Category: Private Equity Technology

Recently, Altvia CEO Brie Aletto and Chief Strategy Officer Jeff Williams were joined by Cendana Capital Partner Kelli Fontaine for a webinar on effective data and technology strategies in today’s LP market. Titled Today’s Differentiated GP: Modern Data & Technology Strategies, the live, online event was attended by more than 250 people and provided a wealth of insights in key areas.

Data Models

The panel starts by discussing the surprising fact that two-thirds of institutional investors surveyed believe that GP information is “less than good,” and 92% feel it’s “less than excellent.” Kelli makes the point that given those numbers, organizations shouldn’t be targeting “industry standard” leveraging of data, as that’s a very low bar today. You can (and should) stand out by exceeding that standard.

The panelists agree that fund management is a business, so you have to think about how you want to run it. And as a GP, you’ve got to understand not just how individual companies are doing, but also how your portfolio is performing in general.

As Jeff says, the overriding issue is that failing to fully leverage your data to offer a superior “customer experience” is a missed opportunity. And Kelli adds that you can’t know “what’s going right and wrong” with a portfolio if you don’t use data wisely.

Systems & Infrastructure

The session continues with Jeff explaining Altvia’s “PEriodic Table of Technology” (including joking that the slide title should probably be trademarked!) and Kelli agreeing that it’s problematic when the functional groups within an organization don’t share data effectively.

She also explains that Cendana is small in terms of headcount but is able to manage billions in assets thanks to having the right technology and properly structured data. That requires putting time and effort into assessing what information is available to you and how you’ll gather, manage, and utilize it.

Kelli also shares and describes an interesting slide with sample Cendana data sets and emphasizes the importance of proprietary data. She then explains Cendana’s data ingestion process, use cases, and data flow.

She goes on to talk about her challenges in finding a technology partner that understands both Salesforce (as the foundation of a data management system) and her firm’s specific need—and how Altvia meets those critical criteria. She mentions products like AIM and Altvia Answers, with both being critical to her firm’s operations and the latter being a “game-changer.”  

An Informative Demo

The session continues with a software demo, starting with actual data in the Altvia Answers product. Kelli explains how Cendana uses Answers to its advantage, noting that users can generate the data requested by any stakeholder in seconds.

Jeff then switches to a demo database to show more Altvia capabilities.

Great Questions and Insightful Answers

We’re grateful that an engaged audience asked excellent questions throughout the session. Their participation allowed the panelists to share essential insights on the Altvia suite of products, what integration capabilities it has, and how firms can leverage data and technology effectively.

We encourage you to check out this information-rich webinar. And if you have questions about Altvia products and services, contact us today to request an informative demo.

It’s no secret – to remain relevant in today’s market, businesses need to think about, and take action toward, how they’re making an impact on the planet. After all, sustainability is the new aspiration for companies, and the key to achieving it is developing enhanced ways to measure ESG initiatives, performance, and overall impact.

However, measuring ESG performance is easier said than done. So how can PE/VCs ensure they’re on the right track? It starts by determining how to measure the relative value of any given ESG metric and understanding the pitfalls to avoid misleading investors along the way. 

Understanding ESG Performance

At its core, ESG performance is a measurement that shows how a company is performing against set criteria of ESG (environmental, social, and governance) values. This measurement is used by investors to fuel decision-making and compare brands against competitors. ESG performance is also a leading factor consumers and employees use to determine if a brand is aligned with their values before deciding to do business with or work for them. 

When it comes to comparing ESG ratings, three main approaches are used by investors: 

1. Comparing ratings to peers managing comparable portfolios
2. Leveraging a standard industry benchmark index
3. The investor’s history and internal data

However, each approach comes with caveats. The appropriateness of each depends on an investor’s particular situation, including the risk profile of the portfolio, the composition of stakeholders, and any fiduciary obligations. 

Comparing ESG performance is not an apples-to-apples game, though. When comparing specific ESG performance indicators, investors are often misled, given how much ratings can vary by industry, company, and value point.

