Most GPs that closed fund this year reported that their existing LPs are re-upping or sticking with their relationships, and some are even increasing their allocations, according to unquote magazine’s research department, which just surveyed more than 40 European GPs.
Specialist funds are more successful than generalists. Economy woes and regulatory burdens weigh on activity, but risk aversion is a more important factor.
The unquote fundraising survey asked GPs who are currently out in the market, or recently closed, about their perception of the state of Europe’s fund environment.
A large group, 71%, said that the current economic conditions complicate fundraising significantly. Venture capitalists, in particular, pointed out that the current sense of risk aversion made fundraising more difficult. It is taking longer to get LPs to sign.
On average, participants counted 3.6 meetings to convince an LP to sign on (again), excluding due diligence and follow-ups. Some noted that institutional investors were much slower in their decision process, driving some GPs to look to family offices and corporates, which are much more agile in their decision making.
More importantly, the survey results show the importance of good relations with existing investors: more than three-quarters of GPs said 50% or more of their commitments at the time of first close had come from previous contacts. Overall, all participants relied on at least one quarter.
The unquote” fundraising survey is a seven-question qualitative survey among GPs targeting Europe who are currently fundraising or have closed their latest fund in the past 18 months. The survey was conducted throughout August and September 2012. (Image source: Unquote)