Category: Fundraising Strategy

Market volatility, inflation pressure, rising interest rates–we could argue that the investment landscape is even more challenging than it was a year ago. As a result, PEs report year-over-year declines across everything from deal activity to fundraising to exits. 

To maintain a competitive edge, firms are finding new strategies and sectors to innovate in, and they’re sitting on a record-level amount of funds to fuel it–$290 billion, to be exact. This record level of dry powder is putting pressure on VCs to step up their investment pace, and startup founders are being told to brace for a tidal wave of venture capital interest throughout 2023.

If the past year has shown us any indication of what’s to come, VC firms that put that dry powder to use could lead to another blockbuster investing year, as we saw in 2021. So, how can PEs best leverage that interest amidst continued economic downturns? It starts by understanding a few key takeaways from the first half of 2022 to fuel new innovation cycles and strategies. Keep reading as we outline our findings and suggestions for a way forward. 

Findings from the First Half of 2022

1. PE Activity Stays Above Pre-Pandemic Averages

In comparing the first half of 2022 with that of 2021, PE firms announced deals have  declined by 18%. Key factors attributing to the decline include those typical in an increasingly volatile market: a widening expectations gap between sellers and consumers; reduced visibility into the overall outlook of the business; a looming recession.

But it’s not all bad news. 2021 was a record year for PE firms, representing more than $1.2t in deal activity. Whatsmore, the current deal rate still exceeds pre-pandemic averages, which could very well turn into another record-breaking year for the industry by the close of Q4.

2. Fundraising Remains Robust 

Just as deal activity declined in the first half of 2022, so did fundraising. As of June 2022, firms had raised over $250 billion, which is about 15% short of the same period last year. However, in contrast to last year, which saw a spike in new growth strategies and activity from smaller managers, 2022 has been dominated by large buyout funds.

Given the decline in public markets, it’s possible that fundraising will continue to drop throughout the remainder of the year. Thankfully, LPs have flexibility in managing those imbalances, and PE firms are unlikely to feel any capital constraints in the foreseeable future.

3. A Mitigated Pressure for Exits

Perhaps one of the most significant changes year-over-over is the number of exits, which fell roughly 35% in the first half of 2022. This decline was driven almost entirely by industry-specific limits to achieve those public exits.

As an example, sales to SPACs represented nearly one in five exits in 2021. However, strong headwinds in that market have made it almost impossible for PEs to sell to SPAC vehicles. As a result, exits in that sector have declined by 94%. Nonetheless, the pressure for exits has been mitigated thanks to the strong market of the past 18 months. 

Spark New Innovation Cycles to Stay Ahead

The past decade has been heavily focused on growth-oriented investments. But, with today’s uncertain landscape, including factors like rising interest rates, shifting gears is essential for success. As the role of operational value-add quickly emerges in the spotlight, firms should push to shift from “growth-at-all-costs” to “value over volume” strategies as a way to leverage dry powder and stay ahead of the competition. 

Where a firm can uniquely add value varies by sector and portfolio. To hone in on areas to spark innovative solutions that create lasting value, PEs must ground themselves and go back to their roots. This means taking a “roll up your sleeves” approach to dig deep into areas like supply chain management, pricing optimization, digital transformation, and working capital–the key areas that will be the new primary drivers for returns.

Altvia’s PE-specific solutions can help develop, streamline, and optimize your firm’s value creation strategies, from streamlining business intelligence data to providing actionable reporting and insights throughout your funnel. To see it in action, request a demo with a member of our team. 

According to Bain & Co., the number of deals executed in 2020 was down by approximately 1,000 as compared to numbers from prior years. In 2021, the number of deals was still down, but the total investment value increased due to transactions having larger values. The first six months of 2022 closely resembled the record-breaking performance of 2021, but pipelines started slowing after the Federal Reserve rate hike in June 2022. Raising concerns of persistent inflation and a minor recession, this pause has continued into 2023 and will likely persist until macro factors stabilize.

What’s the takeaway for PE firms? Now is the time to implement operational efficiencies to find and close deals faster and smarter.

