Category: Private Equity Technology

Data management can seem like a waterfall of information that is impossible to keep up with. There are millions, if not billions, of data points pouring out every day—how can your firm make sense of it all? We’re not going to sugarcoat it—if you aren’t using technology to sort through the data, it is impossible to keep up with. 

Thankfully there has been a revolution in the Private Equity (PE) and Venture Capital (VC) space with data and analytics. The secret sauce to success is technology. 

It’s no longer tenable to manage all of your data in an excel spreadsheet. Savvy VCs are investing in artificial intelligence and data enhancement technologies to streamline analytics for fundraising, deal management, and investor relations. There are plenty of options out there— the tricky part is selecting the right software for your firm.

It’s critical that firms choose a system that supports a holistic data approach while focusing on platforms built for their specific industry. Altvia is a cloud-based CRM built on Salesforce with purpose-built modules specific to PE and VCs. Altvia integrates with any application in the Salesforce ecosystem, allowing firms to build an ideal stack of technology.

The Salesforce AppExchange offers thousands of integrations. To help you choose the right solution, we’ve identified 5 apps that integrate with Altvia that we recommend to simplify data collection and streamline access to information on leads, deals, investors, and fundraises.

Preqin

Preqin is the home of indispensable data, analytics, and insights for alternative assets. With it, firms can access some of the industry’s most comprehensive private market data and tools, or get publications, surveys, and events that provide insider access to the largest global network of alternative asset experts.

Get everything you need to stay up-to-date on market movements with comprehensive data on institutional investors, fund managers, and service providers for each fund and transaction across all major asset classes. Isolate your targets, build connections, collaborate, and understand the past, present, and future of the industry with Preqin.

Pitchbook

PitchBook is the ideal research partner if you’re looking for impartial, premium industry data, news, and analysis for private equity, venture capital, and M&A. As an information resource specifically dedicated to these industries, PitchBook’s core strength is its ability to carefully collect, organize, and analyze difficult-to-find deal data.

By using a Pitchbook Plugin for Salesforce and a CRM, users can view, link, and import customized data on people, companies, investors, funds, service providers, and limited partners. The tool delivers unparalleled intelligence to easily network in the investment space with automated integration of custom intelligence like AUM, investment types, and preferences as well as detailed contact information.

SourceScrub

SourceScrub helps firms get the most out of their CRM investment by automatically syncing millions of private company data points directly within Salesforce. They are tech-driven and human-supervised for optimized intelligence. 

There are millions of bootstrapped companies out there and SourceScrub takes the difficult-to-analyze data and offers a more complete and accurate view so you can quickly map, prioritize, and engage with them. With their data, firms can optimize and automate M&A workflows—set and forget a complete record synchronization schedule with AI-augmented, human-audited company data.

S&P Capital IQ

S&P Capital IQ gives firms transparency into private capital flows at each stage of the lifecycle to help them identify the next opportunity with data. Get a better understanding of performance and trends by viewing and comparing similar fund performance and dive deeper into LP investors and their preferences. 

With S&P Capital IQ and a CRM, firms can identify opportunities, facilitate outreach, and understand customers better with company and decision-maker data.

Data Fox

With Data Fox, firms can find and prioritize target accounts to grow their pipeline. Data Fox uses a team of 100+ human analysts to verify AI-sourced insights on millions of businesses, adding 40,000 new businesses per week. 

Stack your pipeline and grow by improving sales, account-based marketing, and supplier intelligence along with standardized data between the CRM and back-office systems. Make quick and smart business decisions with information that is aligned across departmental databases. Their company data, growth signals, and account scoring help firms to personalize their marketing campaigns and sell more.

Join the VC Technology Revolution

Each day that firms ignore the advantages that modern technology offers they fall further behind. There’s no longer any question that firms that leverage technology for data management have a clear advantage. Now it’s just the question of finding the right technology.

Don’t drown in a sea of data, use it to your competitive advantage. Firms will find success if they focus on capturing the true value of their data and automate as much as possible with a CRM and today’s leading applications.

