Of all the signs that an organization needs a fund management software solution, perhaps the most common is that they currently manage their fundraising and investing using Excel spreadsheets. Excel is a great tool for doing basic data analysis and reporting, but it’s not, of course, designed to handle functions related to fund management.
The Problem With Using Excel as Your Fund Management Software
While it’s less common today than it used to be, there are still many private equity firms that use Excel to manage their funds. They store huge Excel workbooks on a shared drive where their employees access it to add or edit information.
Invariably with this approach, users create multiple versions of the document, and very quickly the validity of the data—even in the original version—is compromised. Also, most organizations don’t have measures in place for tracking what changes were made and by whom. Consequently, when data is incorrect, missing, or otherwise “bad,” there is no way to determine the source of the problem.
Why Making the Move to True Fund Management Software Makes Sense
Switching to true fund management software will make you more efficient in both fundraising and deal sourcing. With AIM, Altvia’s advanced CRM solution, you can more effectively track potential investors and easily communicate with existing LPs.
On the deal side, AIM makes it easy to share due diligence and record details from each step in the due diligence process. Ultimately, this enables you to increase deal flow in a scalable manner.
An example of how not using fund management software makes work more challenging for everyone in a firm is a client of ours who was required to produce a list of everyone who received a PPM from their firm. This would be a simple task in a fund management software system. However, similar to the scenario at many organizations, this firm sent out 100 PPMs—with 30 tracked in one spreadsheet, 30 tracked in another, and 40 of which whose source was unknown. Obviously, this created a problem from a regulatory perspective.
Another problem with using Excel rather than a fund management software is the accessibility of the spreadsheet. If it’s not stored online, it may not be available to team members when they’re on the road. Often, files that are stored on a shared drive are inaccessible from outside of the office. Many clients we work with also choose to store these documents locally on one employee’s computer. This risky arrangement allows for the possibility that the document could get lost or deleted altogether.
Fund Management Software: The Right Database Structure for Firms
One final reason that using Excel to track people and the organizations they are associated with has its limitations has to do with database structure. Excel has what’s referred to as a “flat” database structure. This means you can list individuals and their contact information but you can’t necessarily look up all the individuals who work for one particular company easily or view other connections between contacts.
So, while the spreadsheet may contain all the information you’re looking for, it may be very difficult to find that information or to be confident that you’ve found all of it. And you definitely don’t want to be making decisions based on incomplete information.
Altvia’s fund management software makes it simple to create and maintain relationships between different pieces of data, generate lists and reports, and much more. The result is greater efficiency, simplified data management, and a significant competitive advantage over firms that don’t use fund management software!
Learn more about Altvia and our industry-leading fund management software solutions on our website or you can request a demo below.