Author: Josh

Private equity software is a great way to consolidate your data into one centralized, easily accessible system. In order to migrate your data into a private capital software tool, you first need to consider the source and format of the existing data.

Taking the time to carefully assess all of the different types of data you’ll be merging before you begin migrating data will help ensure that records are imported correctly and that the process flows smoothly.

Giving Flat Files Dimension in Private Equity Software

Many of our clients come to us with basic data such as names, companies, and contact information within a very flat database file. This might be an export from Outlook or a spreadsheet. 

“Flat” for example, means each contact has a company name listed, but there is no hierarchical relationship within the database allowing you to look at a company record and see all the contacts within that company.

In other words, it’s accurate data but not particularly useful data in its current format.

When data comes from a flat file, there is more planning and work involved in determining which fields go into which tables. 

For example, if a firm wants to have a field for web addresses, often they’ll store that information on a contact record. But individuals don’t typically have their own websites—at least not for business purposes. That’s something usually associated with an organization. Consequently, the Website Address field should live on the account record.

Thinking through these types of data relationships is critical as you prepare for data migration. While everyone on your team may understand your data hierarchy the way it is today, that doesn’t mean it should remain that way. If you’re upgrading to purpose-built private equity software, you want to be sure you’re able to maximize the benefits of that system.

Fields Specific to Private Equity

If you’re getting into data tables more specific to private equity—things like fundraising, pipeline, and investments—you’ll need to make similar decisions around the data you’re tracking currently in your private equity software and which table to associate the different records with.

For example, should the “Close Date” field live in a potential pipeline record or the investment table?  Or maybe it should exist in both. 

If that’s the case, you’re going to want that information to be automatically copied from one table to another to ensure data integrity.

Normalizing the Data

When you’re importing data for private-equity-specific tables like those for fundraising or portfolio management, you’ll want to normalize the data. Normalization is the process of ensuring that data is formatted the same way. For example, if you import some dollar amounts like $20M and some as $20,000,000, your data will be inconsistent. So, you should pick a format and standardize it.

Also, when you’re normalizing data, it’s important to remember that some organizations use different variations of their name. For instance, the company Application Experts often goes by App-X. Consequently, before importing contact and account information for people associated with that company, you’ll want to make sure that all variations (there may be several) are standardized to the same name on all records.

Deduplication: A Vital Step Before Importing Data 

Deduplication, or the removal of duplicate records, is perhaps the most important aspect of a clean import and the most often overlooked. This is particularly important if you’re importing records from the Outlook address books or spreadsheets of your team members since it’s very likely that multiple people in your organization will have the same contact person in their address books.

And a word of caution here: Many organizations are inclined to import data and then deduplicate it because they just want “to get all the data in there” as a first step. However, it’s much better to deduplicate and clean up your data as much as possible before the migration.

The most successful private equity firms today are upgrading to integrated software suites and technology systems. From an increasing need for scalability, transparency, and security, to optimizing business processes in order to save time, resources, and money, private equity technology solutions are proven to help firms grow and thrive.

Most firms have already adopted technology to a degree. However, non-integrated or disparate solutions can lead to issues of their own. So-called “swivel chair processes”—manual entry of the same information into different systems—cause significant strain on a firm’s time and resources.

In addition, increasing industry regulation requires greater transparency. And moving data to and from CRM systems and online storage requires digital security measures that are continually evolving to address new threats.

How can firms overcome these challenges and get ahead of the competition? They have to do more than implement new private equity technology. They have to adopt the right technology.

Purpose-Built and Integrated Technology

Innovators solve problems, whether they’re developing solutions in private equity technology or in any other field. Rather than just addressing symptoms, companies like Altvia search for root causes in order to improve systems from the ground up.

Exploring underlying issues often reveals that key segments of a firm’s core requirements aren’t being met. These symptoms can include a lack of transparency and security, poor user experience, issues with time and resource allocation, and an inability to scale. A little research can also reveal the high cost of supporting inefficient systems.

When a firm is experiencing even one of these issues, it can have a far-reaching impact both internally and externally. And we’re not just talking about it taking a little longer to complete tasks. The inability to address stakeholder needs efficiently and effectively can result in a firm losing lucrative deals.

Fortunately, properly integrated technology can solve even the most deep-rooted issues. For example, a well-designed CRM solution that’s purpose-built for the private equity industry and combined with integrated correspondence and LP portal solutions can dramatically improve how a firm interacts with stakeholders.