Recently, Altvia Chief Revenue Officer, Kjael Skaalerud, hosted a virtual event,  “Future Proof Your Private Equity or Venture Capital Firm” focused on issues like the role technology can play in a firm to keep the organization operating at peak performance, the technology maturity curve and how firms can assess where they are on it, and hurdles to technology initiatives. 

The session, which was recorded for those who couldn’t attend, also provides actionable insights on how to move forward with implementing technology.

We’re in a period where many records have been set in private capital markets—from VC dollars invested to the total number of IPOs, etc While that’s great news for the industry, it also means that firms that historically based their success on “ a great team” and being “connected” within the industry are feeling some pressure to up their game.

Implementing advanced technology is a great way to do that. As Hugh MacArthur, global head of PE at Bain & Coobserved, “Speed to insight is everything in private equity.”

The Panelists

Along with Kjael, two industry experts provide their insights on how to future proof your firm.

Jennifer Meyer is a director at Greenspring Associates. She’s an expert in technology companies, particularly SaaS-based services, and leads Greenspring’s technology operations team. 

Richard Grajewski is VP, business development at Huron Capital Partners, where his primary focus is deal origination. 

Frameworks – The Role Technology Can Play in a Firm

Grajewski says what’s key for his firm is knowing what deals are coming to the market before getting the “teaser”. In the current market, if the teaser is your first knowledge of a deal, you’re already behind. 

Huron Capital gets ahead of the curve by establishing and maintaining relationships with what he calls “centers of influence” in the market. Screening deals and educating the market on his firm’s investing criteria are also important to him. 

“Having a powerful CRM is vital to everything Huron Capital does.”

He also notes that the firm works closely with Altvia to understand and adopt best practices for gathering and assessing data and setting goals for their operations. 

Skaalerud points out, many firms suffer from “blank canvas syndrome,” meaning they want to implement technology but don’t know where to start, so Altivia’s guidance can be extremely helpful.

Meyer addresses how technology helps firms meet a need for something they’re all pursuing:  actionable outcomes and delivery mechanisms. She points out that her firm has $15 billion in assets under management and 21 years of data that’s helped them achieve that level of success.

But with all that information, the question becomes: “How do you manage that amount of history and data in a meaningful way that gives everyone high confidence in what’s being outputted and delivered across the firm?”

She notes technology enables the people who rely on it, and who ultimately have to make important decisions. If you view solutions from that perspective, you’ll be better positioned to achieve the outcomes you’re looking for. 

You’ll get better adoption if you’re clear about technology’s role and about the fact that it can give your firm a competitive advantage.

Skaalerud agreed, sharing Altvia’s observation of firms that embrace technology tend to be less siloed, with teams that engage fluidly and productively with each other. 

Skaalerud asks about the importance of high-value work and that repetitive, mundane tasks are minimized as much as possible. Meyer some people see “chaos” in a firm’s operations, but emphasizes the importance of taking a closer look at what’s going on and being able to change perspectives from strategic to tactical and back again easily. This allows you to identify the issues that impede the fast and effective delivery of data across the organization.

One example that Meyer gives is data entry. It’s a critically important task but one where errors can occur if people aren’t focused on their work. That focus can be improved by giving the people doing the work what she calls “more high-value outcomes” and the accompanying boost in job satisfaction and engagement across the organization.

Gajewski points out that one of the best measures of the effectiveness of a system is how well it handles exceptions, and that people who know more about how processes affect a firm are better positioned to react properly to unfamiliar scenarios. His firm uses technology, in part, to isolate the variables that can help them be more effective. 

Skaalerud asks how firms—especially those that have been in business for decades—can go about analyzing data over the long term.

Grajewski responds that Huron Capital Partners has historically been “good” at this, but that with an assist from technology, they’re on the path to being “great” at it. He goes on to explain that his firm has created automated dashboards with Altvia’s help that can assist them in assessing the impact of certain factors on their success—things like intermediary, sector, geography, executives or service providers involved, etc.

The Tech Maturity Curve – Understanding Your Current State & How to Progress

Another conversation involves tech maturity in firms and their well-known resistance to change since there’s a certain amount of lift that’s needed to reach a point where the return on their technology investments is clear. 

