Tag Archives: Fundraising

Fundraising is a significant component of private equity (PE) and venture capital (VC) firms, which actually goes into investing in promising start-ups, scale-ups, or established businesses. The process is the most competitive, in that it requires a combination of strategic foresight, strong relationships with investors as well as great execution. This article will discuss issues related to capital raising for PE and VC firms, important steps, market dynamics, and trends.

The Fundraising Process: A Step-by-Step Approach

The art of fundraising is mastered by taking a structured and strategic approach wherein every step is designed to attract the right investors, align goals, and secure commitments in an effective manner.

The Fundraising Process: A Step-by-Step Approach

Defining the Fund’s Investment Thesis

Any successful fundraising effort is backed by a clear and concise compelling investment thesis. The PE or VC firm will have to state exactly why and for what purpose investment funds are being created: the industry sector(s) and geographical area(s) targeted as deal sources, minimum and maximum sizes of acceptable investment deals, and so on. Not only is this for marketing purposes but also to ensure serious alignment with any prospective Limited Partner (LP).

Market Research and Targeting LPs

Identifying the right LPs is essential for capital raising. Institutional investors, family offices, sovereign wealth funds, high-net-worth individuals, and endowments represent the typical LP base. Market research is a way to classify potential investors using different dimensions like risk appetite, industry preference, and geographical exposure.

Crafting Fundraising Collaterals

High-quality documentation in capital raising is critical to securing commitments. This includes Private Placement Memorandums (PPM), outlining fund details, strategy, risks, and governance, Pitch Decks and Teasers that act as visual summaries for initial outreach, and Due Diligence Questionnaires (DDQs) to answer detailed LP queries on track record, compliance, and fund structure.

Building Relationships with Investors

Typical private equity (PE) and venture capital (VC) firms would have relied on existing relationships within the firm to secure initial commitments. Rather, general partners (GPs) have to earn that trust through a combination of communication, transparency, and evidence that they are able to deliver returns. Events, one-on-one meetings, and roadshows are equally important in this process of relationship-building.

Legal Structuring and Compliance and Closing the Fund

Because the proper legal framework is paramount in ensuring operations run smoothly and in line with the regulatory frameworks, for example, an example would be most funds will be set up as limited partnerships where general partners would manage the fund and LPs would contribute capital. Of course, it goes without saying that different jurisdictions have different rules that must be complied with such as SEC in the US, AIFMD in Europe, etc. The moment target commitments are achieved, a fund is considered closed; this involves executing Limited Partnership Agreements (LPAs) as well as beginning capital calls for deployment. Timing becomes essential because delays could also erode the trust of investors.

Challenges in the Current Fundraising Landscape

Because of the uncertainties in the macroeconomy and the increasing interest rates becoming more pronounced, the environment of raising capital has since changed. There is a rigidity in LPs’ demands as they want to see track records of past performance and a clear commitment to Environmental, Social, and Governance (ESG).
As more and more funds have been launched, increasing differentiation and competition are becoming more and more crucial in capital raising. Trends in LP preferences have shifted toward institutions supporting focused and specialized strategies, accompanied by a rise in the anticipation of transparency and compliance requirements which adds complexities to the fundraising process contributing to regulatory constraints.

Role of Technology in Fundraising

Technology has significantly changed the way fundraising works for PE and VC firms. It also allows the use of digital platforms and tools that make their processes smoother, improve LP targeting, and enhance investor engagement.

Investor Relationship Management Software (IRMS)

These solutions, such as Affinity and Salesforce, can be used to track interactions, manage pipelines, and analyze LP preference for the GPs.

Data-Driven Targeting

From PitchBook to Preqin, these platforms provide snapshots of LP activity that help firms tailor their approach.

maWebinars

GPs can pitch to a global audience using all these online platforms such as Zoom, Skype, Google Hangouts, and Cisco Webex, since geography is no longer an issue.

AI and Analytics

Outreach strategies are optimized using AI and analytics-derived predictive analytics, which assess probabilities of LP commitment.

