Investor relations dynamics are ever-evolving. Right now, changes are being driven by Limited Partners (LPs) who want more involvement as well as financial and high-impact returns. General Partners (GPs) are rapidly adapting in line with these expectations.
We heard this story—and more— during a recent discussion with Speedinvest’s Fundraising Manager, Katharina Porenta. We also gained a more granular understanding of investor relations dynamics and what it takes to cultivate long-lasting relationships. Here’s a selection of the insights she shared, along with timestamps to help you dive deeper at key moments:
When raising a new fund, start with your strongest investor relationships
Speedinvest is a pan-European pre-seed, seed and early-stage tech startup investment firm founded 12 years ago and headquartered in Vienna, Austria. Today, the firm invests in six different sectors, with LPs located across Europe, the Middle East, and the United States. Currently, they have roughly 1.2 billion Euros assets under management, with their latest fund coming in at over 500 million Euros.
Reflecting on the early days of their first fund, Porenta explained how the firm really leaned on their strongest connections. She said, “You always want to start with your local network,” and this meant the firm’s LPs were from a first degree network of founders and referrals. She said, “Even today, about a third of our LPs are domestic” and advised funds to make the most of their home networks before venturing further afield.
Open and transparent communication fuels LP retention over time
Now more than ever, effective communication should be part of a firm’s fundraising and LP strategy. Porenta said, “What’s important in retaining LPs is a certain honesty and communication.”
In reference to some of the common challenges that the ecosystem has faced over the past year and a half— such as struggling to raise capital and keeping investors satisfied—Porenta stressed the importance of transparency, even when conveying negative news. She said, “We always try to communicate why something has been valued down and why we've adjusted a valuation, then also show them what we're working on currently to change that.“
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A well-communicated strategy is critical to fundraising right now
In Porenta’s experience, today’s economic climate is making it more difficult to raise capital. She said, “The more chaotic it is out there, the more important that is actually to have this really good plan and strategy and to be able to communicate it to LPs.”
Timing, luck, and relationships nurtured over the long term all factor into a firm’s successful fundraise. Porenta said, “We were quite fortunate when we started our last fundraising round. It was still a good moment. But in the end I think the fundraiser is the result, not really of the last 12 months but of the last 12 years.”
Relationship intelligence can drive efficiencies and desired outcomes
Porenta credits Affinity as the tool Speedinvest uses to track key workflows, from portfolio performance data to managing deal flow. As a newer member of the team, Porenta leaned on Affinity to better understand the firm’s many relationships that have developed and strengthened over the years. “When you have roughly 300 companies in your portfolio it’s hard, after only eight months, to know all of them well.”
As Porenta explained, what helps is making the flow of information as easy as possible. She said, “The fundraising team really depends on that information because LPs want to know…at the same time, you don't want to bother investment managers too much because they have a lot to do already.” To help with these types of insights, Affinity’s Formula Fields feature can quickly make calculations that LPs want to see such as portfolio company runway and EBITDA margin.
In-house AI can increase organizational efficiency
Many industries, including VC, are investing in artificial intelligence (AI) to optimize workflows and glean the most from internal data. The market is competitive right now and the effective use of AI is one way to gain a competitive edge. According to Affinity’s recent research, 84% of firms plan to increase their use of AI in 2024.
The team at Speedinvest is exploring ways to better integrate AI into systems, including the development of a VC copilot. Porenta shared, “Creating our own AI that we can use across teams will really make things much more efficient because we're a big organization.” With the volume of data at their fingertips, she hopes AI will unlock new insights and efficiencies in the year to come.
Learn more about how Speedinvest plans to incorporate AI when you watch the full webinar, or download the guide to fundraising and investor best practices.
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