and extremely tailored software solutions.

Private capital markets are actually a great demonstration of this dynamic. Where generic CRM platforms simplify — appropriately so — to assume there’s a business, a customer, a sale, and service of that customer, there are a few industry-specific pieces that are missing.

Take for example, that investors become customers by investing through legal entities the GP raises. It’s a subtle but important nuance that just doesn’t make sense at a platform-as-a-service level (because it’s overly complicated for a simple one-time sale that many industries require), but which can easily be added without 10 years or software engineering. Once provided, the rest of the platform’s components become tremendously powerful again and you’re set to take over the world.

As a traditional CRM in our pillars methodology, these nuances must be present to properly account for investors in these legal entities, potential target companies and which are owned by these entities, the context of all interactions with these parties (as well as the appropriate overlap, ie co-investments), and how you’re arriving at finding these opportunities on both sides of the equation, such that you’re able to piece together what’s effective and what’s not. Not just because we say so, but because these are the very relationships and data that are key to the motivation behind a CRM in any industry.

It’s critical, too, that the valuable publicly-available information that helps to enrich CRM systems and save users painful steps of entering it themselves is fully-integrated at the platform level.

Again, look no further than the 3,000+ pre-built integrations that Salesforce.com — the creator of the CRM platform concept — has at a platform level to do so, and which only exists by way of holding just short of overly-specifying certain industry workflows that would present challenges to properly integrate.

Stakeholder reporting and communication (investor relations) draws on a range of datasets

The traditional “customer service” model of CRM systems once again makes overly-simplified assumptions about the customer relationship when applied to private capital markets.

In fifteen years I personally have yet to hear the terms “warranty” or “service call” in this market because it’s just not the same. But make no mistake, as uncomfortable as it may be to say aloud, customer service is more important now than ever and it’s constantly happening; the industry is, after all, considered to be a financial “service”.

As it turns out, that service is primarily information-based — it’s driven by data and takes the form of reports and analysis that drive decisions, and then end up again in investor-facing reports and analysis.

The foundational elements of a private capital markets CRM must be built such that they accommodate this data (like we discussed above), but so too that it can accommodate additional supporting data that investors (customers!) need in the context of service.

Oftentimes this supporting data — financial metrics and time-based values, for example — is believed not to meet the traditional definition of CRM and the natural thought is “well, better do this in Excel!”.

While I happen to believe Excel is still the greatest software application ever built, its introduction to this value chain we’ve discussed herein actually creates the problem many firms suffer from: key data needed to provide customer service (again: effectively the entirety of a firm’s reports and analysis) is now in disparate systems and detached.

Both of those dynamics are important and distinct: not only is this supplemental data disparate, but when brought together there is no logical association that can be made between the two data sets.

Allow me, then, to make the point very simply: not only can this financial and time-based value data (you may be thinking about is as “portfolio monitoring” or “accounting”) be a part of a CRM, it is arguably the most important part of a CRM because it’s at the core of what providing service to the customer entails — information that comes out of data!

Firms need a digital method to engage stakeholders (ie investor portals)

Investor portals are not new; in fact, for many of us — including myself — they conjure up horrifying nightmares in which we’re aimlessly guessing at folders to find the newest document we need.

So in lies the opportunity: not only have the portals we’ve come to hate not simplified the process of acquiring information, they’ve failed to create an entirely new experience that is “customer service” driven.

To be fair, this is not a B2C market where you’d be long out of business for not having focused on customer service and thus the customer’s technology-driven experience. But don’t expect to be around too much longer if you aren’t thinking about this shift.

Today’s institutional investors increasingly expect this same consumer-like experience, and a massive opportunity is being missed by not providing it. It’s not about providing them the experience they desire; it’s more about the ability to measure engagement that is had in return.

Put simply: what’s keeping the market from providing this experience is the availability of the information that’s required to create the service that provides the experience.

If you’ve hung in this long, you know that by focusing on your CRM, you have the data that’s required to manage the customer relationship and the technology-driven experience through which that information is shared to create a differentiated and opportunistic customer experience.