Year-end “retrospectives” often come to the same conclusion: This year was very much like last year.
Obviously, a look back at 2020 is much different.
Some of the most significant economic shifts we’ve ever seen happened this year.
And with them, private equity firms had to change their perspective and processes in order to stay successful in our new physically distanced world.
New and Higher Fundraising Hurdles in 2020
It would be an understatement to say that stakeholders throughout the industry were concerned about the COVID-19 pandemic and how it affected everything from the global economy to the sudden cessation of in-person gatherings and the rise of remote private equity meetings.
Fortunately, firms that had advanced systems in place to support the new virtual approach to fundraising were able to get back to business quickly as the economy picked up.
Those that didn’t, of course, immediately began looking to bridge their internal technology gap to be better positioned to adapt to business disruptions in the future.
Changes in Fundraising Strategy
In addition to greatly accelerating the move to differentiated technology designed specifically for private equity—a transition that was already underway but that became a top priority in 2020—the pandemic necessitated a shift in strategy as well.
- Giving LPs greater transparency into portfolio performance
- Providing enhanced visibility regarding fund manager and investor activities
- Defining processes for sharing information more effectively, both internally and with investors
- Identifying and focusing operations on a “single source of truth” within a firm to enable real-time data access and simplified reporting
Interestingly, as the experts in our webinar The Art of Virtual Fundraising noted, not everything about the new strategies and tactics forced on the industry by COVID-19 were negative.
For example, less time traveling to meetings left more time for addressing other tasks.
Panelists also pointed out that seeing virtual meeting participants in their home environments opened the door to deeper, more personal connections.
Looking Ahead to 2021
When we write our retrospective on the private equity industry at the end of 2021, what is it likely to contain?
Clearly, it will be noted that the need for purpose-built tools continued to grow in a year that began with many questions still to be answered about how the pandemic would be resolved and how the economy would respond.
2020 has highlighted firms that will enjoy the most success going forward have:
- An industry-specific CRM to maintain information on investors and segment investors by preferences, geography, or industry with an email platform to enable communication ahead of fundraising
- An event technology platform such as Zoom, Brella, or ON24 to coordinate investor events
- A portal or GP-LP engagement platform to push out documents and media files quickly and securely
- A business intelligence tool that shows data and trends visually to increase transparency
And, of course, when it comes to firms getting a platform they need to set themselves apart and collaborate more effectively with stakeholders, the sooner, the better.
Create the Best Possible Investor Experience
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