How do you do that? We explain below. 

Proven Tactics for Improving Your Firm’s Performance

The last thing you want during challenging economic times is to find your firm grasping at straws as team members scramble to determine the actions or processes that will help you land much-needed large deals. You need to have a plan with proven tactics that you’re already executing before things go south.

Successful firms will tell you that these four best practices are essential:

1. Hire and properly equip business development professionals. There’s plenty of data out there showing that growth investors with well-staffed deal sourcing teams almost always find themselves in the top quartile across stage, sector, etc. Of course, the people you add to your team must be smart, savvy, and eager to succeed. But they also need the right tools, including a PE-specific CRM like Altvia they can use to prioritize outreach activities, log proprietary information, set task reminders, etc.
2. Leverage the latest data analytics technology. PE-focused solutions can turn data into easily digested visuals your team can use to target companies that fit your thesis. Spotting companies that are outperforming expectations before your competitors do is a great way to get ahead. You’ve got to have tools that enable you to “hear” the buzz a company is generating before others do. That gives you a head start in determining if they represent a valuable opportunity.
3. Stay top-of-mind with business development reps. This doesn’t have to mean costly day-long, in-person meetings. Simply sending a weekly or monthly newsletter, calling to touch base, or connecting for a quick conversation at events you’re already planning to attend can be all that’s needed to remain on someone’s radar.
4. Segment deals into tiers. Segmentation helps ensure that your team members spend the majority of their time on the most valuable deal opportunities. You’ll still want them to put some effort into deals at every level, but they’ve got to prioritize deals with higher upsides.

An added benefit of taking these steps is that it helps build your firm’s brand. And when people start recognizing your name, you’ll find that this recognition opens doors to opportunities that were previously closed. You’ve still got to close the deal, but getting your foot in the door is the first step.

Focusing on Deal Quality vs. Quantity

Many firms find that landing a big deal is more emotionally rewarding than landing 10 smaller deals that add up to the same total deal value. That’s not surprising. You get to know the people involved, and the resulting camaraderie adds to the sense of accomplishment.

And, as noted above, developing the ability to close more significant deals can be a lifesaver when something adversely affects the PE environment and the pool of smaller opportunities quickly dries up.If you’re not yet using purpose-built solutions like our AIM CRM, you owe it to your firm to check them out. Contact us today to request an informative demo.

Source: Bain & Co. Global Private Equity Report 2023

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.

Operational efficiency is an increasingly hot topic for fund managers looking to gain a competitive edge in ever-more-competitive markets. The key to achieving greater efficiency? Cutting-edge fund manager software.

From more effective fund management, to deal flow visibility, to the increased transparency that stakeholders are demanding, the right fund management software can help a firm streamline its operations while also providing a more positive stakeholder experience.  

Today’s Advanced Fund Manager Software

In the early days of a fund management platform, there were many adoption hurdles to overcome. This included explaining to decision-makers what this new thing called “the cloud” was, why using it was better than storing data on local servers, and why it was much better than having team members maintain data on the hard drives of their individual computers!

The times definitely have changed. There are many people in the industry today who are only vaguely aware of what a “server” is if they’re aware at all. Every virtual task they attend to—in both their personal and professional lives—is accomplished in the cloud.

No longer does Altvia have to pitch the advantages of the cloud in areas like sophisticated authentication functionality, data redundancy, etc. We also don’t have to explain why using centrally located, easily accessible fund management solutions are much more efficient.

What to Store in the Cloud for Fund Management Efficiency

Local hard drives and on-premises servers do still exist, of course. Consequently, one area that we do still have to discuss with certain clients is what information they can and should store in the cloud. The short answer is: “Essentially everything.” It’s hard to envision a reason that any type of data shouldn’t be maintained in cloud applications—especially if those applications, like our solutions at Altvia, have enterprise-grade security.

We work to educate prospective clients on the importance of having institutional knowledge in a centralized, online system so that the information doesn’t “walk out the door” when someone leaves the firm or when a laptop fails. But even more than that, we explain that factors like transparency and operational efficiency are far-and-away greater in cloud-based software. Frankly, it’s impossible to be truly transparent with LPs if all your data isn’t in one place.

