Category: Private Equity Technology

Private equity is a competitive industry. The bar for investment returns is higher than ever, and the need to innovate has never been greater.

One way firms are getting ahead of the curve is by investing in technology – from fund-raising software to CRM platforms that allow you to communicate with LPs on an individual basis.

As part of our ongoing mission to educate those looking for career opportunities in private equity, we’ve compiled this list of resources that cover all aspects of how technology can be used to help the next generation of private equity professionals succeed.

1. How are you investing in technology to grow your business?

2. Which tech trends do you see fundamentally changing the way private equity operates?

3. How can a good CRM system increase LPs’ satisfaction with their relationship with your firm?

At Altvia, we see these as some of the core questions to ask yourself when thinking about how to best position your firm and yourself for future success.

Investing in technology to grow your business.

Here are some things to consider when investing in software and technology for your private equity firm: – Can you stay competitive? Private equity firms are increasingly looking at the competition and how they can keep up with the industry’s demand for best-in-class performance from investors, companies, and portfolio managers.

A key area of focus is digitizing client experiences while also giving them a seamless experience across all platforms. That’s the key to creating a phenomenal LP experience.

Tech trends fundamentally change the way private equity operates.

As we have discussed, the private equity world is changing and adapting to better meet investor demands. That includes an increased focus on technology in general and software solutions specifically. – What are your future needs?

A key consideration when deciding what to invest in is assessing your firm’s current state and how it will evolve over time with respect to industry trends, changes in strategy, or organizational structure.

Building a best-in-class team of people that is constantly able to do more with less, through automation and data-driven insights is key to maintaining your current edge.

How a good CRM increases LP satisfaction.

Our SVP of Industry Solutions and Strategy, Jeff Williams explains,

“Better understanding your network, your relationship with that network, being more efficient at servicing and communicating with that network, and having the data to service and support that network are significant differentiators that many fund managers are still not taking advantage of. I expect that we’re in the early innings of this phase, and if some of the B2C markets that were early adopters of these technologies are any indication, the returns will be impressive and create outstanding differentiation for those who adopt them.”

Investment firms need to be able to adapt and change in order to stay competitive. One way of doing this is by using software for managing the relationship with investors, automating administrative tasks, or getting data-driven insights on how an investment strategy performs.

As everyone in Private Equity understands, a deal isn’t an event that happens when an agreement is signed. It’s a process that evolves over time and culminates in a mutually beneficial relationship. Deal flow management gives your deal teams the visibility it needs to track the data you have on a potential investment, including:

• Deal information
• Fund details
• Due diligence

The efficient management of deal flow is one of the biggest factors in a firm winning or losing deals. Consequently, it’s not something that should be left to chance.

A Private Equity CRM is Essential for Deal Teams

In order to be successful, deal teams have to be able to find any resource they need quickly. That means storing and maintaining data in one easily accessible customer relationship management (CRM) system.

Long gone are the days when a PE firm could consistently win deals using a random collection of Excel spreadsheets and documents that “lived” in digital and printed form in countless locations. 

Today, the firms that thrive are those whose deal teams leverage highly coordinated and orchestrated activities among team members to find targets, perform due diligence, and close deals.

Ensuring that those activities can take place efficiently is especially challenging in the wake of COVID-19. 

Many firms are choosing to maintain the remote-working model that they were forced into by the pandemic, which means they need tools for effective data sharing now more than ever.

Technology That Supports Deal Teams in the Due Diligence Process

While all aspects of deal flow management are important, the due diligence process is crucial to reaching the right conclusions and making profitable decisions.

A single source of action helps deal teams assess strategy, operations, and marketing/sales capabilities—three vital aspects of a company—and get answers to key questions, like:

• What is an organization’s position in its market? Are they the leader? The fast-rising newcomer? A solid, middle-of-the-pack performer?
• How optimized are their operations?
• Are there ways to reduce the amount of working capital needed, get more value from existing assets, and better manage costs?
• How well does the company market itself, pursue new business, and close sales?

With make-or-break decisions riding on so many questions, a centralized source of clean, current data is an absolutely vital tool for deal teams.

Our AIM CRM platform provides that specialized data repository. It allows teams to:

• Standardize the deal funnel with recognized stage milestones
• Ensure there is clarity on next steps
• Customize due diligence requirements

Plus, the fact that information can be added to AIM not only from a desktop computer but also from a mobile device helps ensure that data is clean, fresh, and available in a timely manner.

