60 Seconds with Sixpoint: Have You Been Following The New Rules of LP Communication?
Since the onset of COVID, I have written extensively about the need to be creative in how you approach and communicate with new and existing LPs. Gone are the days when “you might be in town” as the excuse to schedule a meeting or where conferences and AGMs provide for the opportunity to impress your LPs and build a lasting relationship with them. Early on, we advised all our sponsor clients and friends to stay connected with LPs by creating forums for regular exchange and supplementing these “live” forums with substantive analysis around the portfolio and your team’s strategic responses to COVID. Today the market appears to have found its footing and LPs are expected to start making commitments to sponsors they may have only met virtually. This means completing the entire investment cycle remotely, from the first video meeting to the on-site and final operational due diligence. Below are some of my recommendations for establishing closer relationships with LPs and virtually bringing them into your office to “touch and feel” the culture and processes of your firm. Here are three actionable recommendations (from recent services on behalf of our clients) that may help you bridge the relationship gap:
1. Consider producing a 20-30 minute “feature” about your firm. The film would roll live from your offices and feature some or all of the investment professionals on your team. This format provides the LPs with a peek through the window of your firm. The video should creatively spotlight your firm’s culture, perspective on the market and commentary around firm initiatives; including how you are managing your interactions and activity day-to-day. You should discuss any changes or enhancements to your operational diligence process, new sourcing capabilities in the COVID environment or initiatives to enable greater diversity and inclusion. You should also consider including a virtual visit to one of your portfolio companies where you might highlight a strong performer in your portfolio without needing to spend 30 minutes in an intro meeting on the full track record.
2. The second tactic is to remove the exclusive attention on your fundraise and host a sector-focused deep dive. Zero-in on why your sector is more recession-resilient or resistant than others and what sub-sectors or themes you are tracking in the current environment. LPs are always evaluating new areas of interest but in a post-COVID world, they are shifting their focus even more rapidly. Take a step back and articulate why investors should be excited about your strategy. In so doing, you can position yourself as their strategic partner for exposure to that sector. Ultimately, the goal of this session is to catalyze these introductory conversations and move LPs closer to a commitment. This deep dive can lead to a more formal due diligence process, or at least allow you to gain mindshare in a hyper-competitive fundraising market.
3. Finally, sometimes there is no substitute for live engagement. Subject to your personal level of comfort, proper precautions, firm policies and State and Federal guidelines you might be able to meet live with LPs in a casual setting. On the West Coast, some GPs are organizing outdoor “walk and talks” with investors. Other LPs in the Mid-west or East Coast have even attended socially distanced, intimate outings with sponsors. Effective gatherings with six to eight LPs include golf outings, fishing excursions and simple outdoor luncheons with popular speakers. There is no better substitute for establishing a relationship with an LP than engaging with them in person in a creative and COVID-friendly way. However, it is important to do your homework upfront and think outside the box about how you might be able to do so in a particular region.
I’d love to hear what’s worked for you and as always, don’t hesitate to reach out if you’d like to know what’s worked for us here at Sixpoint: firstname.lastname@example.org