As for operational efficiency, the ability to produce reports and analyze data in near real-time is vital to a firm’s success. Whether it’s providing deal flow statistics or performance metrics, or responding to an urgent request from an LP, purpose-built fund manager software can help team members handle those tasks quickly and efficiently.

All of our solutions at Altvia have been developed from the ground up with the efficient access of accurate data in mind. That’s because firms that don’t operate efficiently quickly fall behind those that do.

Leverage Fund Management Software to Put Your Data to Work for You

Every firm has data that is vital to its operations. The difference between successful firms and those that don’t achieve their objectives lies in how well they manage that data. Organizations that store information in a disorganized collection of spreadsheets, email inboxes, and disconnected databases are at a distinct disadvantage today.

On the other hand, firms that implement advanced fund manager software have critical data at their fingertips wherever they are and whenever they need that information. And both their team members and the stakeholders they interact with can see the difference in their operational efficiency as soon as their solutions come online.

The foundation of fund management is accessible, accurate information. To effectively implement an investment strategy and manage portfolio trading activities, fund managers need to be able to act quickly and seamlessly in collaboration with others on their team.

Many firms are still stuck in the Excel spreadsheet days. Unfortunately, in today’s fast-moving markets and with growing assets under management, Excel just doesn’t cut it. As firms quickly outgrow their use of Excel, they are moving to what we consider the foundation of the work that Private Equity and VC firms do, a sophisticated CRM.

Customer Relationship Management (CRM) systems are the base of a modern technology stack. And since the technology that firms use are only as good as their data, it’s critical to have a robust CRM is a single source of truth that supports:

• Key workflows
• Contact management
• Relationship mapping
• Deal, fundraising, and pipeline tracking
• Automation of key activities (e.g., emails and task assignments)

We understand that adopting new technologies and the processes to support those technologies can be difficult. But we have seen first-hand how proper technology in the form of a CRM, like Altvia, can superpower fund management. We’ve also witnessed how old-school tools like Excel fall short. While Excel spreadsheets are good calculators, they don’t satisfy the needs of today’s fund managers.

Here are ten areas where Excel falls short for fund managers.

1. Collaboration

Excel files tend to be built for specific purposes, such as an investor list for newsletter emails, or a targeted fund list. Disruptions to collaboration take place with this approach. Often, the information is pushed out of the “master” list but never comes back with corrections or updates. As a result, multiple copies of the same list are maintained throughout the firm. It’s also difficult to establish a consistent list since multiple people can’t work on the same file simultaneously.

2. Data integrity

When there are multiple people working on the same file, that file often becomes corrupt. We’ve all been there, when the Excel spreadsheet gets returned from a colleague and the formulas are broken. Or, because of the back and forth sharing of the file across different software versions, the file becomes fully corrupt and therefore unusable. This situation requires someone to revert back to an older version of the file and lose all of the recent updates. It’s an incredibly frustrating, time-consuming, and inefficient reality of Excel spreadsheets.

3. Storage

Unless your firm has solid processes in place that everyone adheres to, the issue of file location can become a big problem. As different members of the teamwork on and update an Excel file, it might get saved on someone’s machine, and not where it should be stored for everyone to access. This issue creates confusion and wasted time when people have to hunt down the latest version because it’s not stored in a central location.

4. Control

Excel files can get really big and complex. With so many connected cells and formulas, over time, it becomes difficult to diagnose the cause of an error. Fund managers can spend hours just hunting down the wrong character in a formula that’s causing problems.

5. Connectivity

With information stored across different sheets and files, it’s difficult to see a holistic view and connections in the data across all of the sources. This issue creates gaps in insights and slows down a fund manager’s ability to make effective decisions.

6. Stability

Many fund managers who use Excel store connected information across multiple, interconnected sheets. Over time, this becomes precarious. Each sheet gets more complex, the connections become brittle, and the stability of the data and information is less reliable.

7. Access

Unfortunately, Excel imposes constraints on different users depending on their license, operating system, etc. This makes file access difficult at times and due to constraints in a file, these access issues can block users from getting to the information they need to do their jobs.

