Venture Capital Investor Relations

It’s often the case that General Partners are at one of two sides of the Investor Relations spectrum. låna 20000 Either the GP wishes to improve their Limited Partner relations, but doesn’t know how to go about revamping this area; or the GP is damaging their limited partner relations and totally oblivious about it. So, even if you believe that your team is satisfying your limited partners, it’s worth looking reviewing. Fortunately, Denise Palmieri at peHUB specializes in investor relations and offers her seven tips for improving limited partner relations. I’ve added my own thoughts on the advice:

1. Start Over: Reexamine the way you communicate with your Limited Partners. Ask yourself: “How do you communicate with them? Do you actually talk with them or is it simply a reporting function and you only actually speak with them when you need their renewed investment for the next fund?” Limited Partners will respect the fact that you are taking steps to improve your relationship so don’t be afraid to directly ask them what you can do to strengthen their trust in you. Take that feedback and work to address it, you will do further damage to the relationship if they tell you what you can do and you ignore it.

2. Commit Your Time and Effort: If you are serious about limited partner relations then you have to incorporate this area into your routine by setting aside regular time to build the relationships. Palmieri suggest going beyond required reporting and the annual meeting, and keep up informal communication with your investors. Limited Partners know what you are required to do and by doing more than that minimum you are showing that you care about them and their input. Emphasize the idea of a partnership–after all, that is what you and your investors are–and by keeping them involved in the decisions you promote this relationship and removes some of the shroud from your operations. You can also benefit from hearing the LPs perspective, and some LPs may contribute their network of contacts and experience to the partnership.

3. Be Honest and Forthright. As Palmieri puts it, “Don’t play hide the ball or sugarcoat bad news.” GPs can do irreparable damage to their Limited Partners relationships by being dishonest or covering up failures. Limited Partners may look past poor performance but lying about it can expand what would have been a minor setback. Lesson: be honest and direct with your Limited Partners.

4. Offer Sincere Appreciation. Any top performing fund can use a little humbling and nothing can take you down a peg as losing a valuable client because you put other aspects above LP relations. Even if your fund is bringing great returns, you should never lose sight of who gave you the money in the first place. Your fund may be doing great now, but that might not be the case next year and you need a strong relationship to keep those Limited Partners with you through thick and thin. So show your appreciation for their investment, loyalty and advice.

5. The Grass is not Greener. Although you may have other Limited Partners that you can turn to, it’s often easier to work toward satisfying your existing investors and building that relationship. It’s important to balance finding new investors for your next venture and keeping your current ones happy. Limited Partners won’t appeciate you neglecting their current committment because you’re working on impressing the next group of investors.

6. The Buck Stops Here. There are a lot of factors that combine to produce poor returns to investors, but inevitably a share of that responsibility falls on you. Palmieri notes, “Humility and self-reflection goes a very long way in an industry filled with uber-confidence and differentiates you from the blame-layers.” Limited Partners should know that there is never a fund that will always produce high returns every quarter. Simply explain what happened, say you’re sorry and try not to make excuses.

7. Flexibility is Survival. When negotiating terms with your investors, put yourself in your Limited Partners’ shoes. Try imagining your reaction if a prospective portfolio company asked for those terms. Really, your role as an investor in portfolio companies is similar to your Limited Partners to your fund. “Flexible relationships with mutually aligned interests are the ones that survive in all conditions.”

Going the extra mile with your clients can really make a difference in retaining your investors. Taking concrete steps to improve your Limited Partner relations is crucial in a time when investor confidence in General Partners is so weak.