The Key to Maintaining Strong Investor Relationships Virtually

Investor relations technology stack checklist

Private equity firms today are continuing to adapt to lasting changes in the industry brought on by the pandemic and to zero in on how they must conduct business going forward in order to be successful.

Those changes—far fewer in-person meetings, for example—have created a number of operational challenges. One of the most pressing is finding a way to maintain strong relationships with investors in what has always been a very people-oriented industry.

For many forward-looking firms, the answer is investing in a technology stack that supports meaningful interactions and enables strong investor relationships.

This, of course, is a significant change for organizations that, in many cases, are still managing portfolios with spreadsheets.

LPs today are increasingly expecting easier and more complete access to information, both when deciding whether to invest in a fund and when managing their portfolio. As a result, firms that choose not to embrace technology will be at a competitive disadvantage.

On the other hand, firms that actively seek and implement the right tools for relationship building and investor relations will enjoy benefits in many areas.

Manage investor contact information more effectively

Attempting to keep track of investor information using emails and spreadsheets is inefficient at best, and in a worst-case scenario, can result in the loss of data that costs your firm business.

In order to have clean, accurate, up-to-date information free of duplicate records and other unhelpful data, you need a purpose-built, centralized private equity platform.

In fact, this system shouldn’t just be a major component of your investor relations efforts, it should be the foundation for them.

A capital-markets-specific tool enables you to indicate investor communication preferences as part of your investor services workflow. This is essential, as to how you reach out to investors can have a major impact on how receptive they are to your messaging.

A platform like Altvia helps your team build reports and segment lists based on factors like:

  • When you most recently contacted investors
  • Investors who are committed to a specific fund
  • The number of your emails that have been opened or engaged with

Email communication for investor relations

Reach out to an investor just a little too late and they may have been lured away by another firm. Consequently, it’s important to have a platform that generates personalized email templates and enables you to get high-quality communications out quickly.

And while there are many email tools on the market today, you need a system that makes it easy to send industry-specific information like Capital Call notices, PPMs, K1s, and distribution notices.

A solution like Altvia gives you that capability along with powerful integration to your CRM. That seamless connection enables the automatic storing of information like details on email opens and click-throughs, which you can use to further tailor your communications. It can also be helpful during fundraising.

How a data-room & LP portal improves investor relationships

It’s common for investors to want more information in uncertain times. We saw this in the financial crisis of 2008 and again during the COVID-19 pandemic.

In fact, PEI surveyed 120 fund managers about their communications with investors, and, not surprisingly, 61% said that LPs have been requesting more frequent reporting about their portfolio companies in recent times.

What’s a better way to handle these requests instead of responding to each individually?

Empowering investors to answer their own questions with a cutting-edge LP portal and data room like ShareSecure. Simple document sharing sites like Dropbox and DocuSign may work well for other industries, but they aren’t designed for the nuances of the private capital industry.

A proper data portal must have enterprise-grade security to protect the sensitive data it holds—everything from documents to video files, which are more important than ever with the new focus on fewer in-person interactions.

The portal should also give your firm a high degree of control over user permission customization and have digital signature functionality.

And perhaps most importantly, an LP portal should provide access to a visual dashboard where investors can check on fund performance and answer many of their own questions without having to contact your investor relations team.

Learn More About the Growing Importance of Private Equity Technology for Investor Relations

Is your private equity technology stack providing your investor relations team with everything needed to optimize investor services and support current and future growth?

Download our free guide, How Private Capital Firms Focus On An Excellent 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 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.

investor relations