Meyer mentions identifying true technology “champions” within the firm is vital to success, as is achieving small wins that begin to build momentum toward full adoption of tech solutions. She emphasizes the importance of automating things like reminders so that team members can focus on other tasks.

The group tips for successful technology implementation, including:

1. You need an overarching strategy
2. It’s important to “eat the elephant one bite at a time.”

Watch “Future Proof Your Private Equity or Venture Capital Firm” in Its Entirety

“Future Proof Your Private Equity or Venture Capital Firm” provides a wealth of information both for firms that have cutting-edge solutions in place and for those considering a technology initiative. 

View the virtual event in its entirety here.

Cracks are forming around Private Equity’s (PE) traditional process of creating value. The method of “buy, gut, flip, and repeat,” is no longer seeing the success it once had. These days it’s more challenging to grow portfolios by simply “buying smart.” Hold periods for investee companies have multiplied, and operating groups have increasingly limited time and resources. A data-driven talent management approach requires active monitoring, reshaping, and upgrading management capabilities from the ground up.

Strategic transformation of talent and leadership across the portfolio is the new, sustainable way of creating value.

Creating More Value Through Talent Management

PE can create long-lasting value through talent management as a core competency at the portfolio level. From an investor’s perspective, a strong team of talent can add as much as 30 percent to a company’s market valuation.

To create value from talent management, PE firms need a new approach to leadership and talent. The talent management process needs to start early and be very active. Acquiring and developing top talent needs to be a priority. Management capabilities don’t transform overnight, and firms that adopt tools to help with monitoring and tracking are sure to pull ahead.

Diversity Pays Off

Not only is it essential to acquire and develop top talent, but having a diverse workforce is also highly beneficial. By assembling employees of varying backgrounds and perspectives they generate a variety of insights, ideas, and superior returns.

PE is notorious for lack of diversity. There are too few women and people of color serving in lead investment roles. A Preqin study found that only 17.9 percent of PE employees worldwide are women. Another study by Deloitte and Stanford University found that the private investment industry has low racial and ethnic diversity. The lack of diversity is even more astounding if you strictly look at leadership positions.

For further proof that having a diverse team is beneficial, one study in Harvard Business Review found that diversity improved financial performance among venture capital professionals. Another study from Boston Consulting Group found that diverse teams were a key driver of innovation and produced 19 percent more revenue. The bottom line is that diverse teams make organizations more robust and increase profit.

Tools of the Talent Trade

PE and Venture Capital firms are now responsible for building their own competitive leadership teams and those of their portfolio companies. It sounds like a big job, and it is, but PE firms that lean on data and technology to help them in their talent transformation will reap the benefits. 

Most firms use LinkedIn as a talent management tool to reach and find future employees. Nearly 630M business professionals gather on LinkedIn and it is the most effective place for B2B marketers to engage with decision-makers, influencers, and leaders.

Some firms subscribe to LinkedIn Sales Navigator to deepen their capabilities. Sales Navigator includes improved search capabilities, visibility into extended networks, and personalized algorithms to help firms reach the right decision-maker. 

These are great tools, but the problem with using LinkedIn or LinkedIn Sales Navigator on their own for talent management is that these systems don’t connect to the firm’s CRM. Ultimately, there is not a great way to gather and track information on both the CRM and LinkedIn at the same time.

That’s all changing with Altvia. Altvia was explicitly built for PE and Venture Capital to help firms seamlessly evolve and manage the complexity that comes with growth. Leadership teams can assemble and track the data needed to manage talent with a direct integration between LinkedIn and Altvia—allowing talent management data to show in the CRM. 

Data isn’t siloed in one system, but shared for better visibility, internal communication, and improved efficiency. From storing candidate resumes to tracking specific attributes such as salary demands, potential start dates, and skills, firms have the advantage of both systems to build a talented and diverse team that will add value. 

Need to fill a bunch of roles? By using technology tools like Altvia, firms can keep track of all of the roles they are hiring for, both internally and externally at portfolio companies. Pipeline tracking keeps it all organized and tracks due diligence of candidates. Hiring becomes more streamlined, efficient, and effective. 

