How to avoid missteps in the Private Equity dance

I had the pleasure of having lunch with an Investment Director for a mid-sized Private Equity firm this week.  Over very good spicy tuna, we talked about the market recovery and the valuation trends in clean tech, life sciences and technology companies specifically.  Given his expertise in venture capital, M&A evaluation, contract negotiations and venture debt, there was certainly a lot to discuss.

Even though compliance and reporting requirements were ever-present concerns for the firm, fundraising was top of his mind that day.  With a new fund in the works, it was fascinating to hear about the delicate dance that takes place between fundraiser and a prospective investor.  As primarily high net worth individuals facing many potential investment options, it soon became clear that the role technology can play in fundraising is a delicate, but important, one.

“Five minutes trying to figure out how to reset a password, and he’s gone!” my lunch guest bemoaned, referring to the patience level of his typical prospect.   “Just email it to me” is a common refrain when a VDR technology doesn’t work or is too complex for busy users.

On the flip side, what the PE firm and my investment director lose out on when they fall back on “email attachments of last resort” is very valuable information. Has the prospect opened the documents and when?  Has the prospectus been downloaded or shared with others? All very useful indications of level of interest in the opportunity, or not.   Very important information, such as NDAs and Accredited Investor documentation, can easily get lost or overlooked in the world of unmanaged email attachments.

With a good virtual data room at hand, an investment director or associate can upload important fundraising documents in a few clicks.  He or she can send a link to prospects and have the VDR automatically take care of invitations and passwords.  The potential investor, private or institutional, can get all the information required from a centralized location – accessible wherever and whenever needed. A reliable and intuitive virtual data room makes the Private Equity fundraising process easier for everyone involved – both for investment partners and prospective investors.

And the same system should be perfectly suited for Capital Calls and LP reporting after the deal is done.  Secure and easy to use.

As the green tea ice cream arrived at the end of our meal, I had better insights into the nuances of raising millions of dollars, and my lunch date had a better solution to his challenges.

Debbie Stephenson

Debbie Stephenson is a former Content Marketing Manager at Firmex.