The world of fundraising and pitching has changed considerably for entrepreneurs and fund managers since the pandemic. Raising capital from limited partners is in a state of flux and duality. Consequently, fund managers must now master pitching both virtually and in person.
However, this is not necessarily a bad thing. Fund managers can now be in contact with and pitch more limited partners than before. Though some limited partners are exclusively investing in fund managers they meet in person, the majority of LPs are open to a hybrid approach.
Typically, the online to offline meetings is now around 70% to 30% respectively. LPs will usually meet with fund managers remotely and will then request an in-person meeting. LPs who have not taken virtual meetings have been shut down by the pandemic and are slowly starting to allocate capital.
At VC Lab, we’ve helped many venture capital firms raise funds from LPs and launch fund successfully around the world. Here are some of the best practices we’ve found on pitching LPs both remotely and in person.
As stated before, when first engaging with LPs, usually a series of initial remote meetings is the norm. When pitching virtually, you can considerably increase the volume of LPs you are talking to and should strive to meet with as many as you can.
You should expect these meetings to last 30-minutes, though you should try to budget an hour of your time. Typically after 3-4 meetings, some sort of commitment from LPs can be expected. Whether that is to meet in person or something else depends on the situation and the LP.
As you would do in person have all your fund documents ready to present. It is better if all the partners in the fund are present at these meetings. It’s important to cover the basics before meeting your LPs. For example, it’s a great idea to practice your pitch multiple times, check your internet connection, and make sure you are not disturbed. You should own your pitch deck and be able to present it fluidly and answer any questions the LPs may have. When answering questions try to keep to the topic and provide brief and concise answers. Also, make sure your camera and microphone are of high-quality and that you have a neutral background.
It is not guaranteed that LPs you are speaking with will follow through on commitments. It is usual for a relatively moderate percentage of LPs to not meet their commitments when you’re closing your fundraising. So once again, you should speak with as many LPs as you can both virtually as well as in person. When talking with LPs remotely, you should try to get as many leads as possible and gain some level of commitment to meet in person.
We’re seeing a slow and gradual shift back to in-person meetings, though this number post-pandemic will not go back to 100%. When meeting LPs locally and in person, make sure to allocate your day for the meeting. However, you typically won’t meet all of your LPs in such a way. Consequently, you should endeavor to make a list of your LPs and discuss meeting in locations where both you and the LP are comfortable. In these discussions make sure both parties come to an agreement with regard to Covid protocols.
A neat way to hack this process is to schedule your meetings with LPs around events and conferences such as Slush, SXSW, TechCrunch Disrupt…etc. This is also a good way to frame your ask. If said LPs are also attending the conferences, it gives you a higher chance of meeting them and getting funded. This method will allow you to meet a larger percentage of your potential LPs and save time flying back and forth for one-off trips enabling you to focus on other important operations of your fund. In these conferences, you can also be introduced to and meet new potential LPs and build new relationships to add to your existing ones.
When preparing to attend such an event, it is advised to be provident. Try to brush up on the local etiquette and covid protocols. For example, some conferences may require you to present a Covid passport. You should also have an ample supply of business cards and your fund documents. Create budgetary expense plans with regard to your stay and travel. Plan your trip and pick the specific events you will attend, then inform your LPs of the dates you will be available.
Finally, if you are going to an event with lots of LPs, creating your own event or after-party can go a long way. You can bring together your potential LPs and differentiate yourself from other fund managers. It is also a great way to expand your network and build credibility in the ecosystem.
This content is provided by VC Lab, the venture capital accelerator.
The free 16 week VC Lab program provides guidance, structure and a network to complete a fund closing in 6 months or less. Since mid 2020, VC Lab has helped launch 83 venture capital firms around the world.