Emerging Trends in PE and VC Fundraising

There are multiple changes affecting capital raising for the private equity (PE) and venture capital (VC) companies, these changes are majorly influenced by the market dynamics, expectations of the investors, and the continuously evolving technology. Following are the emerging trends in fundraising:

Emerging Trends in PE and VC Fundraising

Focus on ESG

ESG considerations have become crucial in capital raising. LPs now want the GPs to align their strategies with sustainable and ethical practices.

Increased LP Demand

As per reports, the amount of ESG assets under management is expected to exceed $40 trillion by 2030, which surely goes to show a strong momentum toward sustainable investing.

Reporting Standards

The GPs are required to disclose the ESG metrics and reporting with details of carbon footprint, diversity initiatives, among others.

The Rise of Continuation Funds

Since continuation funds act as a mechanism for increasing the lifetime of high-quality assets, especially in situations where GPs see potential for further growth or value creation.

Investor Appeal

These funds offer liquidity options for existing LPs while allowing new investors to participate in well-established investments.

Market Growth

Continuation prestige funds will also be part of the record highest activity GP-led secondary transactions of recent years. In 2022, GP-led transactions would be worth around $50 billion globally, making it the second most active year ever recorded. In this category, single-asset continuation funds accounted for another $20 billion or 42 percent of all GP-led transactions and 19% of the overall secondary market.

Retail Investor Access to PE and VC

In the past, only institutional investors were expected to access investments in PE or VC however with this democratization, the scenario is taking a U-turn completely.

Accredited Platforms

Platforms such as Moonfare and iCapital help provide accredited investors access to private equity and venture capital funds, usually with lower minimum investment thresholds.

Regulatory Adjustments

Jurisdictions are reviewing regulations to make the participation of the retail investor easy without compromising on investor protection.

Secondary Market Expansion

The secondary market which entails the buying and selling of already existing fund stakes is growing at a fast pace as LPs look for liquidity options.

Surge in Transactions

The secondary market accounted for over $100 billion in transactions in the year 2022, and their volume is promising to show growth over the next two or three years.

Innovative Solutions

Structured secondary deals and fund recapitalizations allow LPs to get some flexibility in their exits as GPs begin to use secondaries.

Increasing Popularity of Co-Investments

A rise can be seen in the adoption of co-investment opportunities whereby LPs are directly involved in making investments alongside the fund in specific deals in capital raising.

Attractive for LPs

Co-investments allow LPs to invest in deals with very low fees and most direct exposure to the best deals.

Operational Complexity

GPs need some infrastructure built and communication channels opened to manage the sources of co-investment effectively.

Best Practices for Successful Fundraising

Using established strategies and practices is highly likely to improve the outcomes of fundraising efforts, fostering long-term trust and a diversified, loyal investor base.

Make use of a Strong Track Record

LP confidence may be built by showing successful exits, high IRRs, and high MOICs. Emerging managers must team up with established GPs or convey operational excellence as a way to bridge credibility gaps.

Maintain Transparent Communication

There should be some regular information about the market environment or fund performance, and other follow-ups to cultivate confidence among the investors, thus increasing the likelihood of further investments from the investors.

Diversify the Investor Base

There is risk present in receiving funds from a handful of LPs and it can instead be minimized by widening geographically and investor-type focus.

Incorporate Flexibility

Additional flexibility in terms can be allowed by using co-investment opportunities or targeted fees in making the funds more attractive to LPs.

Magistral’s Services for Fundraising

Magistral Consulting provides complete capital raising solutions to Private Equity and Venture Capital firms in an effective manner along the entire capital-raising process in a most impactful way. This enables the PE and VC firms to spend more time on running their strategic initiatives while yielding better results with fundraising. Our fundraising services include:

Creating Private Placement Memorandums (PPMs), Pitch Decks, and Teasers

We draft all kinds of investor documents around the fund’s vision, strategy, and future performance, these include PPMs, pitch decks, teasers, and more. Every one of these deliverables is geared toward impacting the potential investors and fitting them perfectly into the market.