That includes:

• Demonstrating transparency
• Increasing the security of online resources
• Saving time and effort for users with intuitive navigation
• Providing scalability to accommodate rapid growth
• Reducing long-term costs

What’s more, implementing state-of-the-art private equity technology solutions can help a business position itself as an industry leader, strengthen its reputation, and close more deals. Stakeholders need to have confidence in the firm they’re dealing with before they commit to a project, and using private equity technology rather than a random collection of generic systems shows them that you’re focused on meeting their needs.

Finding The Right Solutions

Many firms begin to look for new solutions once internal pain or external pressure reaches an apex. This turning point drives awareness of the need for change and prompts firms to research solutions in order to find the right provider.

However, there’s no need to reach a pain threshold before starting your search—and every reason to assess your options in advance so you’re ready to make your move. To get started, first assess and document your firm’s operations and the private equity technology solutions required to support them properly.

Next, look at your current systems. How are they working for your team internally and for your external partners and investors? Is your team spending too much time moving information between systems? Do you need greater visibility or transparency for your investors? Create a functionality priority list for your firm and then use it as you search for new solutions.

Adopting Technology Gradually

Keep in mind that a complete overhaul isn’t always necessary. It may be that simply integrating a communications tool or investor portal, for example, will improve your operations significantly. Or finding a company that provides consulting and professional services could have a tremendous impact on your business.

The important thing is to keep in mind that there are private equity technology solutions available for any need. And a small investment of time, effort, and capital to find and implement new systems can produce an outstanding, long-term return.

For more information about how our private equity technology suite can help your firm, get started below.

What does differentiation look like for a fund manager? The answer to this question is complex, so let’s break it down. Previously, we covered the building blocks for processes in private equity technology that capture and warehouse data so that private equity firms can leverage new insights. 

Let’s look at how this foundation can lead to differentiation.

First, a definition: Differentiation is the result of efforts to make a product or brand stand out as a provider of unique value to customers in comparison with its competitors.

How Does This Translate Into Private Equity Technology?

In private equity, differentiation often stems from a firm’s “secret sauce” for how they source deals and find the best investment opportunities. This typically involves intricate processes and models to produce the best returns and ultimately differentiate from the competition.

While this has worked for many years, the process for achieving differentiation is changing. Many of our customers are in the process of raising their eighth or ninth fund and are continually looking for ways to improve investor perception and deliver more value-add services—on top of excellent performance. So, differentiation is not just performance but the entire stakeholder experience. 

This raises three questions:

1. What is the investor experience?
2. How are investors getting information?
3. How are their requests being handled and their needs met?

For example, is information being shared in generic spreadsheets or in branded, visually enhanced formats that are easy to understand and access? 

As a trusted advisor, Altvia looks at the big picture to understand what differentiation means to each customer. Then, we collaborate with them to establish the processes and systems/tools to help them achieve it.
Key point: Differentiation for private equity fund managers involves the entirety of the investor experience. What unique practices do you have that can help you stand out from the crowd?

Personalized communication

In managing the investor experience with the goal of creating differentiation, there are a number of variables that affect the dynamics of this relationship, from clear and consistent communications to reporting and transparency.

For example, optimal communication frequency, personalization, and tracking are among the key requirements for connecting effectively with investors and providing official investor documents and project updates.

LP Portal

Investors also expect 24x7x365 access to investment-related materials. They want to obtain information when (and how) it’s convenient for them. This is why an LP portal is so critical. It actually becomes the “hub” of the GP-LP relationship and a powerful resource for stakeholders.

For instance, fund managers using ShareSecure can securely post and share documents, multimedia presentations, and files with investors and then track materials that are viewed. This provides tremendous insight, enabling fund managers to see what’s really relevant and important to investors.

For your investors, this LP portal delivers a high-touch experience that’s all about ease-of-use. You’re empowering them to get what they need whenever they need it. This type of fund manager software benefits your team, as well, since you get fewer questions and requests that might otherwise strain your front and back office.

Reporting

Another component of the investor experience that’s a key part of differentiation is reporting—specifically, the types of data for which reports can be generated and how this data is delivered to the investor.

For instance, if quarterly reports are capturing the conventional data points and are delivered in spreadsheet format, the investor perception is likely to be that the service you provide is rather lackluster. It’s no better than they would receive from any firm. 

On the other hand, if your quarterly reports offer additional data points with new insights presented in a visually rich format, then there’s a clear opportunity to really engage the investor and create a positive impression. And impressing an investor not only has benefits today, it can create advantages for you down the road.  