Measures that Mislead Investors

Because one of the biggest challenges in measuring ESG performance has been the lack of consistency surrounding industry benchmarks and performance measurement metrics, investors face challenges when evaluating performance. This becomes increasingly tricky when comparing the performance of one company to another, including competitors. 

Whatsmore, most ESG data available is often self-reported by companies, which means there are significant gaps in data availability, not to mention somewhat biased information. 

Measurement also often fails to provide insight into messy underlying processes. For example, data shows that adding women to executive teams will produce better outcomes. However, that data point doesn’t take specific outcomes into account, such as decision-making that reflects diverse perspectives. This is why investors must look beyond the numbers to learn how, why, and under what circumstances the decisions came about. 

Performance Pitfalls to Avoid

It’s recommended that firms follow a “zoom in, zoom out” approach. This means “zooming in” to focus on better integrating ESG factors and their values within the portfolio while also being sensitive to issues of concentration, tracking errors, and risk. By “zooming in,” firms can create risk frameworks that pinpoint ESG threats and failures. By “zooming out,” they can better understand issues and underlying processes while gaining insight into bigger-picture strategies and opportunities. Without a broad and narrow look at investments, PE/VCs risk missing opportunities to improve performance. 

Finally, it’s imperative to maintain a single source of truth for ESG benchmarks and metrics. A trusted, reliable data source that arms management teams with confidence in their numbers and transparent reports for investors is critical to effectively measure ESG performance.  

Track and Measure Your ESG Performance with Altvia

To track and measure ESG performance with confidence, your firm needs to rely on the right tools to effectively transform your ESG commitments and data into transparent reports for your stakeholders. 

To turn your goals into an operational ESG strategy and effectively measure your progress along the way, a tool like Altvia can help. From evaluating risks, to monitoring competitor insight and internal performance, Altvia’s software can arm your firm with transparent, quantified metrics on the impact of your ESG initiatives. 

To see how Altvia can supercharge your firm’s ESG initiatives and performance tracking, contact a member of our team to start a conversation.

Choosing the right technology to meet your firm’s immediate needs and long-term goals will not only streamline operations today but will position your firm to take on future challenges and flourish in an ever more competitive environment.

Your firm is like no other and your technology should be flexible enough to accommodate and improve your unique business processes. In the long run, technology will make new levels of efficiency and transparency available, and provide a way to differentiate your firm from the competition.

With executive sponsorship, company-wide buy-in, a strategic approach, and a collaborative round of testing and optimizing, you can be up and running with more transparency and efficiency than ever before.

Firm-Wide Effort

A data transformation takes firm-wide effort and a well-thought-out strategy. But once you are underway, you’ll quickly see your investment pay off.

1. Drive the Implementation in the Right Direction

Software implementations of any type require planning, technical setup, training, and change management. None of this can be done effectively without proper buy-in from all levels of the organization.

Without the right people backing your decisions and driving the implementation in the right direction, even an ideal software solution can fall flat and wind up being a waste of time and money.

Having executive sponsorship is critical to a successful software implementation.

Executive sponsorship means a senior-level executive is responsible for the business success of a project. Usually, there is a small team of people in charge of making the decisions on whether or not to purchase a new technology solution. This can be troubling since implementing new software, like a CRM, will have lasting impacts on almost everyone in the business.

An executive sponsor on the software implementation team significantly increases a project’s likelihood of success. It helps ensure that the software is being set up in a way that will support business needs at a higher level of the organization. Plus, the sponsor should prove to be a valuable technology advocate for the rest of the firm.

2. Increased Transparency & Visibility with LPs

Sharing information with Limited Partners often involves multiple phone calls and emails. Not only are these traditional communication methods slow, but they also don’t offer the kind of transparency Limited Partners require. Today’s solutions often include an investor portal that empowers Limited Partners to find the information they need quickly, easily, and efficiently. A robust investor portal will allow firms issuing documents in a secure platform to request signatures, track and manage documents, and see who has already viewed the document.