8. Reporting

An important part of your job is reporting. When using Excel to manage data, it can take a full day or more to put together a report that answers all the required questions of the firm. Additionally, without structured and normalized data, advanced reporting is nearly impossible.

9. User Experience

Many fund managers have lots of experience with Excel. They were likely trained on the technology at some point in their education or careers. Yet, the user experience can still trip up the savviest Excel user. With the speed that fund managers need to move at, there’s no time to fight with a pivot table, or Google errors happening within a macro.

10. Human Capital

Managing work in Excel is a big waste of human capital. In the time spent trying to bend and shape Excel to get it to work for their jobs, fund managers could be out hunting, building relationships, and staying on top of industry trends.

The switch from Excel to a purpose-built technology for fund management is a huge boon, not only for the individual but also for a firm. As an example, Crestone Capital saved hundreds of hours of work by moving away from Excel and onto Altvia.

With increasing assets under management, Crestone sought out a system to support business growth, create operational efficiencies, and better serve its stakeholders.

The team was using a set of disparate systems including Excel sheets, PDFs, and Microsoft Dynamics. It was cumbersome to gather all client data into a central location, and the group had difficulty leveraging Microsoft Dynamics across the organization to accomplish basic tasks.

In their move to Altvia, using the CRM and Investor Correspondence, Crestone was able to streamline operations, free up team time, and improve investor relationships. Read more about the experience here.

Altvia helps private equity firms move past Excel and operate more efficiently, securely, and effectively. If you want to learn more about how Altvia can support your firm, request a demo.

With increasing pressure from investors about fees and fierce competition across the industry, private equity CFOs are looking for new ways to streamline and stand out. Operational efficiency is a top priority for many private equity firms and executives. 

It is no surprise that firms are investing in private equity technology to address these key challenges and many more:

• Making data management more efficient
• Improving reporting capabilities
• Integrating systems for a stronger investor communication platform

Whatever firms are looking for, transformation through purpose-built private equity technology is now the name of the game. 

Key advantages that come from investing in new solutions include:

• Optimizing workflows
• Reducing operational expenses
• Freeing personnel resources to focus on more strategic endeavors that support revenue growth

And those advantages together help firms achieve their ultimate goal: standing out from the competition.

In this blog post, we cover how private equity firms can improve operational efficiency and their ability to create an unmatched stakeholder experience to differentiate themselves in the marketplace.

Step 1: Use Private Equity Technology to Make Data Self-Serve

What if every stakeholder could access the real-time information that’s relevant to their specific goals—and get that data whenever they wanted it? 

That’s crucial since every stakeholder has different interests and needs. So, sending out, or providing access to, the information you think they’ll want is a strategy that’s bound to fail in many instances. One-size-fits-all is not an approach that works in private equity.

Intuitive solutions like Altvia give customers, investors, or constituents easy, self-serve data access and important functionality right on their desktop. After taking just a few minutes to learn how to use the intuitive tools in the software, the entire team is able to work more efficiently, spend less time waiting for information, and more time acting on its insights.

We all know that timing is everything in this industry. Miss connecting with someone—by days, hours, or even minutes, in some cases—while your competition is doing exactly that and you may miss out on starting or strengthening a long, lucrative relationship.

Step 2: Ensure Quality Control with Private Equity Technology

In addition to offering a simpler way to manage information, today’s private equity technology solutions can drastically improve your firm’s data quality control, flagging miscalculated or outdated data automatically. Providing stakeholders with inaccurate or old information is a sure way to make them question your attention to detail and also your capabilities in general.

With more accurate information from the get-go, your firm is poised to put together more profitable deals. Another plus? You can consolidate data from multiple sources into one central private equity technology system and optimize workflows to scale for growth.

Step 3: Leverage Technology for Private Equity Efficiency

Whether you’re working on the initial round of funding or are just days away from closing the deal, the reporting tools in today’s private equity technology can ensure everyone on the team is on the same page. What’s more, these tools can improve the efficiency and effectiveness of reporting to investors.

