We’re keen to challenge outdated views of capital introduction and bust some of the myths around what modern (and digital) capital introduction involves, who needs to use these services and why.
Capital introduction (“Cap Intro”) events were originally held by investment banks in the late-90’s, but events soon became saturated with regulatory complexity and conflicts of interest. However, the capital introduction industry has now modernized, with the emergence of “digital capital introduction” providing virtual marketing, capital raising, and investor relations capabilities fit for the 21 century.
Q1 2022 hedge fund letters, conferences and more
People need to meet in person, however, having experienced the effectiveness of remote and digital engagement – not to mention time and cost efficiencies – many investors expect to supplement in-person conferences and meetings with digital platforms going forward.
We’re constantly hearing that the private markets are becoming more ‘democratic’, that is to say, more accessible, with lower barriers to entry for newer, smaller and even retail investors. Digital cap intro is playing a part in this, by helping level the playing field, allowing smaller or lesser-known GPs to put themselves in front of LPs that they otherwise wouldn’t have access to. For LPs too, it allows them to offer more deal flow to some of the larger institutions that they are typically shut out from.
It allows for more distribution too, giving different groups better access and greater connectivity. GPs and investors are able to broaden their network, both demographically across countries, but also at the levels of investment
On the other side of the coin, some larger managers with an established track record and LP base argue that their own network is working just fine (thank you very much). However, with renewed scrutiny on costs and fees, even the largest and best performing fund houses are seeking efficiency through technology. As all markets become increasingly global, the ability to communicate without the cost and time of flights and jetlag is extremely valuable.
Digital marketing platforms such as Profilir, allow GPs to better tell their story and control the types of investors who can look at the products they have to offer as well as reach new investor bases and pools of capital.
Investors can ask questions and learn more about the funds and the GPs, while the GP can answer questions in real-time and meet with the right potential investors. In this way, a hybrid virtual – real world cap intro model lets managers have more purposeful and productive in-person meetings.
It would be foolish to announce the death of PowerPoint when it comes to capital raising, but investors now have different expectations when it comes to the delivery of information about your fund or company.
In an age in which videos can be viewed anywhere, digital marketing allows senior management (who have become used to seeing themselves on a computer screen) to record their thoughts and industry insights to share with current and potential investors.
Video production is no longer the expensive and time-consuming process it once was – you don’t need an expensive studio to record a video. Podcasts are also extremely effective for sharing longer format thought leadership.
Once content is created, it is key to look beyond your website to multiple digital channels. And from an investor perspective, they want to follow you easily and see updates on their newsfeed – that is the new norm.
Investor relations is undergoing a revolution of its own – shareholders are no longer satisfied with familiar pattern of regulation-demanded reporting. The next generation of investors, both retail and institutional, are digital natives and only know a technology-driven world in which information and services are available on-demand, anywhere. The old methods of investor engagement will have to change to match the appetites of audiences who are used to seeing frequent updates, rich content (including video), and direct engagement. Providing easy, mobile access to information about the company, it’s leadership and its social impact is crucial.
For companies that don’t have a dedicated IR function – or large budgets – meeting investors’ new engagement expectations can be intimidating but hugely rewarding. Companies that respond well to this challenge by engaging with digital marketing and cap intro platforms will be well positioned to maintain their investor interest.
What Next?
Embrace the changes to capital introduction and the technologies which can improve your visibility and connectivity. The lockdowns of 2020 & 2021 have demonstrated that digital technologies are effective mechanisms of investor engagement for all involved – investor, fund manager and company management - and will continue to play an important role in conjunction with physical meetings and events.
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