60 Seconds with Sixpoint: Top 3 Ways To Creatively Approach LPs

Are you being flooded with information about COVID-19, issues and responses? Many LPs have privately told me that GPs are beginning to emphasize quantity over quality in their updates too. In recent issues of 60 Seconds, I’ve tried to caution against sending repetitive communications to LPs, but cutting the lines of communication altogether isn’t a good idea either. The optimal approach is to avoid parroting the general commentary on the impact of COVID in favor of more granular and tactical commentary. Create bespoke content that can help you rise above the noise. Here are three examples that may help shape your approach:

(1) Select one or more assets in the portfolio and build a set of 1-pagers demonstrating how your firm’s unique playbook made a positive impact on the company’s performance during COVID-19. Although this may be easily confused for a typical portfolio company case study, the tone and style of this document is different. Feel free to reach out and learn more about how to craft your message in more detail. For one, make sure the piece directly ties the operational levers you pulled to your firm’s “edge” or stated differentiation. Spotlight how the asset is currently performing, what specific challenges the company faced as a result of COVID and how you remedied the situation; or plan to. You can also highlight how your value creation team has accelerated the growth of a business that is experiencing strong tailwinds from COVID or alternatively, you can profile an asset which might otherwise have struggled but for your intensive operating approach. Keep the format to a page and be judicious with what you include. Leave room at the bottom to discuss your restart plan.

(2) Create a deep-dive into a sector or sub-sector’s performance. It’s best to sequence this piece to follow an asset-specific bring-down. This should be a quick primer on why your sector or sub-sector is performing well or expected to perform well coming out of quarantine. Will the demand be pent up, pushed out or a victim (or beneficiary) of a secular shift in demand? Again, use this opportunity to highlight how your investment style and strategy best positions you to respond to the relevant trend. Especially for companies experiencing a positive bump, help LPs understand whether these new drivers of growth are sustainable.

(3) Focus on your pipeline. Remind LPs you are a prudent steward of their capital and that you get paid to take managed risk. LPs have come to believe that this is a buyer’s market, but the question is, how do you set yourself apart from other managers with plenty of dry powder pursuing similar deals? For example, if the strength of your sourcing approach is your network of intermediaries, break down how you are staying in front of them to ensure you get the best look. Highlight how your diligence process or ideal company profile has changed and how you are communicating the same to your industry contacts.

The ABC of marketing (always be communicating…) is an integral part of the relationship management and relationship building process. Provide your LPs with strategic insights into your operating approach to help them develop the confidence that you are the best partner to navigate the current market.