Post-investment transparency — Club Deal 101
Too often Club Deals only focus on the pre-investment phase. This is a mistake as there needs to be a focus on a longer-term strategy.
As outlined in previous articles, transparency and trust are critical to running a great Club Deal. And that applies when presenting deals but also when the deal is closed, the paperwork is over and the money has been wired.
Post-investment communication is key to garnering trust from investors. Not communicating enough can directly impact investors’ trust in the Club Deal and subsequently their engagement.
So what to share with your investors post-investment?
Reports
The common trend for our most active clubs on Zenvest is to publish short but quarterly reports, with both recurring quantitative (QoQ & YoY MRR, # Clients, Churn, etc) and qualitative (the good, the bad, the ugly, etc) information on the investments. It’s imperative for reports to be accurate and factual and for the data to be non-embellished.
This a very good way to keep the community active. As for the deal description, consistency is key: investors must be able to understand everything at first glance. And you can always attach more information if they want to be thorough.
Portfolio tracking
The average ticket in a VC fund has a lifespan of 5 to 7 years.
So does most tickets in a Club Deal. But although being purely virtual (as a private asset has no value per se) you can estimate the Fair Value. Being able to track and visualize this evolution easily is a very good way to create engagement in your investor community.
Documents and information on the deal
The biggest pain for High Net Worth Individuals and Family Offices is the difficulty to track the smallest lines of their portfolio and get all the required information to have a consolidated view or their investments.
To ease this pain, a Club Manager must use tools to allow investors to access all possible data on deals. Offering thorough and clear documentation on deals is an important aspect of any Club Deal and is especially attractive for the lesser engaged investors. Not only does this keep your current active investors engaged, but it also might engage investors that were initially more reluctant to join Zenvest.
And how to share information?
All the information must be in the same place and must be easy to access for investors. Multiple tools (Dropbox, Box, drives, Carta, Investory, etc) might be helpful but won’t be a match for a centralized tool.
This is one of the many reasons why we’ve built Zenvest. We want to help Club Managers better operate their Club on a daily basis and make their lives easier. This will ultimately create the best experience for investors by streamlining the whole process and by creating a frictionless experience. This is what drives us.
Creating and managing a Club Deal is not an exact science
Please remember that this series is based on insights from our customers and the eFounders’ Club. Like all recipes, it can be edited, improved, or updated, but I truly think that those are the fundamentals for a successful Club Deal.
We would be happy to have your claps, feedback, DMs, and comments on the matter especially if you disagree :)
Previously:
- Introduction to Club Deal
- A limited number of targeted & active investors
- Clear and transparent opportunities
- Admin involvement
If you’d like to find out more about zenvest.com, please contact me at cyril@zenvest.com