Email Campaigns and Investor Reach-out

Our team composes and executes focused email campaigns aimed at establishing an effective liaison between the potential LPs and other important stakeholders. Additionally, we specialize in investor profiling and creating outreach strategies to engage the right audience and expand your network.

Design and Data Support

We make sure that all material-from presentation aesthetics to data-driven insights is visually compelling and analytically sound so that firms can clearly communicate their value proposition.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family Offices, Investment Banks, Asset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE funds, Corporates, and Portfolio companies. Its functional expertise is around Deal origination, Deal Execution, Due Diligence, Financial Modelling, Portfolio Management, and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

What is the importance of an investment thesis in PE and VC fundraising?

An investment thesis provides clarity on the fund's purpose, target industries, geographic focus, and investment size. It ensures alignment with potential LPs and acts as a foundation for marketing and decision-making.

Who are the typical Limited Partners (LPs) in PE and VC fundraising?

Typical LPs include institutional investors (pension funds, insurance companies), family offices, sovereign wealth funds, endowments, and high-net-worth individuals.

What role does a Private Placement Memorandum (PPM) play in fundraising?

A PPM is a comprehensive document detailing the fund's strategy, governance, risk factors, and financial structure. It serves as a key tool for securing investor commitments and ensuring transparency.

What is the impact of ESG on PE and VC fundraising?

ESG considerations are increasingly critical. LPs demand funds align with sustainable and ethical practices, provide detailed ESG metrics, and adhere to global reporting standards. ESG-focused funds also enjoy greater differentiation and appeal.

Introduction

Fundraising is a tool to achieve a collaborative dream. It is the spark that ignites change. So, if you are looking for fundraising, this article will surely clear all your queries. This article also concentrates on the interaction that we follow for startups and organizations hoping to raise support fundamentally through selling some equity.

Private Equity is a capital investment firm that is not listed on any public stock exchange, and the risk involved is low and is required for the expansion of business and growth of the firm. A venture capital fund is generally invested in the initial stage by the individual or investor, which helps the company grow in the initial period. According to the survey, 51% of startups said that their next source of funds was venture capital. The funding starts from bootstrapping, in which one can use their own money or family, or friend’s money. The other method of funding is through the seed round where angel investors are available for the seed funding.

Importance of Fundraising

Fundraising plays a crucial role for the startup. It can increase visibility and attracts the attention of the market. It can get additional value from the investor. Lack of capital is the main reason for the failure of many small businesses. To reach a larger audience in the market and compete with the other players, businesses need money to grow and increase their sales and marketing efforts. In today’s time, there is a positive trend in startup business funding.

Five Steps of Fundraising are:

Steps in Fundraising for Venture Capital or Private Equity Fund

Build up the firm

Before starting the fundraising, the firm should build up its profile, improve its website, strengthen its online presence on social media, and check its marketing toolkit and legal structure. It will not raise the fund if the firm is a proprietary company, partnership company, or limited liability partnership. Only the private limited company gets the funding from the PE or VC firm. So first, one must correct the legal structure of one’s business for raising funds and then build the core team, hire the advisory board, and invest in a graphic designer to make the website and business logo. Any limited partner prefers to see a strong portfolio and professional presence of the company.

Private placement memorandum

It is a legal disclosure agreement prepared by the companies and given to an investor for their capital. Creating a private placement memorandum is also essential for the investor. It mainly focuses on gaining long-term capital appreciation through the control investment. This document must include a detailed message about the athletic background, investment strategy, opportunity, and risk.

Research and analysis

Comprehensive research about market reach, market size, and the number of potential customers is done. What is a company’s breakeven, return on investment, and how much is the revenue and profitability of the company? The company vision and plan should be clear. The company should prepare a budget sheet and prepare certain specific questions related to the budget sheet which the investor may ask. The company should check all the financial and legal details before reaching out to the investor. The company should influence how the firm has a competitive advantage and how it will optimize the resources and use it in the best possible way. It also involves doing detailed research and finding the right investors according to one’s industry. Many investment bankers provide investment to the firm, so finding the right investor according to your business is essential. One will easily raise the fund when one gets the right kind of investor, Consequently the company valuation will also increase.

