Category: Fundraising Strategy

“Speed has become more valuable than capital.”

Wise words from Henri Pierre-Jacques of Harlem Capital.

That being the case, it’s more important than ever for PE firms to consider how to decrease a private equity fundraising timeline.

Obviously, your success in accelerating the process depends, in part, on factors outside your control, but let’s talk about the things that give you the greatest likelihood of success and which you can control.

Much of the world’s productivity enhancements in the last twenty-five years have become technology, and that should be the first place for you to look, too.

In particular, firms should prioritize the technology that is closest to their most important workflows: raising capital and generating outsized returns.

Three ways to decrease a Private Equity fundraising timeline

1. Develop a deep pipeline and focus quickly on the parts of it most likely to convert.

Start wide and use data to find prospects. Believe it or not, there are investors you’d like to talk to and who would like to talk to you, but neither of you know who the other is (yet!).

Technology’s role is tremendously powerful in this arena and takes shape in two key ways:

1. The data that will help to uncover who those investors are, why they could be a fit, and who you’ll need to interact with. You will almost certainly have to pay for this sort of data and you’ll get what you pay for. Remember that speed has become more valuable than capital, so pay for it and get going.

2. Applications that will help to leverage time to interact with them, keep track of progress, generate reminders, and show engagement activity that will help to inform conversion likelihood.

Turns out those two forms of technology are best used together and doing so will help to inform where conversion is most likely, and 1) which characteristics of the investor and 2) efforts of yours lead to that.

Once you figure this out, find out how to do more of that and do it faster, and technology is the way to do that.

Here are some questions to help get that train of thought going:

• Who are my top capital raisers?
• What regions are we most successful in?
• Where are our best introductions coming from?
• What are the characteristics of our most committed LPs?

The answers will help you focus your efforts and increase productivity.

2. Automate your processes.

Even simple tasks take time—hours that could be better spent elsewhere.

Consequently, you should automate common workflows like broad email updates, the creation and distribution of PPMs, and the reporting you’ll use to keep track of the process.

In terms of reporting/analysis: account for things you know now that you’ll want to know, but plan to want to report in ways you don’t yet know about.

You should also review ownership/coverage of the prospect universe (including existing LPs) within your team. Then, after completing that review, you can divide and conquer.

Measuring engagement and success will be of help here, too; it will further inform follow-up activities, craft talking points, and focus the activities that offer the least amount of leverage on the things that deserve it and which have the highest likelihood of converting.

3. Prepare key marketing materials, track record, and benchmarks in advance.

For me, just ten or fifteen years ago, the thought of manual but repetitive tasks like these was nauseating.

I’m here to lobby for manual efforts like these being a crime in today’s world.

If for no reason other than that we’ve worked to apply technology to steps like these and you’re wasting precious time given the complexity that comes with manual efforts in this area.

And, of course, when you are fundraising, forward momentum matters. The longer it takes you to close your fund, the less favorably you will be viewed by LPs.

Be sure to have these marketing materials prepped:

• PPMs
• Presentation Deck
• Due Diligence Questionnaires
• Deal Attribution Analysis
• Team Background
• Track Record
• ESG Policy Statements

With these items completed, polished, and easily accessed, you can ensure there is no long gap between request and response.

Recommendation: Evaluate your internal investor relations capabilities. It may be that you can shorten your fundraising timeline by enlisting the assistance of a placement agent.

The Right Tools for PE Fundraising

Of course, your team will be best able to improve its fundraising performance if it is using solutions designed for PE firms.

From our solution, our leading-edge GP-LP engagement platform, the Altvia suite of purpose-built tools has all the necessary functionality in systems that are also intuitive and easy to use. Click here to see them in action.

Wise words from Henri Pierre-Jacques of Harlem Capital.

That being the case, it’s more important than ever for PE firms to consider how to decrease a fundraising timeline.

