Fundraising can be tough. It’s an extensive, drawn-out, and resource-consuming process for GPs, and the less well-known we are, the harder it is.
Don’t we all wish we could raise a new fund and that it would be oversubscribed and beyond the hard cap in just a few months? Wouldn’t it be great to have the luxury of being forced to turn away LPs? Sounds like the best problem to have, and being a globally recognized “brand name” GP can really lead to this “problem”.
Certainly, there are a lot of GPs out there who have strong and proven track records, a broad and stable team, industry expertise, and myriad other impressive qualities, but becoming a brand name is something else entirely.
Standing out in a crowded market
A GP can become a brand name over time after building up a repertoire of qualities, such as:
the firm has an extensive track record and the GP can show superior returns (we’ll get into this in more detail later) across multiple fund generations that go back many years,
the firm previously invested in key landmark deals that performed extremely well, or even if they weren’t hugely successful investments in terms of returns, they still received a lot of positive publicity and therefore, became a famous household name
the firm invests in a relatively less-saturated market, compared against peers (for example, the number of GPs investing in global mega buyout transactions vis-a-vis the US middle market)
the firm already has a broad and loyal LP base, which has invested with the firm for multiple fund generations, and most of the said base consistently re-ups in the GP’s next fund.
But what does this mean for GPs who are strong in many areas, perhaps even have a couple of the attributes described above, but don’t have the panache and grandeur of being a household name? Leverage. No, not leverage as in debt, but rather the leveraging of your own strengths on a platform that scales your impact on LPs.
First, before you can leverage anything, the key is to identify your own strengths. When it comes to what matters the most to LPs while reviewing a GP as a potential investment opportunity, first and foremost is track record. I mean, we’re all familiar with that moment in the meeting while you’re still introducing your firm, and the first thing they do is flip to the track record page of your marketing slide deck. Since it is so vital, the best place to start is by identifying your track record strengths.
Whether it's fund net returns or better yet, deal level returns that are underpinned by strong operating financials of underlying portfolio companies, you should demonstrate these strengths to LPs in an easy-to-digest and convincing format. This makes you stand out from the crowd.
Dr. Daniel Schmidt, CEO, CEPRES
Data is Always Key
Whether it’s the returns of certain deals in certain countries, industries or transaction types as the case may be, it’s all about having empirical data to prove the validity of your strategy. On the risk side of the equation, if your strategy emphasizes low risk in the types of deals you pursue, prove it to LPs by showing them your deal financing structure, deal pricing, and operating growth. Also, make it clear to LPs that you don’t only talk on paper in the PPM about your ability to add value to companies and your experienced team of Operating Partners, but you also clearly show them the actual value creation bridge. Across your portfolio, data on funds and individual deals prove with real quantifiable evidence that is simple for LPs to access, view, and digest.
But of course, strength is always evaluated on a relative basis, so it is imperative to use real empirical market data of comparable peers in the private markets asset class, in particular data that you can customize and compare yourself against. Demonstrate to LPs that your track record outperforms, not only at the fund level but also at the deal and company operating level. This is yet another way of making yourself stand out from the market crowd
Leverage - Scale your strengths!
Next is the leverage part. Now that you’ve identified your strengths and how to highlight them, the next question is how to do this practically. Reliable data is hard to come by in the private markets, you want to ensure that you’re only being compared against the right peers, and you never want to give away too much information. That’s where CEPRES comes in.
Fundraising with CEPRES
There is a practical, efficient and effective alternative that doesn’t rely on being a brand name and standing out in a crowded GP market, where you can still successfully raise LP capital. That is through the empowerment of GPs by leveraging innovation and modern connectivity for the Private Markets.
On CEPRES, you can scale your strengths across a digital investment network with thousands of institutional LPs, around the globe, who are consistently connecting with GPs, conducting due diligence analyses, underwriting their investments, and managing their portfolios of funds, all on one highly secure and consolidated platform.
Tell your story and demonstrate your strengths with the right track record tools for the job. Include your PPM, marketing deck, DDQ, case studies, and other files, all in one comprehensive, private, and easily customized dashboard. Then, you can share access to your dashboard with LPs of your choosing, and still maintain full control of your dashboard and data.