Pitch deck

This is a document where the company should prepare the details about the team member, the company, competition, business model, financials, plans to expand, patent, strategy, etc. and then it is presented to the investor. The pitch deck should be attractive so that investors agree to invest in the business. It must include the return on the investment and how one can expand the company, and future income projections. The investor should see the profitability and the scope of the companies he will prefer to invest in. The goals and objective of the fund, why investment is needed, and where you will support the amount should be clarified. A competitive landscape, marketing opportunities, and detailed information about the shareholder should be necessary.

The investor needs to know how the company’s valuation will grow. The format of the pitch deck should be significant. The pitch to the investor should be professional. The companies should prepare before giving a final rise to the investor so that the last pitch to the investor should be appealing and realistic.

Due Diligence

It is the investigation and review performed to check the process of all the financial and legal documents produced before the investor. The investor should verify all the company’s claims and evaluate the business, check the economic situation, compound annual growth rate, liquidity ratio, profit margin, previous loan, or funding. Due diligence is a necessary process, and the company should clarify or answer all the doubts and questions of the investor. The company should arrange all the documents before going to the investor pitch and do due diligence because if the company misses any records, the funding may not be approved. In this process, the company signs a binding agreement.

Due Diligence process:

A due diligence process is an organized checklist to analyze the company ownership and organization, financial ratio, legal documents, shareholder value, future growth potential, and management. These documents are mandatory for a smooth process and should be prepared before starting the fundraising process.

Due Diligence for Private Equity

The due diligence package includes the following documents:

-Subscription agreement

-Summary of the contract

-Name of the advisor to the fund

-Sample report

-Asset allocation

-Estimated timeline

-Investment transaction

-Management references

-A pipeline of deals

-The risk mitigation

-Conflict of interest.

Term Sheet

The term sheet includes all details related to the terms and conditions of the agreement. It is issued by the investor, in which detailed information about the company valuation, percentage stake, investor commitment, and liquidity preferences, the right of both parties, how much capital should be invested are mentioned.

The shareholder agreement is also issued, which is the detailed version of the term sheet that mentions all the details of the duties, right, jurisdiction, and arbitration of the company. The share subscription agreement should also explain the share and company stake terms.

These documents should be made so that it does not lead to a legal battle if any. Negotiation is also crucial. The investor generally negotiates more to cut the company’s valuation. The firm should take care of that. Investor relations also play an essential role and set the company’s credibility. If the relationship is good, then it may attract the other investor. The company should also explain the report, growth, and the new project to the existing investor. So, if the company is invested in the relationship, it will undoubtedly benefit in the long run.

The five steps, as mentioned above, are simple to raise funds. Raising money through venture capital and private equity in series funding is mentioned in the article. Generally, raising funds for the first time for a startup is quite tricky, and it needs a good network, so outsourcing the fundraising support is needed.

Magistral’s Services on Fundraising

Magistral consulting offers solutions in the following categories –

Fundraising Documentation

Magistral consulting prepares all documents that are helpful in fundraising. It also includes polishing the material to ensure the papers’ standards and design.

Magistral’s investor database

Magistral consulting database help to find the right kind of investor. There are more than 25K+ records of investors.

Specialized lead generation

For business-to-business development particular lead generation program is generated.

Analyst support

Magistral consulting ensures analyst support at every fundraising step.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family Offices, Investment Banks, Asset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE funds, Corporates and Portfolio companies. Its functional expertise is around Deal origination, Deal Execution, Due Diligence, Financial Modeling, Portfolio Management and Equity Research.

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

Introduction

An Investor Database is a list of individuals engaged in investing activity that is used to create targeted marketing campaigns. A variety of sources create investor databases, which are typically guarded closely because they have the potential to be highly valuable. A fee is normally associated with accessing an investor database, which is charged for each entry. Instead of scouring the entire database, they are permitted to search by specified criteria, such as looking for investors in particular demographic groupings.