Obviously, your success in accelerating the process depends, in part, on factors outside your control, but let’s talk about the things that give you the greatest likelihood of success and which you can control.

Much of the world’s productivity enhancements in the last twenty-five years have become technology, and that should be the first place for you to look, too.

In particular, firms should prioritize the technology that is closest to their most important workflows: raising capital and generating outsized returns.

Three ways to decrease a Private Equity fundraising timeline

1. Develop a deep pipeline and focus quickly on the parts of it most likely to convert.

Start wide and use data to find prospects. Believe it or not, there are investors you’d like to talk to and who would like to talk to you, but neither of you know who the other is (yet!).

Technology’s role is tremendously powerful in this arena and takes shape in two key ways:

1. The data that will help to uncover who those investors are, why they could be a fit, and who you’ll need to interact with. You will almost certainly have to pay for this sort of data and you’ll get what you pay for. Remember that speed has become more valuable than capital, so pay for it and get going.

2. Applications that will help to leverage time to interact with them, keep track of progress, generate reminders, and show engagement activity that will help to inform conversion likelihood.

Turns out those two forms of technology are best used together and doing so will help to inform where conversion is most likely, and 1) which characteristics of the investor and 2) efforts of yours lead to that.

Once you figure this out, find out how to do more of that and do it faster, and technology is the way to do that.

Here are some questions to help get that train of thought going:

• Who are my top capital raisers?
• What regions are we most successful in?
• Where are our best introductions coming from?
• What are the characteristics of our most committed LPs?

The answers will help you focus your efforts and increase productivity.

2. Automate your processes.

Even simple tasks take time—hours that could be better spent elsewhere.

Consequently, you should automate common workflows like broad email updates, the creation and distribution of PPMs, and the reporting you’ll use to keep track of the process.

In terms of reporting/analysis: account for things you know now that you’ll want to know, but plan to want to report in ways you don’t yet know about.

You should also review ownership/coverage of the prospect universe (including existing LPs) within your team. Then, after completing that review, you can divide and conquer.

Measuring engagement and success will be of help here, too; it will further inform follow-up activities, craft talking points, and focus the activities that offer the least amount of leverage on the things that deserve it and which have the highest likelihood of converting.

3. Prepare key marketing materials, track record, and benchmarks in advance.

For me, just ten or fifteen years ago, the thought of manual but repetitive tasks like these was nauseating.

I’m here to lobby for manual efforts like these being a crime in today’s world.

If for no reason other than that we’ve worked to apply technology to steps like these and you’re wasting precious time given the complexity that comes with manual efforts in this area.

And, of course, when you are fundraising, forward momentum matters. The longer it takes you to close your fund, the less favorably you will be viewed by LPs.

Be sure to have these marketing materials prepped:

• PPMs
• Presentation Deck
• Due Diligence Questionnaires
• Deal Attribution Analysis
• Team Background
• Track Record
• ESG Policy Statements

With these items completed, polished, and easily accessed, you can ensure there is no long gap between request and response.

Recommendation: Evaluate your internal investor relations capabilities. It may be that you can shorten your fundraising timeline by enlisting the assistance of a placement agent.

The Right Tools for Private Equity Fundraising

Of course, your team will be best able to improve its private equity fundraising performance if it is using solutions designed for PE firms.

From our solution, our leading-edge GP-LP engagement platform, the Altvia suite of purpose-built tools has all the necessary functionality in systems that are also intuitive and easy to use.

We’ve covered how top-tier firms use technology to improve communications and create a better experience for investors during fundraising. The next step is to close a fund with your fund management system. And as Henri Pierre-Jacques of Harlem Capital wisely points out, “Speed has become more valuable than capital.”

As a GP during the closing stage, how you share, store, and request document signatures is an opportunity to provide excellent service, accelerate the close, and build a strong relationship with investors.

Using technology to support all of the necessary back-and-forths when signing agreements and sharing documents can provide your firm with a competitive advantage.

