The online presence of private equity is increasing all the time. Whether through sites such as ours here at DealMarket or other online equity like Angel List, or popular crowdfunding sites like Kickstarter and Indiegogo, opportunities for raising money online are becoming more accessible to a wider market.
When speaking of online platforms, you have to mention social media. Where does social media fit into the online private equity landscape?
Social Media Advertising
Although regulations changed in 2013 relating to non-solicitation – allowing private equity (PE) funds to advertise to targeted investors – the open and public nature of social media means it is unlikely to become an advertising platform.
It should be remembered that sites such as DealMarket are essentially social platforms, although access is controlled to prevent anyone from starting to invest without having the necessary accreditations and credentials. Deals will continue to be presented on our platform and similar ones, although in terms of what most people would consider as social media (Facebook, Twitter, and similar sites) there will be a different approach.
Branding & Reputation
This is the big area where PE firms themselves as well as deal making platforms like DealMarket stand to see the biggest difference. As sites like ours act as more of a deal facilitator, it is probably less important to us than it is to global equity firms to have a huge brand presence (although it is obviously something we’d want to target and achieve). We’re able to focus more on industry news and updates, while PE firms will be much more invested in reaching out to their audience.
They can use social media to share pieces of content they have written, and to bring people to the targeted advertising on their websites. Remember that advertising on social media technically isn’t allowed, although even if PE firms did do it they’d still need to check each investor before they signed them up or let them commit money anyway.
Social media’s role in the PE marketplace will be to publicise the news and activities of successful funds in such a way that they become more attractive to investors. From the perspective of platforms like DealMarket and the other examples listed at the top, social media will continue to be a valuable tool to share “top deals” and for continuing to grow awareness of the increasing accessibility to online deals.