Fundraising Fundamentals: NCVA presentation April 2012

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Top 5 Best Fundraising Practices

Top 5 Best Fundraising Practices

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  • 1. Fundraising FundamentalsJennifer JonesCEO, Jennifer Jones & PartnersJennifer JamesVP of Marketing and Investor Relations, Sofinnova
  • 2. 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?”
  • 3. 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
  • 4. 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
  • 5. Average Time Spent Marketing Funds 2004 to 2011Months 2004 2005 2006 2007 2008 2009 2010 2011 Source: www.preqin.com Year of Final Close
  • 6. 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
  • 7. 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?
  • 8. 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
  • 9. 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
  • 10. 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
  • 11. QUESTIONS AND ANSWERSJennifer JonesCEO, Jennifer Jones & PartnersJennifer JamesVP of Marketing and Investor Relations, Sofinnova