To build trust with your investors, this document-heavy stage must be as streamlined and painless as possible.

A critical part of the job as you look to close a fund is to make the experience as seamless as possible for your LPs. The better the experience, the faster you can close.

Close a Fund Efficiently with a fund management system

The close is the most challenging stage in the fundraising cycle, according to Forbes. Broken term sheets can hurt your firm’s reputation, and if your initial investors back out, you’ll be forced to start over.

That’s why it’s imperative to have a central system to store agreements where everyone involved can access them.  You have to provide a secure, buttoned-up closing experience.

Altvia’s LP Portal, for example, allows you to:

• Store LP agreements
• Invite investors to sign agreements online through a secure login
• Run reports to see which agreements still need signing
• Set up notifications to remind investors to complete agreements and to let your team know when everything’s been signed

Even better, with a central system, you’ll be able to capture all of the terms of the agreements, so you can search and reference them for future communications and fundraising activities.

The Secret to Reducing Friction When You Close a Fund

The longer you take to close a fund, the greater the risk of losing investors. Thankfully, today’s central sharing solutions have built-in features that can make the close process fast and efficient.

Look for a solution that enables your firm to:

• Find and share documents quickly, so your team can better manage investors’ questions—and respond sooner.
• Know for certain who’s interfacing with your agreements and other resources, and when you’re dealing with decision-makers or competitors.
• Reduce duplicative work being done by multiple people—and see who has shared which documents with investors.
• Easily adopt compliance standards to meet increasing reporting requirements from investors and regulators.
• Manage the process wherever you are with secure portal access across all devices, especially mobile.

Trying to keep everyone on course during the crucial closing stage can be overwhelming. But if you use the right technology, you can streamline your firm’s processes and close a fund efficiently and successfully—and in the process, develop strong relationships with investors.

And if you want to learn how successful firms have adapted to new business challenges and can close a fund remotely, check out our webinar The Art of Virtual Fundraising.

The Right Technology for Your Fundraising Activities

In order to be successful in raising a new fund, GPs must be able to engage their existing investors but also forge relationships with new investors for whom the fund would be a good fit. Historically, much of the work with fundraising activities have been done in person, since personal connections and trust are fundamental to success in the private capital markets. In fact, not surprisingly, two-thirds of investors say they would prefer to work with a manager with whom they already have a relationship.

Unfortunately, the COVID-19 pandemic—with its lockdowns, travel restrictions, and health concerns—has dramatically altered the private capital landscape and stakeholders’ ability to meet in person. And, even as life starts returning to something closer to “normal,” it’s obvious that there will be lasting effects from the crisis.

Survey Shows Few Fund Managers Have the Technology They Need

Were firms prepared for this type of event, with private equity technology that would allow them to keep working effectively even when working remotely? Generally speaking, most were not.

In a survey of 120 fund managers in March 2020, PEI learned that of those who were planning to launch a new fund, just 17% expected no delay in doing so. This is a clear indication that at the time of the survey, managers did not have the technology to support remote working and their private capital market workflows.

Essential Technology for Fundraising Activities

As fund managers who were caught flat-footed by the pandemic scramble to adapt, they have become very aware of the tools they need to succeed amid the uncertainty of a global crisis. This includes:

• A centralized, easily accessible contact information database

Firms that had been using spreadsheets and group emails to keep track of investor information have learned that that approach is especially ineffective when you have a dispersed workforce and you can’t just walk down the hall to talk with a colleague about a particular investor or fundraise.

As a fund manager, you need a CRM that’s designed specifically for use in this business. Altvia’s CRM solution, stores information on current and prospective investors and the campaigns that have targeted them in a way that makes data highly secure yet easy for authorized users to find and access. That data can then be used to answer questions like, “What are our highest-converting fundraising campaigns?” and “What are the characteristics of our most committed LPs?”

What are our highest-converting fundraising campaigns?