Investor Databases can include information on both individual investors and institutional investors, such as venture capital firms, private equity firms, and hedge funds. They may also include information on angel investors and crowdfunding platforms. Investor databases can be a valuable tool for companies and investment firms, as they can help to identify and target potential investors who are most likely to be interested in a particular opportunity.

An investor database offers a variety of information. To paint a picture of the types of investments that interest the people on the list, names, contact information, and information about investment history is provided. Databases can also gather information on racial background, marital status, earnings, and other things. Surveys and other methods are used to gather this data, which can be used in marketing campaigns in a variety of ways.

Investor Database Utilization

People looking for investors may utilize an investor database to create a target market and then advertise to those consumers to generate initial interest and start an investment. For those looking for a specific type of investor, such as a philanthropist interested in charitable activities, specialty goods like databases of high-net-worth investors are available. The search will produce a list of investors that fit the search criteria, and the user can make contact with investors from that list as needed.

Considering that businesses are legally permitted to retain and disclose information about their consumers, individual investors have no choice over whether their names appear in an investor database. As corporations may be required by law in some locations to establish opt-out systems where customers can decline to allow their data to be shared, it may be possible in some circumstances to limit the release of the data. Because these parties are exempt from the same legal restrictions as corporations tracking customers, it is more difficult to opt out when databases are produced by third parties.

Complete access to an investor database is an option, although it is typically highly expensive and allows users to search through all listed investors. For processing all the database entries, users often need statistics software and other tools because doing so would be too much information to take in all at once. Since the original database owner does not want the product to lose value, those with full access are typically not allowed to sell the data they acquire.

Features of the Investor Database from Magistral

Following are the features of Investors Database from Magistral:

Features of the Investors Database form Magistral

Updated Data

The investor database requires frequent updating of fresh quantitative and qualitative data. The database gains a competitive advantage over its rivals by continuously adding newer participants, while also satisfying the customers who have paid for the service. Numerous experts continuously update Magistral’s investor database at any given time.

Data Accuracy

Accuracy is essential when selecting an investor database. Unquestionably, the data was obtained from reliable international sources by a third-party data supplier. Government listings, business directories, trade exhibitions, websites, reputable publications, opt-in email addresses, and other reliable data sources are a few examples. Furthermore, outdated information is useless. The buyer needs to confirm that the provider performs regular audits to maintain the accuracy and usefulness of the investor database. Important investment decision-makers can be engaged with and turned into qualified leads using a complete purchase-ready database. Magistral gives verified information that it obtains from all reliable sources.

Affordable Prices

Pricing is a key factor when purchasing an investor database. Data is provided for free by some database providers. However, the database can be constrained or have blank or old data fields. As a result, when looking for a provider of investor databases, the price should be considered while ensuring that the other services are offered. Magistral’s investor database offers the finest value, which is merely a few thousand dollars in price.

Additional Services

Any Investors Database’s value is increased by offering additional tailored services in addition to the database. It is difficult to find specialized leads of general partners, limited partners, angel investors, and other investors. Therefore, providing them will be a tremendous benefit. There are countless options available when it comes to acquiring investors for the desired business. The data will be very difficult to categorize, wasting time and lengthening the process in general. To separate data based on the investor’s industry, investment type, and other characteristics, a database solution should be considered. An investor database should categorize and respond to these queries based on investment emphasis, kind, prior investments, and geographic location. One can quickly search the database for investors who are suited for the company thanks to the categorized data. As a result, more time can be spent on creative marketing and fundraising campaigns and less time may be spent exploring data.

The investor database ought to offer the option of a custom search. Once the target investor has been identified, bespoke search enables leisurely data browsing rather than going through each contact. An investor can be looked up by name, type from a dropdown menu, market, or location, depending on where they frequently invest. Using a tailored search, a decent investor list can be obtained in a matter of seconds without having to browse the full investor database.

The investors’ database at Magistral offers flexible search options. Additionally, it provides tailored services for lead creation based on the unique needs of the customers.

