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Fundraising FundamentalsJennifer JonesCEO, Jennifer Jones & PartnersJennifer JamesVP of Marketing and Investor Relations, Sofinnova
LPs’ Thoughts: “Existing investors must come back and “Make sure you have “Don’t bother to fundraise take 50% of the fund. conversations with all unless you have had some It shows your LPs before you go exits in your last fund-that commitment.” out. Know where they means at least one and stand as it relates to hopefully two that provide commiting to you.” at least a 2x.” “I’m not sure I even “Many funds are not LIKE venture capital as even interested at all in an asset class today. I life sciences. It’s just can make a lot better taking too long to get returns elsewhere. results.” Venture just doesn’t have the returns.” “Your fund returns are very good! Why dont I ever hear or read about you?”
Funds on the Road over Time: 1/2008-1/2012 JAN-08 JAN-09 JAN-10 JAN-11 APR-11 JUL-11 OCT-11 JAN-12 Source: www.preqin.com
Breakdown of Funds in Market by Fund Type Real Estate Venture Buyout Growth Fund of Infrastructure Distressed Mezzanine Natural Secondaries Other Capital Funds PE Resources Source: www.preqin.com
Average Time Spent Marketing Funds 2004 to 2011Months 2004 2005 2006 2007 2008 2009 2010 2011 Source: www.preqin.com Year of Final Close
Top 5 Best Fundraising Practices BestDevelop and communicate a compelling pitch for LPs Recognize the importance of standing out among similarly situated funds Practice Weak 10 year VC performance numbers are making limited partners cautious Getting your pitch right is vital – make it tangible LPs are short on time—if it isn’t compelling, they are moving onTake action: Get it right in 15 Slides Demonstrate your differentiation and an “edge” – with both words and numbers You must clearly explain what you do, how you do it, how it produces results — and how it is repeatable in today’s markets Bring your passion to the page – and find a way to connect
Top 5 Best Fundraising Practices BestRecognize that the golden days of“Venture Allocation” are long past Practice Most LPs have built out their portfolios—very few are trying to fill a “venture bucket” Investors are absolute and opportunistic—you will be measured against all other options LPs are not your LPs for life anymore—they are digging in and making hard choicesTake action Help your team show performance in its best light People are looking for diversifiers and things that are additive to what they already hold Define. Define. Define. Be specific about where you play and what your typical deal looks like Get beyond VC performance—how do you stack up against the public markets?
Top 5 Best Fundraising Practices BestGet your back office ready – it’s going tobe a bumpy ride Practice Investors have a lot of choices – don’t make diligence more work than it has to be Take a hard look at your team’s strengths and weaknesses – and address them Don’t assume you know what LPs want to cover – ask them Being ready for anything is a competitive advantageTake action Make a check list You already know 80% of what you will be asked - get it ready Build a rock solid data room – in IntraLinks or another trusted web product Create a “slide library” Prepare specific agendas in advance of meetings Commit to quick turnaround times for LP requests and stay out in front
Top 5 Best Fundraising Practices BestGet your timing right LPs need more notice than ever about your raise Practice Existing support is key to bringing in the new money Momentum must be built throughout—air traffic control The all important form D Manage the mediaTake action Get into the weeds to know how and when you will cross the finish line Have we talked to existing LPs? What timeline can they agree to? When will we launch? Close? What will be on the cover? Form D strategy? Press strategy? Create an overall timeline to manage against
Top 5 Best Fundraising Practices BestBe Consistent and Transparent ThroughoutYour Process Practice Are LPs hearing the same information and data from your team? Will your data hold up to detailed scrutiny? Is your story consistent with what LPs will hear out in the VC echo chamber?Take Action Create planning docs that will keep your team on the same page Keep in contact with CEOs, existing LPs, and co-investing GPs to ensure a consistent message Know your weak spots and tough stories. Be prepared to address them in a straight forward, honest (and quick!) manner. Meet weekly, every week, until the last LPA docs are signed
QUESTIONS AND ANSWERSJennifer JonesCEO, Jennifer Jones & PartnersJennifer JamesVP of Marketing and Investor Relations, Sofinnova