What are the characteristics of our most committed LPs?

What’s more, the system tracks the stages that fundraises progress through. This visibility makes it easier for teams to work together toward a common goal.

• An advanced communication tool 

When a fundraise becomes a virtual process, you need more than a simple mass email tool. Your digital communications are replacing in-person interactions, so they have to be personalized, informative, engaging, and well-timed. Correspond Market Edition enables you to craft and send impactful emails quickly and efficiently to a segmented list of investors, in part thanks to tight integration with your AIM database.

The system also provides accurate, up-to-date information about your outreach efforts. Who has received your email? Who has opened it? How many people clicked on a link in the email? The answers to these questions guide you as you fine-tune your communications to maximize their effectiveness. Plus, Correspond has unsubscribe functionality that helps ensure compliance with the rules and regulations around emailing and spam.

• A virtual data room/LP portal

In difficult times, being able to provide fast access to important files is more important than ever. A virtual data room and portal specially designed for this market, like ShareSecure, not only enables you to provide investors and potential investors with key documents, you can also use the platform to do things like posting promotional videos of your firm sharing the news about a new fund launching.

In addition, you can embed a dashboard that displays your firm’s track record so that current and prospective investors can obtain information about you in self-serve fashion whenever they have a need for it.

Implement Advanced Systems to Improve Fundraising Results

Equip your team with technology to better engage current and prospective investors. Download our free guide, Creating an Excellent Investor Experience below. This guide covers how the market-leading private equity firms are differentiating themselves with technology to attract top investors.

The amount of time spent to raise a fund and perform due diligence has increasingly shortened over the last decade. 

The availability of capital has continually grown in recent years, which is one factor to shortened timelines. The number of innovative and potentially profitable startups has increased significantly as well. And those companies have the benefit of growth incubators and widely publicized events where they unveil their offering to a large audience, forcing decision-makers to act quickly or lose the opportunity.

However, just as powerful as these drivers—and perhaps even more consequential—is the availability of new technology and new tools to streamline the process. Much of the “legwork” previously associated with raising your fund can now be handled by flexible, highly integrated systems that enable you to gather, translate, normalize, and leverage data in a fraction of the time.

This time savings is especially important to smaller teams. As Private Equity International observed in its Perspectives 2020 report, “Fund due diligence requires the greatest amount of time for over half of investors. LPs are notoriously short of time, with very small teams—sometimes just a couple of people—fielding hundreds of calls and PPMs and co-investment requests.”

Effective Communication and Relationship Building

Technology can help you raise your fund faster is the assistance it provides in building and maintaining relationships. That starts with being able to capture the content of your interactions with organizations and individuals. Simplified tracking of notes from calls and meetings, as well as email correspondence, means you spend less time gathering information and more time acting on it.

Our Private Equity CRM solution, also manages the capital-raising process right from the first contact with investors. That includes automatically generating, sharing, and tracking disclosure documents.

The system also enables you to launch tailored fundraising efforts based on previous fund data. Plus, in-depth reporting and data visualization empowers you to monitor the progress of your fundraising communications in real-time, which helps you accelerate it.

Advanced technology streamlines the maintenance of relationships by automating repetitive and time-consuming tasks like sending emails. As fast as deals are moving today, staying top-of-mind is critical. Let a competitor replace you in that spot because you didn’t have the resources to provide the appropriate nurturing and you risk being left behind.

Display Your Fund Track Record

Investors have always been eager to assess a fund manager’s track record before making a commitment. The speed with which parties come to the table today has only amplified that need. Here again, the right technology can be a game-changer.

Business intelligence tools like Altvia Answers allow you to create dashboards that compile data from disparate sources so you can make a compelling case regarding your fund track record. It is said that 80% of the world’s data is unstructured. Bringing clarity to that chaos through a tool like Answers can be critical to raising your fund in a timely manner.

