‘Digital cap intro’ tools more important than ever, even amid a return to ‘normal’

Digital fundraising platforms continue to transform the way managers develop their businesses, even as many return to in-person relationship management, according to an Apex Group executive.

Fundraising activity is expected to continue growing this year, and GPs are looking to so-called ‘digital cap intro’ platforms to expand their reach with potential investors.

In-person meetings and networking events were always the primary way of getting introduced to potential new capital sources, pre-pandemic. But the approach was always time and resource intensive – something many thought was the simple cost of doing business. And events put on by prime brokers had a narrower scope, either focusing on a particular asset class or an investor group.

But Blair McPherson, head of capital introductions at Apex Group, said that the capital-raising environment is evolving.

“Cap intro used to be very event driven, but it was also very selective, in terms of who was invited to these events. It was hard for newer managers or even certain investors to penetrate these events. There were digital platforms being explored or launched a few years ago, but the pandemic really forced the digitization of cap intro,” McPherson said.

The pandemic exposed the benefit of virtual meeting platforms for fundraising, connecting managers to more investors in more locations than would be reasonable to do in-person. Those benefits continue to ring true for managers. “With digital cap intro, PE managers don’t have to focus on traveling to a lot of meetings that don’t pan out. There is a faster connection and capital deployment that lets managers focus on their funds and their portfolio companies,” McPherson said.

“On the digital platform, GPs can better tell their story and control the types of investors who can look at the products they have to offer,” McPherson said. “Investors can ask questions and learn more about the funds and the GPs, while the GP can answer questions in real-time and meet with the right potential investors. This lets managers have more purposeful in-person meetings.”

And, as the market and its players become more global, the ability to meet with more investors in more locations is a plus for private equity managers – especially emerging managers who have limited reach.

“There are a lot of funds out there and you want to give them the ability to build a relationship with more potential investors who are looking for a manager with a particular investment strategy,” McPherson noted.

All this doesn’t mean that managers have completely disposed of in-person meetings. Digital platforms are useful for building new relationships and maintaining contact, but many managers and investors are excited to get back to in-person meetings and events. And face-to-face interaction remains important for long-term relationship management, resulting in a hybrid cap intro environment.