THE CHALLENGE
Our client was a venture capital manager with their initial fund in the ground and they were eagerly looking ahead to their second fund in the core strategy, plus a third fund which would open a new investment strategy for them. In the midst of fundraising, they had also stumbled into a conversation with an investor who wanted to seed their firm by purchasing a minority interest. The future was bright!
Unfortunately, the past had…challenges. It was July and the initial fund audit was late, tax prep hadn’t begun, and the fund administration team couldn’t decide what the difference was between an asset and a liability as they experienced extreme turnover. To compound the challenges, the internal processes at the management company were underdeveloped – vendors were not being paid timely, payroll was hit-or-miss, and risk management elements like crafting an insurance program or establishing proper cyber hygiene had not yet even entered the conversation.
They needed to support the due diligence process for the new minority investor in their firm, quickly ramp up their next two private funds, and somehow resolve the myriad issues being experienced around their initial fund. Where to begin?
WHERE TO BEGIN
OUTSOURCED INVESTOR SERVICES
OUR
SOLUTION
At FSG, we have seen and solved it all before! We got the call from our client going into the 4th of July holiday and quickly absorbed the situation. Payroll and bill payment at the management company were sporadic because there were no clear owners and no established processes. Audit and tax prep were stuck in a quagmire created by poor documentation and communication. The fund administrator was absent because no one monitored their performance and delivery – we changed all of that!
We brought our functional teams to the table quickly, and began putting out fires in all areas. A new fund administrator was identified and a transition was executed. The audit issues were resolved and a clean audit opinion obtained. Tax reporting was issued to the initial fund’s investors in a timely manner. At the management company, ownership was established at FSG in the bill payment and payroll processes, technological infrastructure and tools were matured to an institutional level of quality, and a tailored insurance program was established.
Critically, all of this was executed in an approach steeped in confidentiality, professionalism, and a recognition that confidence speaks volumes to investors. Not all the challenges were resolved in a day, but we consistently communicated to the various stakeholders that these challenges were not abnormal and that they could and would be resolved.
THE RESULTS
Our client closed its minority investment and proceeded to successfully raise capital for its second and third funds. It now has an operational platform built for growth and the resources in their FSG team to execute that growth. Our goal is not to just solve our client’s “challenges”, but to solve them in a correct manner. We believe firmly that this leads to sustainable growth, and we see that truth demonstrated in our client’s experience as they continue to find success!!