How to Close a Fund Quickly with Your Fund Management System

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.

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 Salesforce.com 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 Salesforce.com 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 Salesforce.com — 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.

fund management system