This is how data management and fund manager software are evolving—enabling users to go “above and beyond” the static report to deliver data in an interactive format. This approach provides fund managers and investors new insights and can answer questions they didn’t even know they had.

Those “aha moments” can turn investors into vocal advocates for your firm!

How to lead for success with your Private Equity Technology

In the SaaS (software as a service) world, there’s always an ebb and flow of being proactive and reactive. In private equity, for many years, it was more along the lines of being reactive to information and data requests from investors. Fund managers would, over time, develop processes for meeting these requests and then add new technology to increase operational efficiency.

To really provide value to stakeholders and investors, fund managers have to be more proactive and deliver information in highly consumable ways. The value of the GP-LP relationship is based, in part, on the fund manager getting in front of requests using purpose-built fund manager software to provide crucial data that’s readily accessible, visually enhanced, and easy to understand. In short, fund managers have to be more progressive.

Providing meaningful information isn’t so much an act as it is a process. It involves operationalizing investment data, capturing institutional knowledge, and other practices that make a firm’s data rich enough for modeling and insight development. You have to have data points that go beyond simple stats.

By interacting with data in new ways and leveraging novel data sets, fund managers are able to make valuable discoveries and share them using impactful data visualizations. Now, the fund manager can ask and answer a whole new set of questions because of how the data is connected, presented, and made easy to consume. 

This strengthens investor relationships and helps set a firm apart. That differentiation is the reward for many years of creating and refining processes for how data is captured, warehoused, analyzed, and harnessed and for supporting those processes with the right fund manager software.

Just this morning, at a roundtable of IR professionals from well-known private equity and venture capital firms, I asked the question “how many of you are using investor relations software to score or predict the likelihood of prospects to commit to funds you’re raising?”

For a good ten seconds, it seemed as if there would be no reply whatsoever from the participants, but ultimately one brave soul did offer up something more or less equivalent to a manually calculated, somewhat arbitrary, and highly subject to interpretation method they use to figure how engaged a prospect is or how likely it is for a prospect to actually convert via commitment.

I left the early part of my career in venture capital not to shame how firms in this market behave, but rather to take advantage of an amazing opportunity to provide technology to these firms; the result of which would create opportunities for the firms themselves to use technology as a strategic weapon. It is my belief that there have never been greater opportunities for investor relations software to change the way PE/VC markets operate than there are today, and I want to start with this concept of predictive scoring, just one basic example of the application of technology.

Measuring how engaged a fundraising prospect is with any given GP raising capital is something that is proprietary; in a world where enrichment providers abound and help save us the mundane, manual entry of data that is objective, there’s simply no way for measuring engagement that doesn’t involve proprietary technology. Said another way: an enrichment provider like Pitchbook, Datafox, Preqin, or CapitalIQ is neither fit nor able, to tell you about the correlation between the messages and channels you use to the likelihood of closing the target. Not in terms of raising capital nor sourcing investment targets.

There are a number of firms we work with that arrive at this, however, and they do so via a modern mix of CRM (the source for proprietary actions taken and other data) and proprietary analysis that most often takes the form of modern analytics applications within the investor relations software. Where yesterday’s CRM is oftentimes seen as a management-driven hassle that users have no choice but to use, today’s CRM is an important provider of critical activity-based data and their associated outcomes, and which provides data to capable analytics applications that in turn start to help us understand patterns and correlations between activities and outcomes.

Let’s look at a basic example of this within the context of deal sourcing efforts. On the surface, every outbound firm has its deal sources, and a certain number of them will be considered “proprietary”. Many firms even have a surface-level assumption about how many of those deals — from a given source — they’re able to close. Note that I’m deliberately choosing to avoid using the word “understanding” in favor of “assumption”. The way I’m defining “understanding” in this case can be widely interpreted, and a simple number of deals closed is a perfectly fair definition by anyone’s standards, but it is my belief that there’s a definition that most firms would prefer. That definition considers the following:

1. whether those deals are deals that are likely to close to begin with
2. where deals from this source get stuck and/or how much time is spent to get them closed
3. whether there are efforts and activities that correlate to increasing the volume of deals from the given source (if it is so desired!)
4. whether the time spent on deals sourced from a given source is actually worth the all-important opportunity cost of lesser-considered sources

I’m attempting to stay relatively high-level with these considerations, but the last question above is the most important because it begins to consider whether there is a more effective use of the same resources. An easy way to think about this is to understand — through proprietary data — whether there is a “better” source for your efforts. In this case, “better” may not mean higher volume; it may mean a greater likelihood of success, or greater return on investment. More importantly, consider whether increasing the activity and engagement with that source has the effect of increasing the volume of higher quality deals.