3. Quicker Knowledge Exchange

Many firms have the information they need to be stored in siloed systems. Logging into and transferring information from various locations slows productivity and even increases human error if not checked properly. 

Today’s solutions are designed to work with one another—either within one solution or through a third-party integration that connects to other solutions. Private Equity firms can enjoy a faster, more efficient process when connected to important systems such as data and analytics reporting, financial accounting, investor relations, customer relationship management, and portfolio management.

There’s a reason auto manufacturers don’t design cars with the speedometer on the ceiling, the fuel gauge under the driver’s seat, and the check engine light in the trunk. In order for a driver to operate a vehicle effectively, they must have critical information that they can check quickly and efficiently. 

Alternative investment firms also need vital data where it’s easy to view. That’s why leading firms implement portfolio management tools that include advanced dashboards. The industry is moving faster than ever today. If you don’t have the information you need to make important decisions wisely and rapidly, it’s likely that you’ll lose deals to other organizations that can.

Essential Data for Portfolio Management

Needless to say, your portfolio management dashboard must provide the specific data that are important for your firm and the types of deals you pursue. But generally speaking, there are three broad categories of data you should be able to see at a glance in your dashboard:

1. Financial information. Portfolio managers need clear, concise details on forecasts, actual figures, and budgets. They also need access to information on cost breakdowns, different types of expenses, compliance costs, and much more. If their dashboard has the right data, managers can spot trends quickly and make course corrections as needed. They can also identify opportunities and start their pursuit before competitors are even aware of them.

2. Strategic assessment. How is your portfolio’s performance aligning with your business objectives? You’ve got to be able to answer that question to ensure you focus your efforts on the right areas.

3. Project visualizations. Often what a portfolio manager needs is access to the status of their projects at a glance. Well-designed dashboards provide summaries of project health using key metrics that are displayed graphically and easy for viewers to understand.

Altvia Answers provides this type of operational analysis. An additional benefit of having this kind of data at your fingertips is that it enables you to differentiate from your competitors. The comprehensive view that Answers produces helps portfolio managers paint a compelling performance picture rather than just reciting facts and figures.

Avoiding Portfolio Monitoring Dashboard Mistakes

Firms that implement a portfolio monitoring dashboard simply so they can say they have one may be doing more harm than good. You must optimize your dashboard to report on the KPIs and metrics that matter to your team and investors.

To do that, you’ve got to avoid common dashboard development mistakes. For example, you must include the correct information in your dashboard. Too often, firms create dashboards that contain data that isn’t useful and become “noise” that makes it harder to find crucial information.

It’s also essential that you achieve the right balance in your dashboard. If it has too little information, it doesn’t help you make well-informed decisions. If it provides too much information, it’s challenging to identify the insights you and your investors need to be successful. And once you’ve identified the right amount of data, you must ensure that it’s always current.

Enabling Proactive Portfolio Management

Finally, your dashboard should enable you to assess dependencies between and among your projects and portfolios. It also must make it easy to spot KPI trends, analyze their impact, and determine what actions you should take to address them.

And increasingly today, firms are looking for solutions that enable predictive analytics. Your portfolio monitoring dashboard should help you do more than react to evolving market conditions and other factors. You must be able to anticipate them and modify your tactics accordingly.

To learn more about Altvia’s industry-leading solutions for alternative investment firms and their portfolio monitoring capabilities, request a demo below.

We’ve advocated for it before – PEs/VCs that take the time now to empower their team with data and technology have an easier time differentiating from the competition. The first step to level up your strategy is building a solid tech stack.

With so many tools available, how can you be sure you’re choosing the right software and tools for your firm?

Read on as we break down the current landscape of tools available to compile an industry-leading tech stack.

The Core Components of the Modern Tech Stack 

The modern PE/VC firm should be stacked with tools that help throughout each stage of the deal process, from consolidating scattered spreadsheets into a centralized platform to ensuring transparency of communications with leads and portfolio members across the entire firm. 