Magistral’s Investor Database Composition

From Limited Partners, General Partners, HNIs, and other investors around the world, Magistral offers hundreds of leads. Information about a lead includes their name, phone number, verified email address, company name, address, and investment mandate. A single-user subscription to Magistral’s vast investor database costs $2500 and has a 6-month access period. Additionally, 500 bespoke leads that have been properly tailored to specifications are offered. The primary information sources for the database include a continual secondary internet search, recommendations, and personal contacts. The database is regularly updated by a dedicated team. The database complies with GDPR, but the user is still responsible for making sure that leads are provided with relevant information and the necessary disclaimers. The internal staff at Magistral finds these leads while working on various fundraising initiatives and maintains the company’s investor database. These leads are reliable since they have been utilized to raise money in the past. Customers on a limited budget who wish to get started with the least amount of money necessary can also use this database. Emerging managers or unfunded startups may be among them.

Benefits of Magistral’s Investor Database

Our Investor Database comes with various benefits to suit your requirement:

Benefits of Magistral’s Investors Database

-Support from analysts for custom research.

-Online product with simple login and search options.

-APIs for transferring data between your current systems.

-Assurance of relevant leads.

-Have access to up to 4500+ limited partners, 9000+ general partners, 6000+ angel investors, 3000+ HNIs, and others.

-Work more productively and generate money more quickly than you otherwise could.

-By establishing direct, beneficial partnerships, you can increase the coverage of your press release or newsletter mailing.

-Arrange additional in-person meetings and conference calls with prospects.

-Make use of the time our team spent creating the investor database to maximize the time and effort put in by your company.

-Give your team the tools they need to follow up on leads from trade shows and meetings.

-Reach concentrated pools of high-net-worth and ultra-high-net-worth investors.

About Magistral consulting

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is Authored by the Marketing Department of Magistral Consulting. For any business inquiries, you could reach out to prabhash.choudhary@magistralconsulting.com

Introduction

Private Equity (PE) consulting has been around for a while. Many consulting firms have practices offering private equity consulting services. It is interesting to note that even global consulting firms rely on offshoring to a great extent to deliver value to private equity clients on their most pressing issues. Offshoring reduces costs of consulting firms and some of it must be passed onto the clients (we hope!!). But what if all the advantages of offshoring could be passed onto the clients directly?

Read further to know more!!

Private Equity Consulting and Offshoring: Why it’s a match made in heaven?

Management Consulting as an industry has been around for more than 100 years on the back of its solid value proposition for clients. It brings in expertise, experience, political leverage, data sources, network, and usually signs business outcome-based projects with the clients. Usually, benefits outweigh the costs by 3X to 10X.

Private Equity Consulting and Offshoring brought together

Offshoring also picked up with the advent of the internet. As the work was possible with the help of the internet and advanced communication options, offshoring started to make sense for low-end jobs like call centers and data entry. It was followed by IT and now it is the turn of high-end research, analytics, and consulting jobs. The value proposition of offshoring is cost efficiency and scale. In most cases, offshoring also results in improvements in terms of quality and delivery apart from cost-cutting.

When we combine the forces, we have the impact of consulting with the cost advantages of offshoring, making it an unbeatable value proposition for clients in their marketplace. Management consulting overheads like weekly flights for consultants, high-end hotels for stay, and highly-priced consultants, all of which are paid by the clients are reduced by remote working and service delivery. At the same time, task offshoring to a group with all the expertise in a given industry brings a scale that can be taken advantage of, by smaller clients.

Business Outcomes for Private Equity Industry and the Services Offered

Major work streams at all private equity companies, big or small, comprise of following workstreams:

Fundraising and marketing or investor relations

Deal origination

Deal execution along with due diligence; and

Portfolio management to get into the operational details of portfolio companies to make it more valuable

Private Equity Consulting Business Outcomes

Magistral’s service offerings for Private Equity

Here is how Private Equity consulting helps in these workstreams

Fund Raising and Marketing/ Investor Relations

A fund is established when it has a healthy pipeline of potential investors apart from the existing ones. This is the area where most emerging managers struggle. The game does not even start if the firm is not able to raise the angel fund. However, like everything else in life, robust results need time and consistent efforts. PE consulting helps reach out to the investors and maintain a continuous touch-point to drive home the value proposition of the fund and thus enable successful fundraising rounds.

