Solving the Pandemic Fundraising Equation

It is certainly fair to say that the current COVID-19 environment makes raising funds more challenging, particularly for first-time funds and emerging managers. LPs have needed to adapt their due diligence processes to the new circumstances, and, as a result, the default position may be to delay investments with new teams or to prioritize managers with which they have an existing relationship.

On the other hand, most investors have capital that they need to allocate to private markets, and if they just invest with existing relationships, they are open to potential concentration risk. Many LPs also recognize the return potential of emerging managers (and often have a specific focus of their investment program allocating to them) and are working to adjust their diligence process to allow them to underwrite a new relationship that they have a high conviction about in the event that they would not get the opportunity to meet the team face-to-face. In fact, despite what the industry press would have you believe, in the July 2020 Emerging Manager Report from Buyouts and Gen II Fund Services, 79% of LPs are not changing their emerging manager allocations in light of the disruption caused by COVID-19.

GPs that are quick to adapt their fundraising approach to help LPs overcome these challenges can get ahead of the curve and position themselves to take advantage of this continuing investment appetite from LPs. This should, therefore, be a critical factor in selecting a placement agent to help raise funds in this new environment. To what extent does the fundraising strategy leverage technology to offer a seamless experience to the LP? How scalable is the fundraising operation in the current climate? How does it differentiate itself enough to attract the attention of multi-tasking investors often still operating in a firefighting environment?

We started considering these questions 18 months ago, to respond to the evolving requirements of our investor network, and the crisis has only made our approach more relevant. Our online portal enables LPs to access opportunities in one central venue and to easily filter and fine-tune their investment preferences to find relevant and compelling opportunities. For our GP partners, the portal is a streamlined and secure channel to present their opportunities consistently to a targeted and very focused audience. No emails lost in busy mailboxes, no variations in messaging, each investor sees the same relevant information for a strategy that is a potential fit for their program.

GPs need to adapt quickly to new and emerging investor circumstances to position themselves to be successful today and in the future. Simple steps can be taken to ensure that LPs can be effectively supported via online meetings, comprehensive due diligence documentation, and responsive investor relations. First impressions are crucial, and therefore, the right starting point is a fundraising go-to-market strategy that helps the LP seamlessly access relevant opportunities and for the opportunities to be presented efficiently and consistently.

At TritonLake, we are committed to continuing to improve both sides of the fundraising equation – making it easier for the LPs we partner with to identify relevant investment opportunities, and enabling our GP partners to be as targeted as possible in terms of finding new investors. The direction of travel was already one of increased private market investment demand, combined with more choices than ever – and the current environment has only increased the need for an efficient solution to solve this equation. Our goal is to bring relevant and differentiated funds and direct deals to each investor we partner with in a personalized manner, enabling them to efficiently diligence quality opportunities in order to deploy capital effectively.