Fundraising can be a daunting task for GPs, but LPs have some tips to make the process easier.
A pitchbook should NOT be longer than 15 pages, says John Crocker, an Auximos Group managing director. “People show up with War and Peace and expect you to go page by page,” says Crocker, who spoke Thursday at the PartnerConnect panel, “Roadshow Workshop: Dos and Don’ts Advice from Top LPs.” Daniel Feder, Covariance Capital Management’s senior investment manager, private equity & venture capital, says pitchbooks that are too long, some as lengthy as 60 pages, make him “want to get out of this meeting.”
GPs can just provide handouts, Feder says. Firms shouldn’t just stick to the pitchbook during meetings, he says. “Try to get off the pitchbook,” Feder says. “I love that.”
Ben Black, Akkadian Ventures’ founder and chief investment officer, told peHUB on the sidelines of the conference that he’s done “hundreds” of investor meetings. Black says he keeps his pitchbook to 15 slides and that’s it. “People don’t invest because of the pitchbook,” he says. “They’ll give you a meeting but then it’s all about the person.”
How often should you be talking to your LPs after you get funding? At least once a year, Crocker says. Brian Gallagher, a partner at Twin Bridge Capital Partners, estimates that only 20% of the firm’s portfolio comes and “tells us what’s going on.”
Some GPs actually don’t come to LP meetings with returns — for deals or funds– listed in their pitchbook, says Martin Day, a Caledon Capital partner. Day, who spoke on the panel, “Funds – Demystifying Manager Diligence,” says this sometimes happens but not very often. Last week, Day was in a meeting with a GP and firm executives spoke all about themselves and how impressive they were.The GP’s lack of disclosure was apparently due to a spate of recent deals (the last two years) that were high-profile losers. Before that, returns for the firm were good, Day says.
GPs should always list returns for their deals and funds, the execs say. In fact, pitchbooks should have a “track record page” that follows industry standards, says Crocker. “If not, it will cause too much confusion and raise integrity questions,” he says.
The LPs had several other tips to make fundraising easier, including not taking calls during a meeting, not disagreeing with your partner during the pitch and not leaving the LP’s business card behind when you leave.
Here’s a list of top 10 Dos/Don’ts for GPs when meeting with potential investors:
- Don’t stretch a meeting to longer than 90 minutes. The sale is not made in the first meeting.
- Don’t use superlatives in self-descriptions.
- Do ask about the LP’s investment program and approach. And appear interested in it.
- Do be clear about what you won’t invest in and why. It’s okay to have skepticism/self-regulation about areas outside your expertise.
- Do be as transparent as possible about your successes and non-successes (a/k/a failures). Take appropriate credit for both sides of the equation.
- Don’t just address the older members of your audience.
- Don’t direct the first female in the room to “get you a cup of coffee with milk and sugar.”
- Don’t be late.
- Do exhibit a sincere passion for what you do. Make it seem like you’d still come into work every day, even if you didn’t have carry.
- Do make sure that no one on your team falls asleep or appears bored during the presentation.
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