The services that help in fundraising are

Fundraising documentation

Fundraising requires a lot of documentation. Sometimes it could be enormous for an emerging manager. At the same time, it needs to be streamlined for established managers. Magistral helps prepare documents like Private Placement Memorandums (PPMs)/ Confidential Information Memorandums (CIMs), pitch decks, financial models and projections, teasers, and strategy and marketing documentation.

Investor profiling and reach-out

Funds specializing in different areas have different ideal profiles for investors or limited partners. Magistral helps in profiling and reach out to these investors. Magistral also has an in-house database that carries leads of more than 15000+ Limited Partners (LPs) and General Partners (GPs). It can also access databases of other players if the task needs it.

Design and Data Support

Magistral has an in-house design team that streamlines the PowerPoint designs and makes them consistent with the global marketing standards. It’s like we receive the content in raw form, sometimes scribbles from a notepad or whiteboard, and the output is a well-designed PowerPoint that could directly be sent to investors. Similarly, pitch decks and PPMs could also be designed to look more powerful visually. Likewise, data could be streamlined related to investors or CRM systems that the clients use.

Newsletters

Multiple touch-points with investors mark content like Newsletters, PoV documents, Industry reports, and market research. Magistral has experience working with hundreds of clients working on these assignments. It has access to resources like secondary sources, interviews with the panel of experts, and triangulations to come up with market sizes, etc. Worthy content establishes the authority of the Private Equity fund in the eyes of accredited investors.

Sustainable Investment and Impact Assessment

We have a specific service offering around ESG analysis, sustainable investments, and impact assessments of the current or potential assets acquired by the Private Equity firms.

Deal Origination

Deal origination services make sure that the focus of the GP is on the suitable targets and populate the deal pipeline with more appropriate deals, to be taken up as and when required. Picking up the right deals is the lifeblood of PE operations. It’s by picking up the right deals that a GP can offer superlative returns to its LP investors. Magistral helps with Deal Flow support and Inbound deal flow analysis.

The deal origination related services offered are:

Industry tracking and landscaping

A Private Equity firm needs to scan the environment for investing continually. It needs to track its key markets, geographies, and industry regularly to take advantage of emerging trends. Magistral has helped multiple clients in tracking industries like healthcare, SaaS, blockchain, cybersecurity, heavy engineering, and many others.

Potential target identification

A list of suitable potential targets is generated using secondary and primary sources. As per the investment thesis, the targets satisfy a host of customizable criteria like revenue, profits, employees, industry, geography, and being open for investments. Secondary sources include databases, whereas primary sources are industry associations, accelerators, angel investor groups, etc.

Target company profiling

Once the list is generated for potential targets, the next step is to shortlist the companies of interest and go for a deeper dive. A target company is profiled for its business details, strategy, latest developments, management, SWOT, Porter’s 5 forces, and other customized information. Understanding the openness of the company for an investor on the board is also studied at this stage.

Target pipeline management

For deals to be continuously happening, the pipeline needs to be populated continuously. There should be deals in all stages of deal-making. That is ensured by filling the targets in the funnel on an ongoing basis.

ESG Analysis

ESG or impact analysis is more critical than it was ever before. It’s imperative then that Private Equity firms evaluate the deals for ESG fitments. A company that performs better on ESG frameworks is a more sustainable investment and makes a far-reaching impact on the society and communities it serves.

Inbound deal flow management

If a firm receives lots of inbound inquiries, there needs to be an agency to sort out the worthy opportunities from the non-serious ones. Magistral matches the opportunities with the GPs investment thesis and brings forward the best deals.

Summarizing and preparing IMs:

If start-ups send IMs, the same need to be summarized for discussion with the investment committee. Magistral summarizes the Investment memos into investcomms decks for quick and effective decision making.

