How to Close a Fund Quickly and Reduce Friction
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. 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-forth 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 THE RIGHT TECHNOLOGY
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.
If you’re looking for more guidance on ways to improve the investor experience, subscribe to our blog, here.
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.