Senior Vice President, Investment Management at AppFolio, which provides cloud-based property management software solutions.
While there is an element of uncertainty across different segments of the real estate market, in an economic downturn, there are often more opportunities to make good real estate investments that will result in high ROI down the road.
However, given the current climate and the potential for investment risk, raising capital might be a considerable challenge for investment managers today. While fundraising may have slowed down this year as a result of the pandemic and its economic impact, when fundraising activity does start to pick up again it will be critical for investment managers to not only attract investors quickly but also to streamline fundraising efforts, reducing capital raise time.
While any smart investment manager knows the inherent value in building trust and credibility with investors, it is increasingly challenging to do without a strategic plan in place. Additionally, the complexity of real estate investment management requires more than just a manual process. Certainly, technology can help to drive the efficiencies that investment managers today need in order to capture investors’ interest and continued business.
No one was expecting a year quite like 2020. It has forced so many industries to adapt quickly to meet new challenges. In investment management, adapting to new realities requires evolving. What worked in 2019, or 2020 for that matter, will not necessarily work for the future. Investment management teams must evolve in order to grow their business. Considering the following recommendations should be a part of that journey
Taking The ‘Impress’ Factor Up A Notch
One of the most important aspects of fundraising is getting investors on board. While there are many different components to building investor relationships and securing investor interest, managers and management teams cannot underestimate the power of impressing investors upfront.
Impressing investors with one of the first things they see when considering an investment management company — a professional website — is key. There is a huge opportunity to impress by offering a comprehensive professional website, and there is a real risk of losing out on opportunities without one. Investment management websites should be inclusive of anything that might be valuable and helpful to prospective investors, including key performance metrics as well as current and past projects that shed light on successes. Having a website that offers up key information, so that prospective investors do not have to go digging for it or ask for it, is a great way to not only attract investors but also to get them on board more quickly. Additionally, user functionality of the website should be streamlined so that the website is easy for investors to navigate.
But impressing investors goes beyond just professional websites. Making tools available to investors that give them more visibility into the management of their investments, like the ability to view asset information at a moment’s notice, is an important element to point to when trying to raise capital from prospects. There are so many moving elements in investing that, when investors know they can have any information they want at the click of a button, it naturally creates more trust.
Ultimately, in an effort to be prepared to fundraise quickly when the opportunities arise again in the near future, it will be critical for investment managers to be buttoned up and as cutting-edge as possible when it comes to all prospect-facing materials in order to stand apart from the competition.
Streamlining Fundraising Activity With Great Communication
Apart from attracting prospects, the ability to expedite the fundraising process will be increasingly important as fundraising revs up once again — and much of that comes down to streamlined communications. It is important for investment managers to have a system in place that enables them to easily send communications to prospective investors. Expediated and instant communications move the fundraising process forward quickly, closing the window of opportunity for misunderstandings or lags in follow-up with investors.
Additionally, moving increasingly toward digital processes to record and consolidate capital contributions reduces the risk of double entries and errors, both of which can impede and slow down the fundraising process. Digital transformation of the fundraising process is vital to success, as well as improved ROI.
As fundraising picks up again in the months and year to come, investment managers will need an edge in this market to both attract investors and raise capital quickly and efficiently. There is a huge opportunity, through strategic planning and reevaluation of business practices, to achieve both these goals and leave the competition behind.