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What is the point and value of AGMs?
Reflections & learnings from Chris Wade, Founding Partner of Isomer Capital.
Firstly let me be clear, I am talking about Annual General Meetings and not Air to Ground Missiles. Isomer has just held its 8th AGM, and it's evolved from a meeting of 20 or so LPs to a multi-day event involving hundreds of LPs and many months of planning. Post-event, in that slightly exhausted but elated space, I thought about the purpose of AGMs and why there is such a wide variety of approaches in our VC industry.
Must you do an AGM?
There is a formal requirement to publish annual performance, which could just be an extension to the Q4 report, and this could be via email. While not mandatory, there is logic in the idea that you would want present and discuss the performance of your funds, especially to LP's who backed you and presumable you would like to do so again.
Why not do the bare minimum?
AGMs cost money! There is a debate between spending scarce fund income on AGMs versus other critical topics. In our fund portfolio over the years, some GPs have gotten it over and done with by holding a meeting in their offices and around a conference table reviewing the portfolio. Total cost? A plate of biscuits! And that can be perfectly alright.
In truth, it's a question for the LPs what they want from an AGM
The following are some of the inputs we have heard over the years:
What do LPs want from an AGM?
Listen to the GP discuss their thoughts on the fund performance, portfolio, and outlook for the future.
Understand the current market dynamics that the fund is operating in.
Understand the GP's plans for future funds and Co-Investment opportunities.
Opportunity to hear from the whole team, particularly team members they do not regularly interact with.
Hear from portfolio companies and understand and appreciate the founders driving the fund's performance.
Meet other LPs and discuss potential investment opportunities together.
LP's like being part of a community … your community!
Perhaps the most surprising (or not) discovery over the last 7 AGMs at Isomer is that LPs who come to our AGM REALLY enjoy meeting each other, and there is a component of their continuing to support furture funds that is affected by this. Think of it as a community which is a bit special, curated by you, the GP, and joined by LPs who share an interest in you, your fund and your investment thesis. So not entirely surprising: this community works incredibly well. Providing the opportunity to exercise that community is a potentially important factor to consider when deciding how to put together your AGM.
One size does not fit all … It's what works for you.
In the 70+ Funds we have backed, I think it's safe to say that no AGM is the same. If there is a pattern, it is that the AGM event represents the personality and culture of the GP and fund, and clearly, a €30m fund must make decisions on the budget. We should say here that the COVID years taught us that Annual meetings could be very efficiently delivered online at a fraction of the cost and done in a couple of hours. But does nothing to create the community effect that may be an important factor.
Types of AGMs we have been part of.
Afternoon-fund-and-portfolio-presentations potentially followed by drinks and/or dinner (expansiveness of whether it’s drinks or dinner often depending on whether the LP has traveled to the meeting or live locally.
Whole-day events with lots of time for networking and drinks and dinner the night before/after.
All of the above plus external guest speaker(s) that may or not be famous, or who are just in your network and/or has something interesting to say.
The conclusion, there’s only one piece of advice…
Ask your LPs what they want - but one word of caution … Most LPs do not know they want to be part of your community until they are, and then they love it!!!
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