There are a few core areas every tech stack should address: 

1. Traditional data
   
   From company financials to expert opinions and forecasts from leading research providers, traditional data can be leveraged to help inform your firm on new deals. This data is especially important during the research and due diligence phases.

   To access all of that public information and centralize it in one place, firms can leverage leading tools like S&P’s Capital IQ, along with publically available websites like Crunchbase.

2. Alternative Data

   Unlike traditional data, alternative data combines information from non-traditional sources like social media, consumer transactions, web traffic; data that is typically not readily available internally through traditional sources.

   By leveraging alternative data sources, firms can identify deals earlier on in the sourcing process and single out the best investment opportunities for their firm that much faster. Incorporating alternative data tools like Capterra and G2 can arm PEs/VCs with powerful insights to compile compelling stories and industry information for stakeholders.

   To take it a step further, firms can push their alternative data to a centralized hub,  like Altvia, to transform that information into visual charts that help tell a stronger story, providing additional value for LPs and portfolio members. 

3. Research
   
   You already know how important research is in the sourcing stage of the funnel. Ensuring you have the right tools available to help streamline that process is critical to your firm’s success.

   While traditional research tools like Forrester can help provide deeper insight into how certain world events impact industries and businesses, software like PredictHQ can help firms predict the impact of real-world events or market shifts. Access to this kind of predictable scenario building will arm your firm with the insight and knowledge needed before making decisions.

4. Portfolio Management

   The more members in your portfolio, the harder they can be to manage. With portfolio management software, PEs/VCs can organize and unify all of that information in one place. From fund and equity information and reports to KPI monitoring and reporting, portfolio management systems, like VestBerry and Altvia, can help aggregate that data down to the fund level. 

5. Dealflow CRM

   A firm builds its success upon a foundation of strong relationships, and the right CRM can help bolster those. However, not all deal flow CRMs are created equal, and, without relationship-driven AI built-in (like Salesforce, for example), they serve as more of a transactional source rather than a virtual assistant to your business.

   CRMs, like Altvia, can serve as a centralized source of truth, connecting data from your entire tech stack and helping optimize it across the firm, such as providing AI-driven insights, like helpful alerts on when to follow up to keep conversations flowing. 

Take Your Firm from Low-Tech to Tech-Driven 

Despite growing investments in high-tech industries, venture capital has a reputation for being a traditionally low-tech industry. However, that’s quickly changing as more and more firms embrace software and data to differentiate. But, with this change also comes the need to juggle new tools and software.  

As you begin to shift from spreadsheets to streamlined software, a simplified approach to your tech stack can make the migration a bit easier – and Altvia can help. From portfolio management to AI-powered insights, Altvia can serve as your firm’s single source of truth. 

To learn how Altvia’s solutions can fit into your firm, contact a member of our team to start a conversation.

In the early days of the cloud, there was a myth that storing data “out there” was not as secure as storing it on your server. The concern and confusion were understandable since it was new technology, but the idea of cybersecurity is becoming increasingly more important.

However, there is no truth to that myth, particularly today. Cloud solution providers have access to the strongest, enterprise-grade security measures available.

A good way to look at the security of your data online versus locally is to compare it to banking. Would you consider your cash to be safer in an online bank or under your mattress? Not many people would choose the latter!

Cybersecurity, Salesforce, and Your Data

Altvia solutions leverage the Salesforce architecture. In the metaphor above, Salesforce would be the “bank.” When you store your assets (data in this case) there, you benefit from all the resources and security expertise of a multi-billion-dollar company. 

If you instead store your assets on a local server—even a server protected by security software—your digital defenses simply don’t compare. And the truth is, your local server almost certainly is connected to the internet. So, having your data there isn’t even comparable to having your money under your mattress. Hackers can “see” your server even though it’s inside your office.

