Firms have shifted from emails to using portals to inform limited partner clients of capital calls and general investor information, and it has greatly improved the production and flow of information for clients, said forum panelists.
The covid-19 pandemic placed some unusual information demands from LPs on their GPs, the speakers said. For a time, everyone seemed to want constant updates on how covid was affecting their portfolio companies. That led some of the panelists to go through and assign a risk rating – red, yellow and green – to each of their holdings in each of their funds. This way the clients could quickly access the problems in six key sectors, including health and safety, strategic and investment impact.
In the field of best practices, the panelists agreed that it is important for firms to operate from one data lake or template that would act as the “source of truth” for each fund. The aim: consistent messaging. GPs should avoid giving different answers to the same question at all costs.
Another panelist talked of developing an information template and adjusting the template based on the frequency of customer requests. The advantage of the template is that it can be reviewed and examined by all tiers of an organization.
The general feeling at the panel was that there is increasing demand for two types of information: standard information and bespoke or custom requests. Processes had to be in place to handle both types of requests promptly.
“The human action of breaking bread we all miss, but the efficiency of what we were able to do with pre-recorded and virtual live events [is now a fixture]”
One panelist said his firm aims to turn around LP client requests within 24 hours, admitting that it was not always possible.
Another speaker spoke of establishing an investor reporting group made of representatives of the deal, IT and client services teams to plan steps and processes to deliver the information to clients. Such a firm-wide effort helps to collapse the silos of information that spring up. The object, the person said, is to spread knowledge and understanding across the institution.
Other firms recounted great success when they pre-recorded and posted their annual meetings and held Zoom meetings for their committees. Two funds reported more viewers of their virtual events than attendees at the normal on-site events. Noting the incredible efficiency of virtual meetings, funds are now looking for some way to combine both on- and off-site elements.
‘To Zoom’ is here to stay
At another panel, speakers noted that virtual meetings are now embedded in the communications strategy of their office and among the deal teams, despite a gradual return toward in-person meetings as covid vaccination numbers climb.
Panelists agreed that “to Zoom” was among the permanent changes to their operations, even as some working patterns resumed.
“We’re going to consult with our LPs” about how best to communicate, said one CFO. “The human action of breaking bread we all miss, but the efficiency of what we were able to do with pre-recorded and virtual live events” is now a fixture.
Another explained that her firm pre-recorded briefings and updates, often in segments “so we could take them and use them in other areas… You felt like you were on TV for three or four hours with consultants and investors at the same time and not having to worry about plane and train schedules. It really didn’t slow down any of the fundraising and investor meetings.”
“[Pre-recorded briefings] really didn’t slow down any of the fundraising and investor meetings”
Another said her firm had reviewed “how much of our portfolio board meetings we should do (annually) in person… we could do at least one or two virtually and two in-person.”Virtual, said one private credit advisory firm COO, means “the cost per at-bat has gotten less.” The savings in time and money on first-time screening meetings was the greatest benefit of virtual fundraising and one they would continue to employ.
The CFO of a mid-market private equity firm that recently closed its fifth fund said the fundraising and due diligence process sped along during the pandemic. “We can do three to four calls in a day,” she said, compared with that many physical meetings in a week.
Emerging long-term advantages of virtual fundraising include the ability to share and refer to documents easily, as well as the ability to bring larger numbers of partners onto fundraising calls. Pre-pandemic, it was more difficult to get schedules to align.