Investor relations professionals dealing with an increase in questions and demands from LPs should prepare to adapt to a communications model that emphasis near-constant contact.
That was the message heard during a panel on fostering confidence among investors as part of the 2009 PEI Media Investor Relations and Communications Forum in New York. One of the panelists, former Morgenthaler Ventures investor relations partner Spencer Timm, said he believed the industry is moving toward an investment management model.
“In that business the entire organization is built around marketing and sales, and you are always looking for investors and the contact and information flow are getting constant,” he said. “We do e-mail blasts to our LPs on any significant action that may affect the firm or its investments and we are trying to maintain those contacts non-stop. You have to be maintaining and strengthening relations with your investors between fundraisings, and that effectively says you are always fundraising.”
The rest of the panel, which included Nicholas Mead, director of investor relations for natural resources-focused private equity firm The Sentient Group, and James Rutherfurd, managing director of media-focused investor Veronis Suhler Stevenson, also agreed on the importance of making sure that whoever is representing the firm to investors – from deal makers to GPs – is telling the same story and is not raising more questions in the minds of investors. Rutherfurd said it is better not to put some GPs in front of an audience rather than take a risk.
Panelists also highlighted the importance of the fundraising process in learning important information about specific things that an investor requires, and the importance of personal relationships in keeping investors tied to the fund.
“If [an investor] has to choose between two GPs that are very similar, the one they are going to go with is the one where they have good personal contacts,” Timm said.