Protection in the Event of a Catastrophe

In addition to the cutting-edge cybersecurity you get from Salesforce and the Altvia solutions built on the Salesforce framework, you also benefit from the fact that Salesforce backs up your data regularly. Should a fire, flood, or other catastrophe damage your office, you can access your data from an alternative location.

In fact, even if one of Salesforce’s servers were damaged, your data would be safe thanks to the concept of redundancy. As the company explains on its website: “Customer Data is stored on a primary database server with multiple active clusters for higher availability. Customer Data is stored on highly redundant carrier-class disk storage and multiple data paths to ensure reliability and performance.”

Cybersecurity and Email

Riskier than storing your data in the cloud is sending it from person to person via email. Most email platforms are unencrypted. That means that if a hacker intercepts an email, any data it contains is compromised.

The fact that you log in to your email program doesn’t mean that your messages are protected. Attachments like spreadsheets and forms are vulnerable as they move from your outbox to the recipient’s inbox.

Then, of course, there’s also the risk of sending an email to the wrong recipient! Enter one incorrect character or leave a character out when typing someone’s email address, and you send sensitive information to the wrong person. That would be like putting an envelope of cash in the mail to the business next door to your bank—or down the street or across the country.

That being the case, storing your data “out there” in the cloud and sharing it using encryption is much safer than keeping it in-house. And in a heavily regulated industry like ours, failing to protect your data properly can be disastrous.

Fortunately, with Altvia and Salesforce watching out for you, you can focus on your job confident that your data is very secure.

Suppose you’re a data room user or have recently explored the data room market. If so, you’re probably familiar with the two or three biggest legacy data room providers, which have been around for years and make up a large part of that market. And if you’ve priced the offerings of those legacy providers, you know that data rooms can be extremely costly.

The pricing also tends to be somewhat cryptic, with out-of-pocket costs that increase rapidly based on how many pages you upload, how many people you provide access to, and several other features. This approach to pricing leaves many people wondering why secure data room technology has to be so complicated and, frankly, so expensive.

The Origins of Secure Data Rooms

It’s interesting to look back more than a decade at the origins of secure data rooms. Companies developed the big, enterprise-level data rooms at a time when technology infrastructure was very costly because virtually every aspect of it had to be custom-built. Often that required even creating the building blocks of secure data rooms from scratch.

For example, giving data rooms the level of security the market demanded required firms to build expensive technology stacks. In addition, browsers were far less secure–as was the internet in general–so firms had to take measures to account for potential gaps in other pieces of the security puzzle.

The result was significant capital outlays by a few big software providers, and companies were left trying to recoup large investments by charging high prices to their customers. Plus, pricing got complicated when these providers recognized that there was a real cost associated with, for instance, uploading another 100 pages to a server. As a result, companies decided to “nickel and dime” clients to cover that cost—and then some!

Secure Data Rooms: A Challenging Business When Not Approached the Right Way

One of the big data room providers that have been around for years still has never been profitable and carries a large amount of debt. The reason they’re facing those financial challenges is that to turn a profit at their scale would require many firms each paying them a lot of money.

And a significant part of their debt is from building their own technology stacks and developing their infrastructure from the ground up. Those efforts were successful, to a degree, but at what cost? When wrestling with that kind of debt, there’s little revenue left over for funding a cutting-edge research and development (R&D) program.

Today’s Secure Data Rooms and the Availability of Infrastructure

No question about it: Providers of today’s secure data rooms have benefitted from the efforts of legacy companies. We can leverage technology they developed or refined at a much lower cost than they faced when creating it.

The cost of storage, for example, has gone down dramatically in the last decade, as has the price of enterprise-grade security in the cloud. So now it’s possible to provide a comparable level of protection without having to incur the costs of creating that infrastructure, and storage is so cheap that the cost of storing an additional 100 or even 1,000 pages is negligible.

Secure Data Rooms and Online Behavior

Another change we’ve seen is that the way people share information and interact with one another is significantly different today. Most of us don’t think twice about sending information, shopping, or banking online.

