Automation Taking Aim At Entry Level Roles

Could your new co-worker be a robot? Thanks to automation, 2022 could be the year we see more and more entry-level analyst roles being swapped out for Artificial Intelligence (AI). In fact, the World Economic Forum predicts that, by the year 2025, 85 million jobs will be replaced by AI. While that may sound like a terrifying statistic, it’s not all bad news—there will be job growth, too (we’ll explain more in a minute!).

From time and cost savings through data automation and integration to streamlining deal-sourcing and internal operations, private equity and venture capital firms can leverage AI to replace tedious and mundane tasks while making room for more high-level and strategic hires. 

Entry-Level Analysts Are Out—AI is In 

Robots are not humans—and firms can use that to their advantage, especially when it comes to operationalizing tasks completed by most analysts in entry-level roles. By leveraging machine learning to streamline deal-sourcing and operational processes, VC/PE firms can eliminate the need for analysts’ involvement in tedious tasks, such as copy/pasting, transcribing, and data entry. 

Machines are, by design, less error-prone than humans (who make mistakes by nature), so repeating the same mundane tasks over and over is no sweat. On the other hand, humans can easily become exhausted, irritable, and more prone to mistakes when completing tasks repeatability with no break. Computers can be programmed to automatically complete these tasks, helping to avoid human error—like typing mistakes—which can lead to costly and detrimental effects to the business down the road.

The Role of AI in PE/VC Teams

When integrating data from various sources, including VC-specific CRMs like Altvia’s, AI-driven recommendations only improve. So, along with replacing day-to-day mundane tasks, the more data your systems have access to, the more likely your AI program evolves to become an intelligent extension of your team. 

As PEHub states, “The holy grail of high-tech robots is for alerts that proactively advocate next steps, based on your relationship with an intermediary.” Teams can program their systems to provide enriched alerts with powerful time-saving data, like market changes and insights, contact information, and details on previous conversations with portfolio members. This arms team members with deal-closing insights to act on in-the-moment, rather than having to wait for an analyst to dig up information. 

Before implementing AI, Institutional Venture Partners’ (IVP) VP of Business Development and IR, Kelly O’Kane, noticed their firm’s investor communications workflow was not scalable. “Our team would spend anywhere from 5-10 hours cross-checking our investor reports for distribution,” O’Kane stated. Once Altvia’s data-intelligent software was implemented, the firm instantly saw time and cost savings results on operational processes and investor communications. 

Through AI, firms like IVP can easily transform data into actionable intelligence and deal-closing insights in an instant while refocusing attention to other areas of the business that can’t be automated.

What Jobs Are Sticking Around and Why

Keep in mind that, with job loss and replacement also comes significant job growth. The same World Economic Forum report that predicts 85 million jobs lost to AI by 2025 also predicts 97 million new ones opening up because of machine learning. That’s because AI cannot replace everything – or everyone.

Roles that involve creative and complex thinking will be more important than ever. Computers cannot think critically or develop new strategic ideas, especially in complicated scenarios—and that’s exactly where the human mind shines. Additionally, while  AI can provide powerful data to assist in decision-making and thinking through problems, it cannot be programmed with human intuition and the years of experience that executives and business leaders possess. That’s why roles for creative problem solvers and leadership members will stay put—and even grow. Think: marketers, inventors, and business operations executives. 

Robots will also never be able to replace the role that real human connection plays in business. As any VC knows, establishing trust and a human-to-human connection in order to get people to relax, open up, and share about themselves is imperative to successful business relationships. Because of this, expect to see sales and investor relations roles stay for the long-term. 

Finally, to fully automate your processes, a successful AI program requires someone to actually program, refine, update, and maintain it. Because of this, roles for AI programmers and developers will be popping up on job boards across the industry. 

Make Room for AI-Driven Automation 

Before heading to the job boards to post a wanted ad for a new analyst or data-entry employee, think twice to see if you can turn to automation to complete those tasks for you. 

While the upfront cost of building and training AI programs to align with your firm’s specific processes and needs can be high, replacing these entry-level tasks with intelligent automation can significantly lower operational costs compared to paying humans to do the same job. 

If you’re ready to automate your operations and make room for more strategic growth, we’re here to help. To see how your firm can benefit, start a conversation with our team.

A traditional crm was built for general ‘customer’ scenarios

Software platforms have made the world a better place by making work a better place. Indeed the world is better off when people enjoy their jobs even marginally more, and workplace applications on big CRM platforms like Salesforce.com have done that and much more.

