Throughout the pandemic, Robin Lokerman, group president at MCI Group, spent a lot of time on internal training to help clients operate in the virtual space – as his company coordinated over 2,000 online events in the process. But, he saw that that clients were still hurting and needed different solutions. So, in October 2020, with the help of ESTROCEO, Alessandro Cortese, and ASSOCIATIONWORLD president and CEO, Kai Troll, they starting conceptualizing the idea for Association Investment Partners (AIP).
By working hand-in-hand with associations to help develop models, strategies and solutions, the business-minded approach is aiming to future-proof organisations by ensuring long-term growth. Boardroom sat down with the three founders – whose team has already grown to a board of five (with two American counterparts) – to learn more about this shift in mindset and management.
Cortese: Change is everywhere. We are in a time where organisations are facing new challenges, and it’s important that those challenges are addressed right now. Change costs, so you need to fund cost and the ability to drive change. We are in a situation where revenue has dropped and cash flow is lower than before. The model of AIP is very timely to address this need.
Lokerman: We want to come in and help associations identify the strategies to help them be more impactful in a changed world—and that’s investment in digital marketing, communities, events. Every event, I believe, will become a 365-day-per-year event, where you engage with your delegates and your sponsors not just during the event, but throughout the year. That will require different platforms, different ways of thinking, and different staff, eventually. We will help associations design its strategy first, but also have the capital available to invest in that strategy.
So many associations need to change, but they also need the resources to make that happen. We went out to raise money so we could truly become change agents in a changing world. We want organisations to be in charge of their own brand, their own destiny, which is why we only take a minority stake. We want to make sure the recommendations we make are working and take a risk for just a small part of the reward.
Robin Lokerman: There’s an alternative that has been happening in the trade show realm for many years, where big trade show organisers approach associations to acquire their congress or trade show, but then they sell it and lose control of it. We don’t want that; after five years, associations have the option—not the requirement—to buy back our stake and have 100% control. It’s really a five-year commitment to go through a change process together.
Troll: It’s not a new model—it’s just a new model for associations. We run business components, so why wouldn’t we run an association with a mindset of running a business, even if we are nonprofits or representing causes? Even more so now, associations need to put their business mind on now in times of change. This is an ongoing process; there is a shift of mindset on the board level to understand their responsibilities and roles that they have.
Cortese: It’s a cultural change—the idea is to drive the whole sector into a new way of thinking that hasn’t been done before. At the end of the day, why should it be different from other sectors? We come from this mindset that it’s either for- or not-for-profit, but maybe it’s really just good or bad management.
Lokerman: It’s critical. I think the life of associations has suddenly become more complicated because of the hybrid model. It was mostly physical before COVID, then quickly became virtual. But as meetings resume, you’re moving into the hybrid space, a new space that requires double resources. It requires two teams for a hybrid event: one that does the physical—logistics, marketing, content staging—and the other that handles the virtual, the platforms. That’s why we feel now is the time for associations to be making the investments to operate in the hybrid space, which is more complex, but, if done well, more rewarding, because you can make significantly more impact, have a bigger reach, and, we believe, a much better revenue potential.
Lokerman: I think it’s important to note that there will be no cost to the association working with us. We are investing in commercial entities that we ask the association to set up—which is a common practice in France and Germany for VAT and other reasons—and we take a minority stake in these commercial entities and one or two of us serve on the board alongside representatives of the association. So, we are strategic advisers with the client throughout the five-year process.
Troll: For organisations that have large trade shows and exhibitions, with decreasing revenue, this is a win-win situation. At the moment, most associations think of how they will break even; we need to bring in a situation where we have a co-creation process with the organisation that will lead to a growth of revenue.
Cortese: Events are a driver of growth; many organisations make the majority of their revenue from events. But the co-creation process is about understanding how many organisations will evolve over the next year to stay relevant to their communities, their offerings, the benefits they propose. The change is a growth strategy change and the events are the tool to allow to drive and sustain that growth.
Lokerman: In a time of enormous change, like we’re in, there will be those associations willing to adapt and function well in new world and new way of engaging with their stakeholders, and some who won’t. There will be an opportunity in the next two to three years for merger and acquisition talks between associations; before COVID, we saw a huge splintering of the association market, I think we’ll go back toward a federated model. In the hybrid world, these sub-communities can exist as part of a whole—they don’t need to be a separate organisation. To have capital support helps associations in their negotiations with potential acquisition targets, and I think that’s one of the ways we can support associations with their growth.
Written by Lane Nieset