You can also take advantage of convenient communication tools for connecting more efficiently with busy investors. Stakeholders appreciate getting timely, concise, and helpful information.

Private Equity Technology Is the Key to Steady and Significant Improvement

Of course, throwing private equity technology at a problem is not going to change your business overnight. It’ll take some time and effort to implement a new system the right way. But in the end, your team will be able to work on more fulfilling—and profitable—tasks that set your firm apart.

Private equity success is highly dependent on your ability to successfully fundraise. In the past, much of the fundraising process and related communication were managed manually. 

In recent years, the explosive growth in the private equity space has increased the volume of people, information, and activities there is to manage. 

You used to be able to fundraise successfully simply by leveraging past relationships. Today, LPs are demanding more access to information, proactive communications and reporting, and seamless exchanges with their GPs.

Software makes the Fundraising Process Efficient

With these increased expectations, it’s worth taking a closer look at the steps in the fundraising process. Are you providing an excellent experience for your investors? Or are you, instead, providing the bare minimum in terms of data access and service? 

Evaluating how investors perceive their interactions with you enables you to identify opportunities to improve communications. It also allows you to leverage technology to be more proactive and provide greater information access to LPs.

Below are four areas to consider throughout the fundraising stage. 

You should use them to identify opportunities to increase your efficiency and improve the investor experience. 

Every advance you make puts you a little farther ahead of firms that aren’t proactive and stick with the status quo. 

1. General communications

How do you communicate with your investors? Are you doing so in the right ways and at the right times? There are a variety of messages you might share with your investors—information on what you’re bringing to market, potential close dates, the fund prospectus, and others.

Consider the channels you’re using to deliver these messages and make sure that they are accessible and convenient for your investors to receive. You might be sending this information via email, but consider the work the investor must do to keep track and aggregate the messages your firm sends. Find ways to simplify the delivery, improve the organization of the information, and personalize the message.

For example, if all the emails of a particular type that you send to investors start with the same word or phrase (e.g., Fund Prospectus: [fill in the blank]), that makes it easier for the recipient to search for an email (Find: “Fund Prospectus”) that they may have archived.

Communications also can be improved using technology to provide targeted email messages, delivered based on the activity and behavior of your investors. Email tools can help your firm ensure accuracy and save time when emailing lists of recipients, too. 

Often, email tools can connect to your CRM, allowing your team to create reports and lists, and to send updates to groups quickly and efficiently. In the Altvia platform, users can “BCC” emails and track results for compliance as well as verify which recipients receive emails.

2. Document sharing

How are you sharing documents? In the fundraising process, many due diligence questionnaires, reports, and agreements are shared back and forth between LPs and GPs. If you’re not handling this process the right way, it can be both time consuming for your team and irritating to investors.  

These documents are often shared and requests are sent via email. With a decentralized system like email, files get lost and it’s not clear where ownership lies. This can create the impression that your firm is disorganized or cause delays in the fundraising process.

A portal where DDQs and agreements are posted, requests are transmitted and assigned, and progress can be followed solves many of the problems that arise as a result of decentralized file sharing. Central file-sharing systems offer an organized structure that creates clarity for investors and demonstrates your professionalism.

3. Status management

GPs need an easy way to identify who owns a particular investor request, what the components of the request are, and when it’s due. 

Often LPs ask the same questions or request similar information. By formalizing responses to requests, GPs can create templates or a collection of commonly asked questions and answers to pull information from. This is far more efficient than drafting new verbiage each time a request is received. 

As a result, you can provide a faster response. In addition, because the core text has been reviewed and approved, you can be confident that you’re providing accurate and consistent information across LP communications. 

4. Firm differentiation

Investors are typically working with a variety of GPs. What is your firm doing to create a better experience for investors in order to build trust and differentiate? 

If the answer is “Very little,” that’s a problem. Investors understandably gravitate to the firms that stand out from a service perspective.

Top firms are identifying points in the fundraising process (and beyond) to build brand equity and personalize communications. This can be done through activities like investor nurture campaigns. 

