Securing a commitment from an investor is a huge milestone, but the real work begins after they say "yes." As the saying goes, "time kills all deals," so a slow or disorganized onboarding process can lead to delays—or worse, a lost investment. Having a streamlined system in place ensures you can efficiently guide investors through the process, maintaining momentum and trust.
The Importance of a Smooth Investor Onboarding Process
A well-structured investor onboarding process demonstrates professionalism, builds confidence, and helps ensure compliance with regulatory requirements. Before you secure commitments, develop a structured approach so you can move swiftly when the time comes. Here are key steps to consider:
Key Steps to Onboarding an Investor
- Prepare in Advance
- Define your onboarding process before you start raising capital.
- Ensure your investor portal is set up and functional.
- Have a plan for verifying accreditation and compliance requirements.
- Provide Clear Next Steps
- Investors appreciate clarity and efficiency. Provide a checklist of next steps as soon as they commit.
- Key instructions should include:
- Accreditation verification requirements
- Subscription documents and where to submit them
- Wiring instructions or payment details
- Verify Investor Accreditation and Compliance
- If you are raising capital under regulations requiring accredited investors (e.g., Rule 506(c) of Regulation D), you must verify their accreditation.
- Conduct Know Your Customer (KYC) and Anti-Money Laundering (AML) checks as required.
- Ensure all compliance documentation is collected and stored securely.
- Guide Investors Through the Investor Portal
- Provide detailed instructions for accessing and using the portal.
- Ensure subscription documents are easy to understand and complete.
- Offer support for any technical issues that may arise.
- Accepting Self-Directed IRA (SDIRA) Investments
- If your investors use SDIRA funds, be prepared for additional steps, including:
- Working with SDIRA custodians to ensure a smooth transaction
- Ensuring investors understand the process for directing funds to your investment
- Confirming the timeline for SDIRA funding, which can take longer than traditional wire transfers
- Confirm Receipt of Funds
- Immediately acknowledge receipt of funds once an investor wires their capital.
- Provide a confirmation email or notification to assure them the process is moving forward.
- Ensure funds are correctly allocated within the investment structure.
Building a Strong Investor Relations (IR) Framework
Investor Relations (IR) is critical for maintaining trust and fostering long-term relationships with investors. While early-stage fund managers may handle IR internally, growing funds often build out dedicated teams or leverage external IR services.
Key Functions of an Investor Relations Team
- Investor Onboarding
- Accreditation verification
- KYC/AML compliance
- Subscription document assistance
- Investor portal navigation
- Wiring instructions and fund receipt confirmations
- Ongoing Investor Communications
- Capital call notifications and fund collection
- Quarterly reports and fund performance updates
- Responding to investor inquiries about statements and fund performance
- Organizing investor events (annual meetings, networking dinners, etc.)
- Attending investor-related conferences
- Providing customized reports for investor meetings
- Conducting periodic check-ins to maintain relationships
- Investor Engagement and Referrals
- Asking for introductions to potential new investors
- Creating content such as newsletters or market insights to keep investors engaged
- Hosting webinars or roundtable discussions for investor education
Key Considerations for Your Investor Relations Strategy
- Do you have internal resources to manage IR functions, or will you outsource?
- What type of experience do you want investors to have after committing capital?
- Are there aspects of IR that you can automate to improve efficiency?
- How will you measure investor satisfaction and engagement over time?
Final Thoughts
A fast, efficient, and professional onboarding experience sets the stage for a positive long-term relationship with investors. By preparing in advance, ensuring compliance, and delivering excellent investor relations, you’ll position yourself as a trustworthy and capable fund manager.
If you're looking for expert support in investor onboarding and relations, consider working with a specialized service provider like Verivest to streamline the process and elevate your investor experience.
Legal Issues
Whenever you are raising capital, you are selling securities. This implicates various laws and other regulations, and also creates potential liability for you, so you want to make sure that you understand the limits around what you can and cannot say while selling securities, the legal limitations on who you can raise money from, and various other issues that your securities counsel can guide you through. If you aren’t already familiar with these legal issues, you should take some time to discuss them with your attorney.