Deal Viability Analysis: This involves getting into the nitty-gritty of a deal, identifying red flags both inside out and outside in, to make sure the deal produces the impact, which is the aim of the investment to start with. This is achieved from the exhaustive and comprehensive market and company research.

Deal Execution and Due Diligence

Deal execution and due diligence ensure the right investment decisions to produce significant returns, identifying risks for better planning post-investment or M&A.

Here the services are about providing all the foresight and intelligence to make the right decisions. The primary service offerings here are:

Target company due diligence

Here, Magistral takes access to the data rooms and analyses the information to produce highly relevant deliverables and insights. Due diligence includes financial, operational, and ESG related aspects of a firm. Magistral works with both Private Equity firms and Investee companies. It prepares Due Diligence Questionnaires (DDQs) and collects information from the investee companies, either directly or indirectly.

Industry Research

Here, industry research is more specific and has to do with the target company’s operations. The industry in which the target operates and details like trends, SWOT, Porter’s five forces, key competition, pricing trends, news. etc. are captured to provide a holistic view about the industry in which the target company operates

Detailed company profiling and competitive intelligence

In this stage of the company profile, details are captured from multiple sources like ex-employees, management, existing employees, vendors, competition, investors, and industry stakeholders. Also, information related to competition and their strategy is captured using primary and secondary sources.

Investment Memorandums

If the investment needs to be made with other co-investors, standard documentation is applicable like Investment Memorandum, Confidential Information memorandum, Pitch Deck, and Financial Models.

Modeling and Valuations

This exercise ensures that deal is made at the right prices so that there is a significant upside for the investment returns. Magistral has prepared 100+ financial models for valuations in industries like SaaS, tech, healthcare, IT, manufacturing, B2C retail, fashion, chemicals, and e-commerce. Here the information and assumptions required to prepare a financial model are captured from detailed discussions with the client. The models in which Magistral has expertise include and are not limited to 3 parts financial models, LBO analysis, DCF modeling, Real Estate modeling, precedent transaction analysis, comparable analysis, and impact analysis.

Portfolio Management and Fund Management

Portfolio Management aims at maximizing the value of the investment in a company by a Private Equity firm. This is achieved by supporting various tasks of the acquired company to reach more customers, hence improving revenue or reducing operations’ costs. Fund Management is about streamlining the functions of the fund itself to focus on the core tasks of investing and fundraising.

Here the services are:

ESG Compliance Monitoring

Magistral, after assessing the ESG maturity of an investee company, suggests a set of metrics monitored periodically after the investment is made. The data is collected on these metrics and reported to the board and management along with investors every quarter.

Outsourced CFO

Outsourced CFO services are relevant for both funds and the portfolio companies, specifically in the cases where the PE firm invests in start-ups or smaller firms. These companies may not be in a position to invest in a full-time CFO and thus may go for an outsourced CFO that is fractional and provides the operational and cost flexibility. Sometimes Financial Process and Accounting could be outsourced, while CFO could be kept in-house. These tasks include accounting, bookkeeping, administration, procurement, and preparation of financial statements

Outsourced Fund Administration

This service is specifically for funds and takes care of all the administrative aspects of the fund like fund accounting, expense monitoring, trade reconciliation, distribution waterfalls, taxes, fees, incentives, expenses, etc.

Strategy and Business Development support

After the investments, most PE firms focus on growing the revenues of the portfolio companies. This is done through a slew of interventions on strategy and marketing. Magistral supports these activities by providing services like consumer and market studies, new product or market development, lead generation, which is critical in the B2B space, and finding follow-on acquisition or buyer for the investee companies.

And this is how Private Equity consulting joins forces with offshoring to provide an unbeatable competitive advantage for our clients.

About Magistral

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family Offices, Investment Banks, Asset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE funds, Corporates and Portfolio companies. Its functional expertise is around Deal origination, Deal Execution, Due Diligence, Financial Modeling, Portfolio Management and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The Author, Prabhash Choudhary is the CEO of Magistral Consulting and can be reached at Prabhash.choudhary@magistralconsutling.com for any queries or business inquiries.