Within your initiatives on transparency to investors and portfolio company leadership, your private equity firm will often make changes to the vision, mission, investment criteria and decision-making process. You typically have specific investment criteria and a well-defined decision-making process, a vision and mission that shouldn’t change too much, and investors funding future rounds carefully consider their choices when a firm makes changes to strategy. 

On a day-to-day basis, your analysts and strategists are making changes to adapt to market conditions. This can either be a “well of course” update, as small changes are expected, or it can be a “brace yourselves” update if major overhauls are deemed necessary. Most often, you’ll integrate these updates into your regular quarterly, biannual, or annual reports, but occasionally, your investors will want to see a rapid response to seismic change. 

Having a structure in place to create this report at the ready when geopolitical shifts occur will set you apart from other firms, and we believe that planning these reports as virtual events can possibly increase the speed in which you can get them out to your audience. 

What is included in an update to investors on future plans and strategies?

• Vision, Mission, Investment Strategy and Criteria Changes
  • New target industries, geographic focus, stages of companies, or size of investment
  • Detail any adjustments made to the decision-making process within the firm, such as evaluation methods, due diligence procedures, review stages, or individuals/committees involved, and the reasoning for the adjustments
  • Potential exit routes, such as IPOs, M&A, or secondary market transactions, or revised exit plans for existing portfolio companies
  • Discuss the impact on deal flow, firm reputation, portfolio diversification, risk appetite, and other relevant risk factors
  • Any major events or new information that have impacted the strategy and the supporting evidence to justify the changes 
  • The implementation plan and what steps you’ve already taken in the new direction
• Fundraising and Capital Deployment
• Information on upcoming fundraising activities and initiatives
• Strategies for sourcing and evaluating potential investments
• Allocation plans for deploying the raised capital
• Market Analysis and Trends
  • Please see our post on Market Analysis
• Talent Network and Value Creation
  • New hires that support the revised strategy of the firm
  • Efforts to attract and retain top talent within the firm and examples of successful collaborations between the firm and portfolio companies in doing the same
  • New talent development initiatives and programs
• ESG Focus
  • Identification of ESG risks and opportunities in the investment portfolio
  • ESG-related policies, guidelines, or frameworks adopted by the firm
  • Positive ESG outcomes and achievements of portfolio companies in the firm’s investment portfolio

Most often, this report will be a subsection of a regularly scheduled investor relations update. We mentioned before that major geopolitical events might demand adjustments in your strategies. Depending on the concentration of your funds’ assets, this may be the only thing on your investors’ minds when they tune in.

Other topics to cover in this update

• AI, the transition to remote work, renewable energy, blockchain, IoT – as you show them how you think the dots will connect, your portfolio companies will begin to reflect those theories
• Consider Tulip Mania, the Gold Rush, the Dot-com boom, the 1970’s oil crisis, the Chinese Cultural Revolution, the Cold War, the Civil Rights Movement, the Meiji Restoration – depending on your new trajectory, different time periods may offer insight into why these changes matter now
• Any insight you have into what other firms/funds are doing that is similar or wildly different from your new strategy

Who’s Involved?

• Your Managing Director and Partners establish the vision and strategic direction of the firm based on an understanding of the investment climate, industry trends, and potential growth areas. As a primary point of contact, they communicate with stakeholders about future plans and strategies, monitor and assess the performance of implemented strategies, and make necessary adjustments. They also network within the industry to gather information for future strategies, sourcing and structuring deals. They are responsible for both the strategic direction and tenor of the report.
• Your Investment Committee establishes the investment criteria process for decision-making, reviewing investment proposals, assessing risk-reward profiles, and collectively making investment decisions based on the committee’s expertise and strategic objectives. They contribute to the fundraising strategy, and ensure regulatory compliance, integrating ESG considerations into the investment strategy.
• Your Business Development Manager conducts market research to identify emerging trends, technologies, and investment opportunities. They source new deals and assist in fundraising activities, fostering partnerships with potential investors and relevant stakeholders. They contribute to strategy formulation for the firm and portfolio companies and provide direct support to these companies for achieving their growth objectives.

What are the goals of these updates?

• Showing your commitment to transparency and communication with the firm’s future investment direction and strategies
• Highlighting target sectors, markets, and geos where their future investments may be focused and the differences in stage or size of investments
• Attracting new and relevant investment opportunities/increasing deal flow as entrepreneurs assess whether their venture aligns with the firm’s criteria and approach
• Educating investors on trends, inviting input, suggestions, or feedback from investors on potential investment sectors, markets, or strategies 
• Outlining strategies to mitigate risks including diversification, risk management frameworks, and contingency plans, helps investors weigh their options
• Any new implementation plans leveraging technology or personnel in the investment processes and portfolio management

What can you include when planning this update as a virtual event to achieve these goals?

Two things we always suggest are to pre-record your main ideas, backing them up with data and visualizations to get your message as clear and concise as possible. Included in that should be a Q&A session where questions are solicited via email included in that pre-recorded session.

Other things to consider are:

• Live Q&A to address evolving strategy, depending on how quickly the market is changing
• Breakout discussions with your firm’s key people to give investors more time to get their questions answered in more detail
• Panel discussions, in which thought leaders and your key people talk market trends, investment opportunities and landscape, and the impact of emerging technologies from perspectives they may not have considered
  • Ideas for visiting thought leaders
    • Economists from think tanks or educational institutions
    • Current/former government regulators or officials
    • Research Fellows working on related subjects
    • Policy analysts with specific country or industry knowledge
    • Data scientists
    • Popular creators (Substack, Twitter, Medium, YouTube, etc.)
    • Post-doc researchers
    • Prolific Investors
    • Leadership or other key people from your portfolio companies
    • Leaders from other VC firms (scratch backs/rising tide…don’t discount the idea that cross-pollination helps)
    • Futurists
• Solicitation for feedback on the new path
• Depending on your firm’s tone of voice, gamification elements don’t have to be gimmicky. Incorporating quizzes and polls on investment knowledge and market trends, may add cheer and positivity to a difficult position or help celebrate a fantastic new path
• Rewards or recognition for investors or portfolio managers who have actively engaged and assisted with the change
• Post-event on-demand video can include snippets of the pre-recorded video presentations to use in public or investor-only social channels and can be incorporated into a podcast

Benefits over your traditional communication strategy

Beginning to sound like a broken record here (if you’ve read the other articles on Virtual Events and Venture Capital Communications Strategy), but the benefits are the analytics, the sharable multimedia content generated, and interactivity. A lot of times, we mention sponsorships, but there’s no obvious partner for this topic as the focus is internal – that subject matter is best left un-sponsored. 

Depending on your compliance department, it might be quicker to schedule a virtual roundtable if a major world event impacted your business. Offering speed first and then balancing your preparedness to handle the change with the fact that you might not have all the answers right away, straight from the gut might is one path to choose. Putting your key people in breakout rooms and having them field questions/lead a conversation to address changes will show your investors that you are committed to transparency and are quick to act in a crisis situation.

More on this topic

If you haven’t read the other parts in our series on Virtual Events and Venture Capital Communications Strategy, check out the links below:

• Virtual Events and Venture Capital – Performance Updates
• Virtual Events and Venture Capital – Market Insights
• Virtual Events and Venture Capital – Risk Assessments
• Virtual Events & Venture Capital – Portfolio Company Reports
• Virtual Events and Venture Capital – Bonus: Personalized Investment Performance