In the financial sector, there remains a need for robust security features. But if we look around at how the internet functions and how people work today, there simply are fewer worries about security. Perhaps this is because there is a little bit of security “baked into” all the tools and platforms we use, so, at some level, we feel that our overall level of digital safety is relatively high.   

Consequently, many data room users continue to pay for expensive security features that may not be relevant or necessary for their business. They do this because they don’t know that there is a system available that is just as secure (if not more so) while also being significantly less expensive.

Our ShareSecure product is a secure data room that meets those criteria. If you’re using a legacy data room—or aren’t yet using any data room—you owe it to yourself, your coworkers, and your stakeholders to check it out and schedule a demo.

A data strategy is no longer reserved solely for the tech industry. Without one, PE/VC firms lose out on improved outcomes and enhancements in everything from deal origination to value creation. However, if you’ve never implemented a data strategy, the process to do so can feel a bit overwhelming.

While data strategies for VC/PE deal funnels have been a “nice to have” in the past, they’re quickly becoming the standard for firms looking to level up their strategies and processes. So how can your firm implement a data strategy guaranteed to get you ahead? Read on to learn how.

Leveraging Alternative Data

To differentiate your firm and reap broader returns, start by differentiating your data and technology approach, beginning by leveraging alternative data. 

Alternative data, put simply, is non-traditional data that can be used throughout the investment process. This includes data from social media, consumer transactions, web traffic; data that is typically not readily available internally to a firm from traditional sources like Bloomberg or FactSet. By leveraging alternative data sources, firms can identify deals earlier in the sourcing process and single out the best investment opportunities for their firm that much faster.

Implementing a Data Strategy

To begin seeing the benefits of incorporating alternative data sources into your firm’s process, you need to set a strong data strategy, and that starts with appointing a lead to manage it. This doesn’t necessarily mean you need to head to the job boards to find a new data scientist to head up your firm’s initiatives. In the early stages, you’ll be better off appointing a senior analyst who is familiar with your firm’s processes and current data sources to help develop a maintainable strategy.

It will be up to this data strategy lead to allocate a budget, audit existing data sourcing processes, and identify the best starting points for your firm to begin sourcing, and leveraging, alternative data. This can range from due diligence, deal sourcing, or post-deal monitoring. Wherever you choose to start, focus on building out a core strategy for each phase before furthering development in other areas. 

Measuring and Reporting on Your Data Strategy’s Success

Without a proper reporting system in place, your firm will be left in the dark as to whether or not your new strategy is effective. How you measure and report on your strategy’s success can differ based on your industry and unique firm goals. A few starting questions to consider include “how many datasets should we evaluate?;” what stages of the investment process should we target?;” and “how many investment decisions should incorporate alternative data?”

Once the core key performance indicators (KPIs) are in place, firms need a robust software solution to pull data from multiple sources into one centralized system that can run automated reports and produce visual dashboards. These resources arm key stakeholders with powerful insights on everything from portfolio monitoring to due diligence. Plus, this knowledge empowers PE/VCs to focus more on strategic initiatives and adding value and less on piecing together data and compiling manual reports.  

In fact, after implementing Altvia’s data-driven software, the team at Crosslink Capital has been able to leverage multiple data points to fuel their firm’s success. They are now easily able to determine where their fundraising efforts have been most successful and what types of investors are most likely to invest with them, giving them more time to focus on what moves the needle.

Improve Outcomes Throughout the Funnel

With a strong data strategy, firms can leverage the information they receive to improve performance and outcomes throughout every funnel stage. Firms can combine alternative and internal data to find better deals by continually monitoring the industry and emerging trends to identify patterns and target new investment opportunities. When it comes to adding value, this same data can unveil new opportunities and boost value for current portfolio members.

