When first getting to know our private equity clients, we discuss what methods they are currently using, and often the answer is Excel.
Private equity firms look for a new solution when they reach the limits of Excel, which is inevitable.
Excel is great for basic data management and analysis, but when it comes to the intricate work of managing relationships, funds, and associated deals, the systems’ limits become glaring.
We’ve found that there are several reasons why Excel isn’t an effective tool to manage funds, some of which you may have already experienced.
Here are some limitations of Excel:
When you’re working with individual files, it’s challenging to collaborate. Using Excel, only one person can have the spreadsheet open at one time, which creates inefficiencies and an irritating user-experience.
All of us have had this experience—we attempt to open up an Excel file that’s been edited by several people, and we find that it’s corrupt. All of that hard work is lost.
Controlling the location of an Excel file is nearly impossible. You might have a central location for file-sharing, but we’ve all experienced the situation where we’re working on a file, get called into a meeting or a phone call, and save that file to our computer, without updating the group version. This is a mess and creates massive inefficiencies for the company. You end up with hundreds of versions of the same documents (Yes, literally. Hundreds. We’ve seen it.)
In a complex web of connected cells and formulas, it’s nearly impossible to figure out the broken piece. And, even a well-intentioned user can blow up the file, rendering it unusable. There’s often no way to track who made changes. Additionally, you’re going to end up with one person who is the master of that spreadsheet, and when that person leaves all of the historical knowledge is lost.
An Excel file can sometimes feel like an island. You likely have related data and information on your funds and the associated relationships, deals, and people involved, but it’s nearly impossible to marry all of that data together in a single file, creating gaps in the full picture of the funds.
Working across interconnected workbooks can sometimes feel like deactivating a bomb. When you try to connect data across workbooks, things become precarious and often end up blowing up.
Excel files often have constraints in their access. Often, you have to be logged into a specific system, VPN, or document sharing network to access the proper file. Also, when you do get access, it’s mostly only from a desktop, because of the limited options for access from mobile devices.
Advanced reporting usually requires Visual Basic knowledge. Additionally, Excel doesn’t provide structured data points that you can report on. Moreover, it’s hard to print from Excel, so putting together reports to take to your Monday meeting can be a hugely tedious endeavor making reporting overall a pain.
Pivot tables are hard, sharing is difficult, accessibility is limited, Excel is ugly, and on and on. All of us are becoming acclimated to a smooth and easy web and software experience, which is making the Excel experience more and more painful for our stakeholders and us.
Is it a good use of your time and your team’s time to serve as an Excel jockey? With access to advanced and connected web-based systems, why continue to use a dated system when you could free up your team to do more critical and strategic work?
Excel is great for many things, and we use it regularly here at Altvia. However, if you are using Excel in lieu of private equity investing software or venture capital management software, my guess is that you are either running into limitations with Excel already or you will be soon.