As Volume and Velocity Increase, Deal Teams Must Keep Pace

The term “digital transformation” is widely used in business today. Nowhere is this concept more relevant than Private Equity. With many thousands of PE firms worldwide and many thousands of deals closed annually, competition is fierce. 

Aggregate deal value in the U.S. alone has reached nearly half a trillion dollars in recent years.

As a result, deal teams are having to work faster and smarter to stay competitive and continue delivering good risk-adjusted returns. They’re finding that the right technology can help them collect, transform, search, assess, and perform predictive analytics on data in order to gain an advantage over firms that are still relying on outdated, manual processes. 

Plus, a cutting-edge system allows deal teams to see how much is left in a fundraising process so they can plan accordingly.

Considering a Technology Upgrade?

If your deal team has been using the same deal flow management processes for many years, it can be difficult to envision how those procedures could be enhanced. The best way to understand the potential for improvement is to learn more about the advanced systems that are available today.

Gathering “intel” on them—even if your deal team isn’t ready to make a change yet—positions you to leverage these systems when the time is right for your organization.

Learn more about how Private Equity deal teams can benefit from a technology stack with our free guide, Winning Deals in a Hyper-Competitive Market.

Like the well-known thought experiment, “If a tree falls in a forest and no one is around to hear it, does it make a sound?”, a similar question can and should be asked about fund management software: “If a firm has powerful fund management software and nobody uses it, does it make a difference?”

The answer to the second question is, of course, an emphatic “No!” Not only does unused fund management software not make a positive difference, it can have a negative impact on everything from firm finances (i.e., the cost of the software) to user morale (having a new system but sticking to old, outdated, inefficient systems and processes).

So, taking action to ensure widespread adoption of your fund management software is critical. And to be clear, simply issuing a directive that everyone must use the software isn’t effective. Even if the order causes more people to “use” the software, they certainly won’t get the maximum value from it. Instead, you have to help users understand the value of your new fund management software.

In our work with many successful firms, we’ve found that there are five keys to ensuring user adoption of a new system:

1. Ensure that you have complete data from day one. Having high-quality data is crucial to getting users to adopt new fund management software. Many fund managers we talk with just want to get the database set up with little or no data and then they wait and see what happens. They incorrectly assume that the “right” data will be added sort of “organically” over time. However, fairly quickly they learn that this assumption was a mistake. You’ve got to be strategic and intentional about what information you collect and maintain. Otherwise, users will quickly recognize that much of what’s available to them in the fund management software isn’t useful, accurate, or up-to-date—and, consequently stop using the system.

2. Commit to using reports out of your database.  managers are hesitant to use reports out of a database because they feel they don’t have enough data to populate the report and make it valuable. The result is they continue to use their Excel models or other reporting tools despite the fact that the limitations of those tools are typically what drove them to look for a better solution in the first place. When fund managers commit to creating fundraising or deal pipeline reports from their new software, the volume and quality of data in the database both increase rapidly. And those improvements make it even more helpful to run reports, and the two activities (collecting data and reporting on it) reinforce one another to everyone’s benefit.

3. Get buy-in from executives. As with any IT spend, new fund management software will have better adoption if firm leadership or an executive sponsor is behind it and they are committed to making it successful. Today, there are many technology options for the private equity industry, and your firm needs to have someone be the “champion” for the solution you select. Otherwise, you’ll be faced with ongoing “what if” questions about other systems.

4. Acknowledge that it’s not just technology you’re implementing. You can’t just implement a new system, announce it’s available, and expect everyone’s behavior to change. There’s a large and essential change-management aspect to ensuring the adoption of new technology. It’s important not only to acknowledge the change but to maximize its benefit by incentivizing people to be early adopters, soliciting feedback, and acting on that input. And, you should expect there to be some resistance from users—it’s simply part of human nature to be wary of, and often resistant to, change.

5. Set clear and attainable goals during implementation. A simple goal such as, “We’re going to be able to drive our deal pipeline with less effort.” helps your team understand what you’re working toward and lets you focus on one set of functionality and specific workflows to support it. This type of goal can also be measured. In our example, you could compare the hours of deal pipeline management required before and after your software implementation. And as soon as you achieve one goal, you should be ready to set another. Very quickly your team will recognize and appreciate that you’re not expecting everyone to master all aspects of the new platform immediately.