Let’s pause there for a moment, and take the same proprietary data and analysis and port it to our understanding of fundraising efforts. Which activities lead to the highest conversion? Which attributes (location, size, mandate, etc) lead to an increased conversion with new LPs? Which messages are most effective? What is the typical engagement path and how long does it take to get to conversion? Which activities should we be taking and when?

But where proprietary technology and data begin to get extremely powerful is when we combine these two examples and begin to tell fundraising prospects a data-driven story about how our story is unique and how we’re differentiated in our ability to find the best opportunities. If that is where it begins, it is most certainly not where it ends; armed with the ability to understand our proprietary data and analysis of it, there’s no reason we can’t expect to begin to better understand how to win more competitive deals, both in terms of understanding deal dynamics and in terms of our ability to communicate what makes us differentiated when presenting to management teams.

In a time where the world is attempting to automate as much as possible, we must be careful to understand and distinguish between the time-saving automation efforts, and the invaluable proprietary tactics and data that can’t be automated. The combination of these two, and the insight therein is where true differentiation lies.

Step 1: Choose a technology partner that understands your business. 

The first step in our process is to understand your business. While we’re experts in software implementation for private equity, each firm is unique. You’ll want to customize the software to mirror your specific business processes.

When you’re selecting a data management system and/or a software implementation technology partner, it’s critical to work with a team that understands your industry and has implementation experience from projects with many other fund managers. 

It’s equally important to understand every software implementation is unique. It’s necessary to spend the time in the beginning tasking the right questions and really set the framework for your tech stack.

Step 2: Formulate a data strategy for your software implementation. 

While it’s tempting to jump right into implementing new technology, you need to take the time to focus on the underlying problems that private equity software is meant to solve. 

Taking the step to formulating your data strategy before the software implementation process ensures that the solution you purchase will be properly implemented and configured to solve your specific data problems and to produce the insights your team needs.

Identify the specific problems you need to solve by answering the following questions:

• Which parts of your operation would be best served by enhanced data management capabilities?
• Who are the stakeholders who will benefit from a data strategy? How will they benefit? Why will the strategy benefit them?
• Where are there problems in your ability to generate and capture data?
• Which processes could be streamlined by or be better-informed by data?
• What data would you like to have but don’t currently?
• Where could technology be used to address internal processes that may be generating data that isn’t currently captured?
• Where and how do you currently store data?
• How usable is your data in its current format?
• Who do you depend on to make your data usable?

Step 3: Implement, test, and refine your solution. 

Now that your internal team and technology partner has a clear plan for how the data in your new software is going to be used, it’s much easier to successfully install and configure the system for your team’s needs.

Depending on the type of private equity CRM you’re working with and the level of customization needed, this step could take anywhere from days to weeks. During this time, it’s important to start communicating the changes the software implementation will create to members of your organization, particularly those that it will impact.

You will want to work with a technology partner that has experience in the type of software implementation you’re executing and that has extensive project management experience. 

If they have that kind of background, they will lay out timelines and key milestones to ensure that the project moves forward efficiently.

As the software implementation comes to a close, your technology partner and implementation team will need to test the software to ensure it’s set up properly and that workflows are behaving as expected. This usually involves “dipping a toe” into the data to see how it reacts in the system, then refining configurations as needed.

The effective software implementation will involve working with small segments of your data first, rather than simply turning the system on and letting it run. 

This ensures that everything is functioning smoothly, there are no “breaks” in the data management workflows, and that you can pull from the system any information or reports you need.

Step 4: Conduct employee training and promote system adoption in your software implementation

Many organizations tend to think that software implementation ends once the solution goes live and there is evidence that data is being passed through it successfully. 

But don’t underestimate the need for team communication and training as the system is being rolled out. There is no substitute for having actual users “bang on” a system and place the kinds of demands on it that they will in typical work scenarios. 

Training that is personalized for your team is much better for promoting user adoption than generic training. Customized sessions help people understand how they will use the system in their everyday work, and makes them more productive from day one. 

It also helps ensure that employees put “clean” data into the system when they use it so that the software continues to work properly for your organization. You want the solution to deliver the same amount of value years from now as it does today!