Messages that might be included in this type of campaign include:

• Information about the firm and your niche
• What you’re seeing in the market and learning from those findings
• Your firm’s investment focus
• Portfolio company performance
• Announcements of upcoming webinars and events
• Suggested resources and publishers for investors to follow

Firms can also include personalized content in nurture programs based on investor behavior.

When it comes to the need for advanced software, fundraising should be at the top of your list. 

Assessing and improving your investor’s experience during the fundraising process is an important step to building more credibility and strengthening your relationships with investors. 

And, of course, doing that helps ensure continued investment and future funding.

If you’re looking for more guidance on fundraising software and ways to improve the investor experience, read our full guide by clicking below.

When it comes to private equity fundraising software, potential clients often start the conversation by inquiring, “How can I better target investors for my private equity fundraising?” That’s a common question but one that doesn’t have an easy answer. 

It’s no surprise that GP-LP communications have quickly risen to the top of the priority list as far as fundraising goes. That shift in priorities has occurred primarily because these days, when fund managers have to reach a broader audience while prospecting, efficient and effective communication is a must. And improved targeting is the key. 

But to appreciate today’s advanced targeting techniques, you have to understand private equity’s history in this area.

How Firms Operated Before Private Equity Fundraising Software

In the past, fund managers relied on highly manual processes to get their work done. Often, they used Excel spreadsheets or similar tools in conjunction with an email program of some kind to do a passable job of capturing contact information, tracking prospects’ activity, and communicating with them during fundraising. 

Notice the use of “in conjunction with” rather than “integrated with.” That lack of connectivity was one of many significant failings of this approach. 

This method wasn’t ideal, and it definitely wasn’t scalable. It allowed fund managers to get by at the time, but with today’s increased “need for speed” in an increasingly competitive industry, they are realizing that there has to be a better way. 

There is, of course. Technology has improved dramatically over what was available just 5-10 years ago. Tools like our advanced CRM patform for private equity, are helping progressive firms operate more efficiently and scale their operations effortlessly.

Tools To Target Investors

As for prospect targeting specifically, Altvia Correspond Market Edition solves this major fundraising challenge. Market Edition is an email communication tool that is fully integrated with our platform.

Using the solution, fund managers can leverage their entire network and easily identify which prospects to target for their next fundraising cycle. No patchwork outreach. No “swivel chair automation.” Everything they need is in one system that serves as what we call a single source of truth.

For instance, let’s say your firm wants to announce their latest fundraise. Market Edition allows you to easily create contact “smart lists” directly from your records based on virtually any criteria of your choosing, including contact type or role, and contact location. 

You can also use filters to do things like find fundraising prospects that passed on the previous fund but requested that you follow up with them during the next fundraise.

In short, you can easily identify the right prospects for your fundraising and quickly send an email blast that arrives to each recipient fully personalized. 

It’s a great way to start this type of engagement, or any interaction, including things like planning a roadshow.

Targeting and Timing Are Everything

At the end of the day, fundraising is about connecting with the right people at the right time. Private equity fundraising software empowers you to do exactly that. 
Plus, being highly targeted in your outreach means that you don’t bother people who wouldn’t be interested in a particular offering. That leaves them much more receptive to communications about funds that do interest them.

According to a recent study by SEI News, after several years of underwhelming performance and lack of liquidity, many private equity fund administration teams are trying to increase transparency to attract and retain skeptical investors. 

After all, confidence is—as it should be—a critical element when it comes to making a commitment. 

A great way to provide the transparency that stakeholders crave, both in fundraising and investing, is to implement a purpose-built and intuitive fund management software platform. 

Not only does this type of system simplify private equity fund administration for the primary users, it makes it fast and efficient to provide information and insight to anyone outside the firm who needs it. 

What Is “Transparency” in Private Equity?

From a fundraising perspective, transparency starts by knowing where you are in the process. You have to have an accurate understanding of your progress in order to communicate information clearly and concisely to investors. 

For example, if you have a first close and are planning on a second close at a specific future date, having clarity on where you are in your overall fundraising process at any given time enables a GP or manager to be transparent regarding their fundraising activities.  