Creating Excitement Around Your New Fund Management Software

Ideally, the steps above won’t just convince people to start using your new fund management software. They’ll create a sense of excitement and optimism about the benefits of the system to users and the firm as a whole. At that point, you’re moving past adopting the software to embracing it, and that’s a very good thing!

For more best practices for private equity firms, read our white paper below.

Not long ago, artificial intelligence (AI) was interesting to people who followed technology, but not really anyone else. For the rest of the population, it was a concept that would, at best, impact their lives decades or more down the road.

Well, AI has “arrived” sooner than expected and is having a game-changing effect on many industries. Increasingly, private equity firms are in that group. 

The Pandemic as Rocket Fuel

PE firms were already considering AI’s potential benefits before the COVID-19 pandemic. However, that event and the global lockdowns it triggered were like rocket fuel to the rise of AI.

Unable to use many of the processes they’d previously relied on, firms got serious about figuring out how they could leverage AI. And from data management to outreach efforts, they’re using it effectively in a long (and growing) list of ways today.

It Only Takes One

As with any groundbreaking change in how businesses operate, all it took for firms to “see the light” about this new technology was a few organizations adopting AI successfully. Suddenly, they were head and shoulders above the competition in productivity, accuracy, and other factors.

Firms that had dismissed AI as “science fiction” found themselves scrambling to figure out how and where to use it most effectively. Optimizing workflows and eliminating paper-based processes were some of the first tasks that firms sought to complete using AI, but others were close behind.

3 Ways Firms Are Using AI

Three major areas have emerged as ideal for AI assistance:

1. Back-office processes. Firms are ditching manual processes and adopting AI to complete repetitive tasks faster, more accurately, and cost-effectively. And as a result, they’re freeing back-office staff to work on more important projects.
2. Portfolio monitoring. Keeping an eye on portfolio companies used to be a labor-intensive activity. However, AI can do in seconds what used to take hours.
3. Target identification. While target selection must be performed by humans and their understanding of the nuanced interplay of several factors, firms can leverage AI to quantify and narrow down the field. This saves team members a significant amount of time.

A Holistic Approach Delivers Better Results

The PwC 2022 AI Business Survey produced some interesting insights. One is that companies that focus on using AI to help them achieve three business goals as opposed to just one are much more likely to report high adoption of and substantial value from AI.

This includes creating value through several types of initiatives, the top three being:

1. Increase productivity and improve efficiency
2. Improve decision-making
3. Streamline development of new products and services

Improving the customer and employee experiences follow closely, as do developing new, data-driven business models and increasing agility.

Challenges Accepted

Adopting AI isn’t without its challenges, of course. The top three in the eyes of survey participants are:

1. Developing AI datasets and models that are applicable across the organization.
2. Training employees about AI and helping them get comfortable working with it.
3. Recruiting, hiring, and retaining workers who are already proficient in using AI.

Once the companies have decided to implement AI solutions, they must look for ways to accelerate adoption and improve results. But when they achieve those goals, they’ll be empowered to get more work done with the same number of team members, make their employees happy, and fill talent gaps by hiring data experts who can be taught the other skills they need.

AI and the Altvia Product Suite

Like AI systems, our private equity solutions are built with efficiency and productivity in mind. They were developed—and continue to be enhanced—using our deep industry expertise and understanding of the functionality that firms need to succeed.

Because SaaS (software as a service) products are, by definition, hosted remotely, and often supported remotely as well, the role of IT in researching and evaluating options is growing increasingly unclear.

Fund managers in the market for new fund management software—or any SaaS offering—will often send a member of their IT team out to evaluate the market and determine the best options.

Frequently it’s the IT director. Why? Well, it’s a technology solution, so who better to assess the contenders than the person at the top of the IT group.

However, that approach exposes firms to a potential pitfall. And it’s a significant one—one that can haunt them for years after they make their purchase.

The IT-Only Approach to Purchasing Software

There are many types of solutions that an IT director can assess on their own and approve for purchase. Often, they are infrastructure-related systems about which the director is the firm’s top authority.

Fund management software is another beast altogether. The problem with putting the IT director on point for your software selection process is that they typically look at products primarily or exclusively from a technical perspective. You can’t blame them—technology is their thing.

Unfortunately, with this approach, the end-users of a software solution may not even be brought into the conversation until a short (sometimes very short) list of potential providers has been created. That means users don’t learn about products that have excellent functionality but have been excluded from the list due to some technical issue, and potentially an issue that really wouldn’t negatively impact the value of the solution to the firm.

