The 2024 PEI Investor Relations & Fundraising Forum, held in San Diego September 25-26, 2024, emphasized one clear message for private equity firms: the industry is recalibrating, and it’s time for firms to realign their strategies.
While fundraising has typically followed a cyclical three-to-four-year pattern—leaving many anticipating renewed activity in 2025—the old playbook is no longer enough to stay ahead. There is optimism that 2025 will see a resurgence in private equity fundraising, but it’s clear that a recognition in how GP’s approach fundraising must evolve to meet new expectations.
Investors today are increasingly pragmatic, seeking investments that not only promise returns but also resonate personally with their financial goals and values. In turn, GPs must tailor their marketing and fundraising efforts to appeal to these diverse client profiles. Firms that leverage technology to support this multifaceted approach and adapt quickly will thrive, meeting evolving investor expectations for transparency, personalized communication, and dynamic engagement. Conversely, those without purpose-built private equity software to support this agile, multi-pronged strategy risk being left behind.
A Market in Flux: Reassessing and Realigning
In what some speakers called a “get your act together” phase, PE firms are re-evaluating their fundraising tactics and revitalizing strategies that may have grown stagnant during the recent market lull. Teams are leaner, with people wearing multiple hats, which has shifted the burden of investor communication to nearly everyone in the organization. As a result, the role of investor relations has expanded, with sales, data collection, and client engagement now requiring a single, more agile process.
This shift has made firms realize that the same old approach won’t work for much longer. Investors are seeking firms with an operational infrastructure capable of reporting on non-traditional metrics. So, in light of the market downturn, there is a heightened focus on actual distributions rather than projections, which encourages firms to be transparent about underperforming vintages from previous years and to candidly share lessons learned. Consequently, there is a growing emphasis on metrics like DPI (Distributions to Paid-In Capital) over IRR (Internal Rate of Return).
Diversifying Investor Bases: The New Communication Challenge
The Forum also highlighted a growing need for fund managers to diversify their investor bases. As private capital markets broaden, fund managers are engaging with an increasingly varied range of investors—from institutional investors to high-net-worth individuals and family offices. Each group brings its own set of expectations, particularly when it comes to communication and engagement.
High-net-worth individuals and younger generations of investors, in particular, are pushing for change. They expect digital platforms, instant access to personalized content, and quick insights, rather than traditional reports or meetings. Delivering on these diverse communication needs demands a more sophisticated strategy. Solutions like Altvia’s LP Portal and VDR, ShareSecure and our CRM, AIM, are essential for helping firms streamline workflows, enabling fund managers to deliver personalized and relevant content to each investor type without sacrificing efficiency. Moreover, ShareSecure’s landing page functionality is designed for rapid deployment, allowing firms to create targeted, appealing pitches for any use case—marrying speed with high-quality communication.
Storytelling: The New Language of Fund Performance
Fund performance has always been important, but what’s changing is how firms communicate that performance. Today, it’s not enough to present a series of numbers; investors want to understand the story behind those numbers. Why did a particular investment perform the way it did? What were the key decisions and events that shaped its outcome?
This need for transparency is especially important for funds with underperforming vintages, as it offers an opportunity to build trust by sharing both successes and setbacks openly. Firms that are able to communicate both successes and setbacks through compelling storytelling will find that they foster deeper trust with their investors.
Products like Altvia’s Answers empower firms to craft narratives by isolating key data points and presenting them in an engaging way. Whether it’s explaining why a particular investment didn’t meet expectations or highlighting a strong exit, the ability to weave data into a cohesive story is now a crucial part of fundraising and investor relations. This narrative approach resonates more with investors, particularly as they seek to understand the ‘why’ behind the numbers.
The Road Ahead: Embracing Technological Evolution
As firms prepare for a potential private equity fundraising rebound in 2025, adaptability and agility will be the key to success. The needs of today’s investors have evolved, and the technology that firms use must evolve with them. The traditional fundraising playbook is being rewritten, and technology is at the forefront of this transformation. Instead of trying to fit new investor expectations into outdated systems, firms must embrace platforms that offer dynamic, customizable solutions.
Private capital fundraising isn’t what it used to be—and that’s a good thing. If your firm is ready to evolve, it’s time to explore how platforms like Altvia can help you meet the changing demands of your investor base. Here are 5 tips to make 2025 your strongest fundraising year yet: altvia.com/elevate-your-fundraising!