This article was initially published on The Drawdown by Krytal Scanlon.
“We enable GPs to lead with their story, to present their track record to prospective LPs, which then gives them the chance to look through the data to understand what sets this GP apart from its competition.”
The Drawdown (TDD): What is Betterfront and how does it work?
Michel Geolier (MG): Betterfront is a fundraising platform for PE and VC managers that want to attract and engage institutional investors. We work with GPs across Germany, France, the UK, the US, Russia and Canada during their fundraising process and help win LPs with a data-driven fund story.
TDD: How does your platform differ from its competitors in the market?
MG: At Betterfront, we focus on the GP’s track record, simply because it’s the number one element for the LP due diligence process, and it’s generally time consuming. Betterfront enables GPs to collect the data, analyse it and communicate a data-driven story to LPs efficiently.
We differ from other solutions by taking a more proactive approach to analysing, communicating and sharing the GPs track record in a way that makes LPs’ DD easier. This results in a far better experience for LPs overall, while building better relationships between GPs and LPs through this higher level of transparency. This has enabled us to attract new clients, which were already using other more well-known platforms in the market.
TDD: You received seed financing from HTGF and angel investors in September 2020. At the time, you said the investment would allow you to accelerate product development and launch more customers. What have you achieved so far?
MG: Prior to the fundraise, our team consisted of our three co-founders, each with different backgrounds. Our first seed round has enabled us to hire the engineers to build a more holistic product, as well as incorporate our ideas for track record analytics and data room functionality. Since the fundraising round, every client we’ve attracted has been through word of mouth and haven’t had to spend anything on marketing.
In the last year, we upgraded the product to provide a holistic view of the fundraising process, making it a complete fundraising product, not just a solution to complete track record analysis. Prior to the seed round, €350m was being raised via Betterfront. Since our fundraising and upgrading the fundraising software, we are close to €2.5bn being raised on the platform, which has undoubtedly led to us attracting even more GPs.
TDD: Your firm said: “Fund managers who continue to use data rooms to dump data on prospective investors instead of adopting new fundraising technologies will be left behind.” But Betterfront has its own data room. Can you tell me more about this?
MG: Most managers make the mistake of leading fundraising with a data room, rather than using the platform to support storytelling. LPs invest in funds because they truly believe in the story of the GP. They have completed their due diligence and understand how the firm is different and unique compared to its peers.
According to Preqin, today there are more than 5,000 fundraisings in the market. That quantity is almost impossible for LPs to sift through, to understand and analyse each fund in detail. That’s where Betterfront steps in.
We help GPs to tell their story even when they aren’t in the room. Usually after LP meetings, the GP would send over their data room for them to look through. But today, that doesn’t work as well. GPs need to be able to tell their story even when they aren’t in the room, so the LP can build conviction about the investment strategy and how it’s different - without having to do excessive manual work of taking data from Excel, which is time consuming.
Our platform eliminates the manual work and creates an efficient process for both parties. We enable GPs to lead with their story, to present their track record to prospective LPs, which then gives them the chance to look through the data to understand what sets this GP apart from its competition. The data room is there to support the bigger picture.
TDD: You previously worked at an LP, Siemens’ pension fund. In what ways did your LP perspective help you to create Betterfront?
MG: Siemens’ pension fund had been allocating to VC/PE for more than 20 years and the deal flow was amazing. However, that’s what made my job even more challenging. It was incredibly difficult to understand what set one manager apart from the next, when around 90% of the pitch decks I’d see would feature the same phrases, such as “top quartile”, “top returns” and so on. Sure, the statements might be true, but it didn’t show me why the GPs were unique. And of course while the way to sift through the details lies in the data, most LPs don’t have technology which can handle and analyse hundreds of funds, therefore a lot of the work I did was manual.
That’s what led me to leave the LP world and co-found Betterfront in 2019. I wanted to build a product which could solve this pain point for both GPs and LPs.
While it’s great to provide LPs with GPs’ data, what we really want them to understand is the GPs’ stories. For example, how they construct their portfolio, their approach to ownership and valuation, does the strategy drift over time - the real crux of why this GP is different from its peers. That’s ultimately what will swing an LP vote in your favour.
TDD: What further upgrade plans do you have for Betterfront in the future?
MG: We want to enable capital introductions to relevant LPs directly on the platform, which is something that’s been requested frequently by our users.
Previously, we’d make introductions via emails when we saw a good GP/LP fit. But now we want to enable Betterfront to streamline the discovery element, meaning more GPs and LPs that are relevant to each other would be within each other's spheres. We’re introducing a SaaS-enabled fund marketplace, enabling LPs to access primary and secondary fund opportunities. By using our platform, they can not only find new managers, they also have direct access to their track records data and analytics, taking away the manual work.