The right private equity fund administration system can also provide important information should any issues arise with the fundraise. Specifically, a system that helps track detailed data on your contacts could prove invaluable in a case involving alleged malfeasance by consultants or other intermediaries. 

Documenting the connections between your fundraising prospects and your fundraising activities can be critical to understanding and explaining your level of involvement. Without that type of easily accessed “audit trail,” you could find yourself having to do much more work to outline what has happened. 

A private equity fund administration system can be useful on the investing side, as well. In particular, the fact that it provides a central database of all the contacts at each of your investors is very helpful. 

Ensuring that everyone is using the same contract records and has easy access to them is critical.  

Tools To Assist With Transparency and Private Equity Fund Administration

Another critical facet of transparency is understanding who is expecting to hear from you and how often they want to receive communications from you. 

There is such a thing as providing too much information to busy stakeholders, who may feel compelled to look at everything you send so as not to miss something particularly important. 

Consequently, it is important to have a way to track interaction preferences. 

Our data management platform has features that enable users to record these types of characteristics.

Pair it with a means of streamlining and tracking communications with investors, such as our ShareSecure LP Portal, and you have the capabilities you need to quickly and easily share information with all relevant parties—and only relevant parties.

If you’re putting together monthly or quarterly updates, a virtual data room and GP-LP engagement platform like ShareSecure empowers your team to share those documents in a secure fashion. And as you do, you also have visibility into how often your investors are accessing the information.

Private Equity Fund Administration Requires Effective Data Management

Full transparency in private equity fund administration requires tracking the data you want to share, and that requires having a defined process in place for collecting information—financial or otherwise—on the performance of portfolio companies. If you don’t have that data, you can’t produce the content that you would turn around and share with your LPs.

And, of course, if that information isn’t well organized and accessible, you may as well not have it at all. A private equity fund administration solution enables you to turn disparate information into valuable data and actionable insights.

As a private equity firm, your team talks to many investors, track numerous deals, and monitor a variety of investments. Making organization key. Without the right fund management software in place, your job can quickly become overwhelming.

If you aren’t able to perform the activities below quickly and efficiently, those are signs that you need fund management software.

1. Store contact information. 

If phone numbers and email addresses for the people your organization contacts are spread out through various people’s personal address books, that’s a problem. That information must be in one, easily accessible location.

2. Track firm-wide activities. 

You’ve scheduled a meeting with a potential investor only to find out that your colleague was there a week ago. That’s awkward. And it doesn’t have to happen—and won’t happen—when you have a holistic view of what’s going on at your firm.

3. Work from anywhere. 

If the COVID-19 pandemic has taught us anything, it’s that you must be able to access your company’s database or shared drive from the road, your home, or anywhere.

4. Stand out from other firms. 

You need to demonstrate to potential investors that you have a regimented process that differentiates you from other funds. Specialized fund management software enables you to do that.

5. Keep track of PPMs and other fund documents. 

If you have to manually number PPMs and you don’t know which prospective investors you’ve sent them to, it’s time to get an assist from technology.

6. Leverage accurate, real-time data. 

Using spreadsheets to track your funds is risky for many reasons. Just one formula error can create significant problems. Fund management software eliminates that risk.

7. Keep your team in the know. 

It’s very inefficient to have to email colleagues to find out what happened in a recent meeting. You should be able to find that information quickly without their assistance.

8. Perform due diligence effectively. 

Too often, the steps in a firm’s due diligence process are not well defined and there’s no record of who performed each step. Fund management software can ensure this process happens the same way every time and that each action is documented.

9. Meet portfolio management requirements.

You need a system that can assist you when regulatory or compliance requirements force you to be more transparent in your portfolio management. Altvia answers can help you transform and normalize data.

10. Maximize your time spent fundraising. 

You shouldn’t have to spend more than 10 seconds compiling your pipeline report for investing or fundraising in preparation for your weekly meeting.

Learn More About Fund Management Software

If you’re seeing the signs that you need to implement fund management software, the first step is to learn about what’s available.

Request a demo so you can see our comprehensive private equity solution in action.