How has the pandemic impacted the fundraising process?

It’s been a tale of two cities. You really have to consider who you are, how your brand carries your fundraising and how much of an effort it is to get commitments from people that haven’t heard of you before. In that sense, it was much harder because people couldn’t travel. However, LPs quickly adopted these digital means to communicate with managers, conduct due diligence and continue to commit capital.

How is Palico’s offering different from traditional methods of fundraising?

The first big change is a directional one: the interaction now starts at LPs’ discretion. Normally, the process is very much one of GPs hunting LPs, which can be a little daunting. We feel that is an antiquated way of doing things — instead, we want to put LPs back in the driver's seat. We’re solving the riddle of FOMO vs time management: we generate a much broader base of managers for LPs, so that they can decide to start their due diligence earlier without necessarily engaging too deeply in the process right away.

Secondly, we are putting fundraising on steroids, with content. While data is in the documents and is key to benchmark and make ultimate decisions, we’re talking about rich content helping IR teams tell their story, and to shine in an innovative and modern way. How funds fully portray themselves has for too long remained unchanged. Yet, with today’s technology there is no reason that GPs shouldn’t be able to consistently create rich content that follows the life of their fund and their fundraising. Whether it is hitting major milestones or sharing news related to the fund, like investments made in portfolio companies or sharing recent interviews and webinars[...] in today’s day and age content is king, and PE should and will follow that.

Finally, Palico is “debrokerizing” the fundraising model: no more commissions. This was a key shift not only for us but for the entire industry. We now offer GPs a flat fee and really play up their presence and fundraising opportunity online. Each time one of our clients gets a commitment from an LP met on Palico, they don’t owe us any commission, but they tell their friends, and we just prove our model works, day after day.

What are the key advantages of using Palico’s digital marketplace for LPs and GPs?

In a nutshell, powerful funnel optimization for both LPs and GPs. Palico’s overarching aim is to give the best tools to IR teams so that everything that’s a pain point can be delegated to a technology platform. We’ve built a fantastic digital stage for funds to appear, with an audience of over 3,000 LPs. We also host a dedicated chat room and video conferencing feature, with our virtual data room, where LPs can gain access to key fund documents, with sharing remaining at the discretion of the GP. With access to videos, interviews and testimonials, investors are able to start their due diligence process prior to actually having any in-person contact.

What do you think the fundraising process will look like post-Covid?

It will be exciting when people meet again in person. At the end of the day, digital will never totally replace real life. However, what we do believe is that you won’t be successful if you don’t have a strong digital presence, because that’s now how LPs start their job. Of course, they will probably want to meet you in-person to close the deal, but meeting out of the blue for the first time will be something of the past. In order to run, you need both legs and one of those legs is called digital presence. This means visual activity, interaction, sharing, all with the best tools technology can offer and we are proud to be paving the way towards the digitization of the industry.

What are Palico’s future plans? Is the company launching any new services?

More content, more interaction and providing control of secondaries to IR teams. We are in the midst of launching a brand-new interface that includes video presentations and testimonials from LPs and portfolio company CEOs. We plan to have electronic roadshows at the beginning of next year, so we’re working very hard to ensure that this updated video function will be accessible and easy to use. Again, being regulated offers us a wide range of possibilities. We’ve also relaunched the pre-marketing feature on our platform, which has already been very successful, especially for the larger funds who need to start engaging early with new LPs.

Another key area we are focused on is the secondaries market. We’re planning on having our GP clients process their own secondaries, just because they want to do it as a service to their existing LPs. We’ve had very successful sales where the LPs were selling their positions directly to secondary buyers, but the overarching philosophy is that we believe LP stakes secondaries will become a commodity and should be much easier, faster and cheaper to process. We are certainly pushing hard to commoditize smaller lines - below $20m - by automating the bidding process and streamlining the admin one. One important aspect is that we believe IR should be dealing with secondaries, as it’s their existing clients, and we aim at providing them the best possible tools to deliver on that. We are currently in talks with global fund managers to help process entire batches of “smaller” stakes that some of their LPs want to sell, because a tech platform can process that well, fast, and at a low cost, because we’re also planning to cut the commission model on secondaries - but that’s for a future press release!

Ultimately, we are building a fully integrated IR Solutions platform, so IR teams can focus on delivering on what matters the most: building and nurturing relationships with LPs in the market.