During the due diligence stage, firms can fuel their process and gain a competitive edge by leveraging big data to enhance their decision-making. Along with deeper insight into customer behaviors, firms can more easily determine the level of brand awareness and competitive positioning of an LP, while getting answers to key questions like “how effective is the marketing strategy,” and “is the growth sustainable?”

Arm Your Firm with an Effective Data-Driven Strategy

It’s important to remember that while data can improve outcomes and firm performance, it still requires a human touch to effectively execute the strategy and make decisions based on the data’s information. 

To help your team make the most of your new data strategy, the key is ensuring all of that data is in a centralized platform that can serve as your firm’s single source of truth. To set up a centralized place for all data sources to live, get started by contacting someone from our team.

Purpose-built fund management software is essential for any private equity firm or fund manager that wants to be successful. Not only does the right fund management software enable users to handle all the tasks necessary to engage with stakeholders effectively and track those efforts, but it also empowers them to do so with maximum efficiency.

In other words, implementing a well-designed fund management software solution can help you get more done with less effort! However, the key there is “well-designed.”

If in your eagerness to get a system in place you make a poor decision, you may do more harm than good. Many low-end fund management software systems are sitting idle today at private equity firms around the country because they were hard to implement, use, maintain, or all of the above.

And as a result, many fund management software champions are licking their wounds and wishing they had never promoted the idea of buying a system.

6 Key Considerations for Finding the Right Software

To ensure that the solution you select meets your needs and will be used to help your firm achieve its objectives for years to come, it must be:

1. Easy to implement. If it takes months and months (or more!) to get a fund management system up and running, enthusiasm for it will decline or disappear altogether. This isn’t to say you want to hurry through an implementation. It means you need to find a system with a great design that makes it simple to get it up and running.
2. Customizable to your needs. Forcing people who will use the fund management software to completely overhaul how they do things to align their processes with the system’s features is not going to go over well. You may find processes that should be changed, but your fund management software should also have some flexibility.
3. Easy to use. People are much more likely to use a system if it’s intuitive and user-friendly. If there’s too much mental “heavy lifting” required, there is a good chance they’ll simply do things the old way, and your adoption rate will suffer.
4. Secure. There’s no worse feeling than to arrive at the office in the morning and be told not to log into your fund management software because it’s been hacked. The thought of all that important—and often sensitive—information in the hands of cybercriminals, and all the damage that may be done to relationships you’ve worked so hard to build, can be crushing. You need a system that’s well-protected from unauthorized access.
5. Open to integration. Your fund management software likely isn’t the only mission-critical application at your firm. Being able to share data between and among systems is vital to efficient operations. Implement a system that doesn’t have this characteristic and you can look forward to lots of double-entry of information.
6. Well-supported. You will have questions about how to use your software most effectively. You must be able to get answers from friendly, knowledgeable experts who know both the product and the industry. There should also be self-help resources available.

The Risks and Rewards of Buying Fund Management Software

There are tremendous rewards to be had from implementing advanced software. If you’re not using the right system, now is the time to find it and make the switch. But you need to be clear-eyed about the risks of putting just any system in place.

If you are, you can look forward to a huge increase in both the quantity and quality of the work your teams can produce. Interested in seeing the right system in action? Contact us today to request a demo.

The Private Equity/Venture Capital industry is numbers-driven, and, while cash flow is important, firms looking to level up their growth need to set goals that go beyond the simple metrics of money-in/money-out. To measure progress and success, firms need to track those goals against Key Performance Metrics (KPIs). 

The KPIs you set will become the firm’s “north star”—the backbone of how you strategize growth, and how you think about the core mission and future of the company. But which KPIs should PE/VCs be focused on, and how can you best monitor and report on those metrics to add value for investors? Read on as we help weed through the noise and determine the top 5 KPIs your firm should be tracking. 

5 KPIs Your Firm Should be Monitoring 

1. Time Spent Sourcing

   Time is one of your firm’s most valuable assets (time is money, after all). The on-the-clock time your team puts into researching and sourcing deals and opportunities is a critical component of the firm’s scalability.

