Four Areas to Consider During the Fundraising Process

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.

LP Experience

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 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 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 — 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.

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