In other words, an IT director may be inclined to “throw the baby out with the bathwater,” which leaves the firm with a product that isn’t ideal but that they’ll now have to live with for the foreseeable future.

The User-Only Approach to Purchasing Software

So, if the IT director’s software selection criteria may be skewed toward the technical aspects, a better approach is to let users make the decision without IT’s help, right?

Especially since the whole point of cloud-based software is to remove the technology from the premises, meaning there isn’t much for a SaaS provider and an IT director to talk about anyway.

Actually, users have their own biases and blind spots, as well. And because SaaS solutions are “technology”, input from IT is still important and valuable.

A fund management software solution that has all the “bells and whistles” a fund manager could ever want but that doesn’t play well with other applications, for example, is not going to provide the kinds or degree of benefits a firm is looking for.

The Middle Way to the Right Fund Management Software

It will come as no surprise—particularly on the heels of the previous two sections—when we say that we have found that the most effective fund management software evaluations are performed not by one person from a particular department, but by two people from different departments working as a team.

Specifically, having the IT director and someone from the fund management group work together is ideal. The IT director still must be involved in evaluating the viability of a SaaS platform in terms of attributes like security, uptime, and performance. IT might also evaluate the possibility of integrating a new solution with other systems already in use.

The fund manager can weigh in and judge each solution based on other aspects such as functionality, usability, the extent to which it matches (or can be made to align with) existing processes, the industry knowledge of the support staff, etc. And this is no ceremonial “final blessing” authority. A fund manager should be involved in the search right from the start. In fact, there’s nothing wrong with the manager observing the assessment that the IT manager makes. Doing so will only make them that much more helpful in future software evaluations.

Fund Management Software Selection: A New Skill on the IT Director’s Resume

Keep in mind that researching SaaS solutions (as opposed to on-premises solutions) and being involved in the buying process may feel odd to the IT director and others in the department. “If it’s hosted remotely and doesn’t affect any existing systems, why should we care?” is a common way for IT to look at this process.

But the job of IT, especially as SaaS solutions have become the dominant type of system, is less about racking servers and more about helping the organization find technology that makes the business more successful.

So, if you’re looking for fund management software, get your IT director and fund manager together and let them know that their insights and input will be vital to finding the ideal solution.

You’d think with all of the capital involved, that private equity firms would embrace technology with open arms, but the opposite is true—PE firms are notoriously slow and resistant to adopt new technologies. 

The industry has been traditionally reliant on spreadsheets and intuition. These methods miss the mark on data-driven insights that help the firm identify opportunities, build relationships, and strategically invest. 

Fund managers needed a big shakeup and a perspective shift to see the advantages of adopting new technology. The pandemic was that shakeup. 

The firms who started their digital journeys pre-pandemic were able to leverage the latest tools to minimize disruptions, react quicker to shifting issues, and monitor the impact of the pandemic on portfolio health.

Firms that were behind the curve with technology felt the blow of the pandemic much more dramatically. Many were left scrambling to sift through spreadsheets and emails to try and make sense of the pandemic’s impact on their portfolios. With the move to remote work, reaction time slowed, there were more disruptions, and the inefficiencies caused stress and loss of trust.

It’s now more apparent than ever what an advantage it is to use centralized systems and data to manage operations and drive insights for PE firms. The use of data-driven insights for PE firms is a clear competitive advantage. Instead of leading by intuition, firms using data to drive their decisions have more trust from their investors and make better investments. 

How can firms make this shift to data-driven and get better insights? In this article, we’ll review three different ways to use data to drive business decisions.

Take advantage of your proprietary data

Every PE firm has massive amounts of historical information. The answer to the most pressing questions lay within that information if you have the proper technology to identify insights efficiently. Comparing massive spreadsheets and pulling data from multiple sources can lead to mistakes and false conclusions, let alone, it’s an enormous waste of time. 

Modern firms with smart technology tools should be able to look at their data and quickly answer questions like the ones below:

• Who are my top capital raisers?
• What regions are we most successful in?
• Where are our best introductions coming from?
• Where can we improve deal progression and optimize performance?
• What are the characteristics of our most committed LPs?