But the potential that platforms like these offer presents diminishing returns: once the platform provider has engineered too many industry specific components into its platform, its usefulness for other industries begins to be threatened, and with that so do the usefulness of the component tools built into the platform.

So it is with the CRM category that Salesforce.com has defined: it is generic enough to work for many industries, and yet still offers the potential for others to round off the edges and nail more vertically-oriented and extremely tailored software solutions.

Private capital markets are actually a great demonstration of this dynamic. Where generic CRM platforms simplify — appropriately so — to assume there’s a business, a customer, a sale, and service of that customer, there are a few industry-specific pieces that are missing.

Take for example, that investors become customers by investing through legal entities the GP raises. It’s a subtle but important nuance that just doesn’t make sense at a platform-as-a-service level (because it’s overly complicated for a simple one-time sale that many industries require), but which can easily be added without 10 years or software engineering. Once provided, the rest of the platform’s components become tremendously powerful again and you’re set to take over the world.

As a traditional CRM in our pillars methodology, these nuances must be present to properly account for investors in these legal entities, potential target companies and which are owned by these entities, the context of all interactions with these parties (as well as the appropriate overlap, ie co-investments), and how you’re arriving at finding these opportunities on both sides of the equation, such that you’re able to piece together what’s effective and what’s not. Not just because we say so, but because these are the very relationships and data that are key to the motivation behind a CRM in any industry.

It’s critical, too, that the valuable publicly-available information that helps to enrich CRM systems and save users painful steps of entering it themselves is fully-integrated at the platform level.

Again, look no further than the 3,000+ pre-built integrations that Salesforce.com — the creator of the CRM platform concept — has at a platform level to do so, and which only exists by way of holding just short of overly-specifying certain industry workflows that would present challenges to properly integrate.

Stakeholder reporting and communication (investor relations) draws on a range of datasets

The traditional “customer service” model of CRM systems once again makes overly-simplified assumptions about the customer relationship when applied to private capital markets.

In fifteen years I personally have yet to hear the terms “warranty” or “service call” in this market because it’s just not the same. But make no mistake, as uncomfortable as it may be to say aloud, customer service is more important now than ever and it’s constantly happening; the industry is, after all, considered to be a financial “service”.

As it turns out, that service is primarily information-based — it’s driven by data and takes the form of reports and analysis that drive decisions, and then end up again in investor-facing reports and analysis.

The foundational elements of a private capital markets CRM must be built such that they accommodate this data (like we discussed above), but so too that it can accommodate additional supporting data that investors (customers!) need in the context of service.

Oftentimes this supporting data — financial metrics and time-based values, for example — is believed not to meet the traditional definition of CRM and the natural thought is “well, better do this in Excel!”.

While I happen to believe Excel is still the greatest software application ever built, its introduction to this value chain we’ve discussed herein actually creates the problem many firms suffer from: key data needed to provide customer service (again: effectively the entirety of a firm’s reports and analysis) is now in disparate systems and detached.

Both of those dynamics are important and distinct: not only is this supplemental data disparate, but when brought together there is no logical association that can be made between the two data sets.

Allow me, then, to make the point very simply: not only can this financial and time-based value data (you may be thinking about is as “portfolio monitoring” or “accounting”) be a part of a CRM, it is arguably the most important part of a CRM because it’s at the core of what providing service to the customer entails — information that comes out of data!

Firms need a digital method to engage stakeholders (ie investor portals)

Investor portals are not new; in fact, for many of us — including myself — they conjure up horrifying nightmares in which we’re aimlessly guessing at folders to find the newest document we need.

So in lies the opportunity: not only have the portals we’ve come to hate not simplified the process of acquiring information, they’ve failed to create an entirely new experience that is “customer service” driven.

To be fair, this is not a B2C market where you’d be long out of business for not having focused on customer service and thus the customer’s technology-driven experience. But don’t expect to be around too much longer if you aren’t thinking about this shift.

Today’s institutional investors increasingly expect this same consumer-like experience, and a massive opportunity is being missed by not providing it. It’s not about providing them the experience they desire; it’s more about the ability to measure engagement that is had in return.

Put simply: what’s keeping the market from providing this experience is the availability of the information that’s required to create the service that provides the experience.

If you’ve hung in this long, you know that by focusing on your CRM, you have the data that’s required to manage the customer relationship and the technology-driven experience through which that information is shared to create a differentiated and opportunistic customer experience.

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