   Because payroll is the major fixed expense of any deal sourcing, tracking time spent sourcing arms your firm with a full understanding of deal sourcing costs and unveils process inefficiencies so you can adjust for the better.

2. Number of Quality Deals (and their sources)

   Along with how long it took to secure you a deal, you’ve likely heard the question “Where did this deal come from?” once you’ve closed it. If your firm isn’t tracking 1, the overall number of quality deals (ie: those that have converted through your funnel), and 2, the source of said quality deals, you could be losing out on the ability to hone in on a quality lead source to replicate for future deal sourcing.

   By tracking the source for every deal—quality or not—your firm can better understand the deal sources to allocate more time to, and those that are not bringing any value.

3. Frequency and Touch Points

   The process in closing a deal differs from firm to firm, but regardless, your team needs to check-in and communicate to nurture that lead from an opportunity to a secured deal. That’s where measuring your frequency of communication, and overall number of touchpoints, comes into play.

   Tracking the number of outreach points throughout the deal closing funnel helps answer questions like “what’s our average time to close a deal,” and “how many times did we have to check-in to close this deal?” 

   By monitoring these performance metrics, you can arm your sales team with the data they need to understand when, and how often, to communicate throughout the sales process. You can also unlock areas where your team may be over-communicating, under-communicating, or need some refinement in their messaging to better tailor the conversation to a deal’s stage at any given point in the funnel.

4. Cash Flow

   To put it bluntly, no one wants to invest in (or own) a company that’s not making money. Cash flow is a key performance metric that clearly shows investors how much cash a company is generating.

   Firms can measure cash flow on EBITDA—the acronym for Earnings Before Interest, Taxes, Depreciation, and Amortization. EBITDA is the leading indicator of a company’s financial performance and potential to earn, and is what will help the investor determine their ROI (ie: if they’ll be able to sell the company for more than what they invest upfront).

5. Industry-Specific Metrics

   We hate to be vague, but each industry and business will also have its own unique metrics to track against. Do your research to learn the drivers moving the needle in your specific industry to understand what you should be concentrating on.

Monitor and Report on Your Key Performance Metrics

Once you have your set of KPIs, you’ll want to monitor and report on them regularly (weekly, if not daily). By keeping a close eye on your firm’s performance against your KPIs, PE/VCs will be better able to adapt and pivot if needed in real-time, unlocking new areas of growth and success throughout the firm. 

Through leveraging the use of automation platforms designed for PE/VCs (like Altvia), firms can integrate all of their data into one centralized platform and run reports at the click of a button, providing more time to interpret that data and make actionable decisions. 

For example, before integrating Altvia at their firm, Spire Capital was relying on spreadsheets for putting together labor-intensive and time-consuming reports, such as recording financials for their portfolio companies, providing information for monthly financial reviews, and producing quarterly and annual reports. 

With Altvia’s help, Spire Capital implemented a custom dashboard, providing immense time savings and increased transparency across the business. The firm can now use their custom dashboards to easily pull up mark-to-market valuations (cost, fair market value, etc.) at a fund level for each portfolio company, empowering them to better serve LPs. 

Add Value with Data-Driven Dashboards

Through automated platforms designed to help firms better visualize their data, PE/VCs can provide investors with data visualization that provides deeper value and insight than a spreadsheet ever could. 

With Altvia’s platform, firms can simplify investor communications and drive LP loyalty through a modern experience that includes interactive dashboards, videos, and charts that bolster engagement. With features like ShareSecure, firms can easily create custom KPI dashboards to share with investors through a secure link—no .csv downloads or multiple email attachments required. 

There’s a lot of data available to PE/VCs today, which means there can be a lot of noise when it comes to determining the metrics your firm uses to define success. While these five key metrics can help your firm track success, it’s worth noting that each industry and business will have its own unique metrics to measure. 

To revamp your KPIs and set up custom reports and dashboards to arm investors with the data they really want, contact our team to get started.