By answering these questions, firms can identify top priorities and ensure they are efficiently spending their time on tasks that are more likely to provide high returns instead of sifting through spreadsheets. At a minimum, technology can be used to create firm-wide visibility, better-coordinate teams, and avoid frustrations chasing data across applications.

Use third-party data

To make their data even more powerful, PE firms can take their collected data and combine it with third-party data tools, like Pitchbook, DataFox, and Source Scrub. Combining data in one tool, like your CRM, gives firms a complete picture of portfolio’s performance in relation to the marketplace as a whole.

With industry benchmarks and internal data combined, it’s more straightforward to determine which factors accelerate or derail a deal right from the start. Firms can hone in on great opportunities earlier and use their resources to act faster. They can also identify red flags and avoid situations where they are likely to lose time and money.

You can learn a lot about your company by analyzing internal data, but by combining it with industry knowledge and stats, firms can spot both advantages and areas of weakness. There are untapped opportunities or warning signs of future collapse that could go unseen without the proper technology and information.

Create a single source of truth for private equity firms

With the right tools, a firm can visualize the proprietary data housed in their system of record, enriched with 3rd party data sets, and further enhance the data with portfolio and fund performance visualizations.

Altvia is a tool that can combine internal data with 3rd party data to create visualizations that empower firms to see trends quickly. The aggregated data feeds business intelligence, which turns spreadsheets into interactive data visualizations that accelerate the viewer’s comprehension to provide real-time insight to identify trends and abnormalities quickly.

Visualizations shared with firm team members contribute to faster analysis and a more efficient process. They can give firms an edge over the competition and quickly communicate their value and expertise. 

To take it a step further, tools like Altvia allow investors to enter a web-based, consumer-like portal. This portal surfaces investor-appropriate data visualizations and provides real-time transparency into their investment. With this type of portal, investors can get relevant data instantly and slice and dice charts and graphs as they please. 

Uncover data-driven insights and gain a competitive edge for private equity firms

Your firm already has mountains of data. Now it just needs the right technology to make sense of it and add in market data to draw powerful data-driven insights and dynamic visualizations. 

If you’d like to give your firm a competitive edge with the ability to identify issues before they arise and laser focus on the very best opportunities, give Altvia a try and sign up for a free demo.

If there’s a type of business that can ignore or refuse to implement new technology as advances are made and still be successful, we don’t know what type of business that is. It’s certainly not private equity firms.

In our fast-paced, highly competitive industry, firms that aren’t using purpose-built, state-of-the-art systems are at a distinct competitive disadvantage.

And firms that remain at the back of the pack don’t last long.

Private Equity Technology and Differentiation

Competition in the private equity space is continually reaching new extremes. This ongoing escalation forces firms to reach new levels of operational excellence, personnel optimization, and data management.

How do they support this continuous evolution? They stay vigilant, constantly scanning the horizon for the next technology solution to break new ground and enable improved operations. But operating more efficiently and effectively is really just a means to an end. The “end” in this case is creating clear differentiation from competitors.

Is your firm the only one of its kind in the industry? It may have some of the best people and have an impressive track record of success, but no, it isn’t particularly unique in the services it offers. However, the combination of the skills, experience, and insights of your team with the communication, data management, and other capabilities of the right technology solution—now that’s something that can set your firm apart from the competition.

And that differentiation can make all the difference in attracting investors and closing deals. Why? ‘

Because the stakeholders you interact with are just as busy as you are. They don’t have the time or resources to assess each one of the countless “middle of the pack” contenders. They identify a few that stand out, do a little research, and decide how to move forward. If you aren’t in that select group of finalists, you’re out of the equation.

How Firms Leverage Their Technology

How do firms use technology to get ahead?

For one thing, they use a CRM to manage their contacts. That’s the foundation for getting the right communications in front of the right people at the right times. They also make it easy to share resources securely with stakeholders, which increases transparency and helps create and nurture trusting relationships.

And underpinning all of these advantages is the implementation of efficient workflows. The easier it is to get day-to-day tasks completed, the more time there is for finding innovative ways to engage stakeholders and close more deals.

From “Nice to Have” to Necessity

Not long ago, switching to a better CRM or an email program with enhanced features was something firms did if they had the time and capital to invest in those upgrades. Today, those tools and others that increase productivity and improve stakeholder relationships clearly have moved into the “Mission Critical” category.

But the good news is that it’s easier than you may think to implement a suite of private equity technology solutions. The first step is learning about what’s available.

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.