Of all the elements that make up investor relationships, the most important is trust. In the digital age, we don’t see investment as one organization handing another a briefcase full of neatly stacked banded bills, but that is essentially what this transaction is. Bring that visual to mind and it becomes even more clear why trust is so important.
What investors need to be confident you are taking the right actions as the steward of their capital is transparency.
One of the definitions of transparency in the Cambridge Dictionary captures this idea perfectly:
a situation in which business and financial activities are done in an open way without secrets so that people can trust that they are fair and honest
However, by some estimates, just 7% of LPs rate GPs’ transparency as “Excellent.” How can your firm provide transparency, instill trust, and also reduce risk and exposure by keeping investors informed about developments at the companies that make up their portfolio? You achieve all those objectives by using a purpose-built private equity communications platform.
The Right Tools for Creating Transparency
Effective investor communication is not, of course, about the frequency of communications or the quantity of information in a particular message. It is, as Diligent Insights points out, about providing investors with the right information at the right time. Delivering on that expectation requires a specialized toolset.
For example, deal announcements and other important information should be sent out in a timely manner and in a way that maximizes the efficiency of busy team members. A solution like Altvia Correspond Market Edition provides the ability to queue up and send out emails through a highly intuitive interface. It does this, in part, through tight CRM integration. The system helps your team add contacts, keep mailing lists accurate, and generate emails to send to up to 50,000 recipients. That includes automatic de-duplication, advanced scheduling, and data privacy and compliance features so you can prepare a blast and move on to other tasks.
To generate email content that is interesting and informative, you need a powerful business intelligence solution to explain fund performance. The data analytics system must be able to pull information from multiple sources, normalize it, and present it clearly and concisely. In addition to providing material for email blasts, the solution should enable you to perform complex analyses at a moment’s notice, like Altvia Answers does, so your team can react to investor inquiries quickly and reassure them with a rapid response.
In order to support productive interactions with investors, firms also should have access to an easy-to-use and secure virtual data room and GP-LP engagement platform. With a system like ShareSecure, you can provide investors with the documents, multimedia presentations, and other files they need to accurately assess fund performance. For example, some GPs create videos on their portfolio companies and share them with investors as a way to show them where and how their money is working.
Transparency as a Competitive Differentiator
While increased transparency is a top priority for investors—not to mention a focus area for regulators—it is a concept that many firms have yet to adopt. Enabling a high degree of transparency using the right technology can set your firm apart, and that differentiation can produce many benefits.
First, transparency about your firm and your track record can help you close more deals, with your trustworthiness being a major factor. A commitment to openness can also help you retain investors who are constantly bombarded with enticements from other firms. And finally, transparency can enable your firm to raise more funds.
Best-in-class firms do more than simply maintain open lines of communication, they go above and beyond to ensure their operations are transparent to investors and other stakeholders.
Get more insights on how to create transparency around firm analytics, gain trust, and improve the investor experience in general by downloading our informative guide on The Four Stages of the Investor Experience now. Or, contact us to discuss our platform for raising and deploying capital, managing the full lifecycle of investor relations, delivering business intelligence, and ensuring a positive experience for stakeholders.