This dynamically updated single source of truth retrieves data on a schedule that you define in order to ensure accuracy and allows you to answer questions quickly whenever they are posed.

Then, with a virtual data room and GP-LP engagement platform like ShareSecure, you can provide investors the information they need to do their evaluation in a way that is very convenient yet fully protected with enterprise-grade security.

Not only does the combination of business intelligence tools and a streamlined information conduit help you deliver a complete investor experience and maintain positive forward momentum, but it can also decrease the number of requests you get from LPs.

Raise Your Fund Faster with Technology

There’s a better way to show off your track record. See how business intelligence tools can create transparency and provide LPs with the information they need to move forward confidently.

Now is the time to leverage technology to improve your operations, and the first step you is learning more about your options. Seeing Altvia in action can help bring its benefits into sharp focus.

There is a “get it while you can” trend happening in private equity. Here is what you need to know.

You are aware that you need “rainy day” private equity funds for your personal finances. And you also likely have one for your business. But there is a growing trend in the alternative asset management world that is applying that mentality to fundraising. 

The economy has been humming along nicely, but for the first time since 2008, the Federal Reserve is expected to cut rates on July 31st. Although it might appear that the economy in the U.S. is thriving, there have been concerns over current trades, which may tie into a slowing global economy. Weathering just a few bumps in the road over the past couple of years, investors, asset managers, and analysts are starting to ask themselves: How much longer can this last?

For those of us who experienced the dot-com bubble, and then the Great Recession, the question lingers not as a passing muse, but rather a warning light in the back of our minds. 

Smart private equity and fund management firms are using this time of plenty to get ahead of the ballgame. As Chris Witkowsky at PE Hub puts it, they’re stashing cash “under the proverbial mattress”.

Private equity closing huge funding rounds

Big name firms like Advent and Blackstone have closed huge funding rounds this year. Advent reported closing $17.5 billion on its hard cap, posting $1.5 billion above the firm’s $16 billion goal. Meanwhile, Blackstone reported $22 billion in its latest round earlier this spring. 

The interesting trend is that many fund managers are electing to save these funds for future investments. They are also coming back for more fundraising sooner than expected, dipping back into the pool to emasse a greater stash. And since they don’t start charging fees until those funds are dispersed, LPs are mostly happy to oblige.

Has fundraising peaked?

Of course, there is no way to know when we’ve hit the peak of this trend.

Some analysts argue that we’re in it now, while others predict plenty of potential for the near future. What all seem to be able to agree on is that now is the time for fund managers to get what they can while the getting is good. Whether they’re going to use the funds now or save them for a later date when the market is less favorable, now is the time to build as much as possible.

Perhaps more importantly, smart PE firms are putting more effort into planning for an eventual downturn. As the U.S. and global economy steams into one of its longest-running expansion periods, many are predicting a slow down in the near future. Managers are looking at the data and learning from the mistakes and successes of the last recession to help them plan ahead with investments in recession-resistant industries. 

What does all this mean for your firm?

The data seems to suggest that what all this means for you has a lot to do with the size of your private equity firm and the amount of capital it manages. Smaller firms are getting a bit more pinched, as the “big guys” are going out to raise more funds faster than before, are successfully capturing a big share of the capital, and then are stashing it away for a later date.

But for a private equity firm of any size, building relationships and data management are key to competitive advantage. Those that have modernized their fundraising and communication processes are experiencing better results overall.

“It helps us to look at our data in a different way. We had been looking at a very high level and now we are able to break it down and be more specific. We have more accurate and more meaningful data — we can see everything more in real-time. We are a lot more efficient,” explains one private equity VP. 

Integrating a data management and/or CRM system built for private equity firms will not only provide your team with a competitive advantage now—while the market is hot. It will also pay dividends into the future in improved decision making, more efficient use of time and data, LP satisfaction, and more.

Is it time to upgrade your fundraising process? Learn how integrating your CRM can give you the boost your firm needs.