Conclusion: Transform the Talent Management Process with Altvia

Gone are the days when firms could simply leverage their finances, slash costs, and expect to unleash value. It’s become common knowledge that attracting and developing a talented and diverse team will add long-term value. By combining the power of LinkedIn and Altvia, firms have the tools that they need to build powerful teams and ultimately, a highly desirable portfolio.

Are you Interested in seeing how Altvia can help your firm transform the talent management process?

It seems that artificial intelligence (AI) is constantly in the news for one breakthrough or another—not to mention predictions from industry observers on what those breakthroughs mean to a particular industry and how they’ll be used. But how are investors and tech giants like FAMGA (Facebook, Apple, Microsoft, Google, and Amazon) companies and others viewing AI and the innovators responsible for advancing its capabilities?

PitchBook’s report titled Tech Giants Pursue Inorganic Growth with AI provides insights. At a high level, the author notes that M&A activity in AI reflects the immaturity of the technology itself. In other words, we’re definitely not seeing its full potential. But despite deal counts and deal values in recent years that have been flat for VC-backed companies, there are suggestions in recent activity that leading users of AI may be ready to start investing more heavily in the technology.

An Industry Gaining Momentum: Highlights of PitchBook’s AI Observations

From Altvia’s perspective, some of the most interesting and important observations from PitchBook’s report include:

• Tech giants have previously focused on investing in internal R&D initiatives and smaller tuck-in acquisitions and acqui-hires to fill gaps where needed. PitchBook surmises that this approach has been used to appease shareholders and prevent high losses and antitrust scrutiny.

• Evidence of the incumbents putting significant resources into R&D includes the fact that they announce new products and research discoveries regularly.

• Reasons for ramping up artificial intelligence spending include that some tech giants have fallen behind in certain areas that they have neglected. Apple’s AI acquisitions to bring its Siri product back up to par with other voice recognition systems is one example. Intel’s acquisition of Habana Labs to energize its own stalled AI chip design initiatives is another.

• Deals of $1 billion or more have been limited to semiconductors and autonomous vehicles.

• Microsoft’s $16 billion 2021 acquisition of Nuance, a company specializing in conversational AI, might be a sign of things to come. Notable is the fact that Nuance’s technology has demonstrated commercial traction in the healthcare industry, so it is more than a tuck-in-focused deal.

• In another sign that AI-related acquisitions are heating up, human resources automation company Workday has acquired employee sentiment analytics platform Peakon for $700 million.

• FAMGA companies spent $133.5 billion on R&D in 2020; total VC investment in North America in 2020 was $29.3 billion.

• To assess the priorities of M&A leaders, PitchBook examined the acquisitions of 110 companies that stand out for their AI R&D. The results are summarized in an interesting bar graph for the years 2017 through 2021. [Link to the report again here?]
• Horizontal platforms such as core software, natural language technology (NLT), and AI automation platforms along with consumer AI are the leading targets for industry leaders.

• PitchBook analysts believe that “NLT is a faster-growing niche that carries greater commercial and strategic value to big tech companies in the medium term,” in part because both Microsoft and Alphabet have signaled that NLT is important to their future with new acquisitions and internal initiatives.

• Public cloud hosting companies are rolling out verticalized AI offerings for industries like financial services, industrial, IT, and healthcare applications. However, they have made a few acquisitions to enhance related capabilities. Instead, they’re acquiring horizontal platforms and developing their own applications.

• The possible ROI of AI acquisitions is still hard to gauge. This is putting downward pressure on valuations for AI startups and causing AI leaders to be hesitant about paying a premium for even the most promising startups, like Element AI.

• The filling of gaps in the AI architectures of FAMGA companies continues to represent a significant opportunity for startups. 

We agree with PitchBook’s take that stakeholders can expect tech companies to make additional large acquisitions in categories that they have already clearly prioritized. And given the immaturity of the technology being acquired, it doesn’t appear that regulators will focus on antitrust issues.

Stay Ahead of the Curve With the Right Software

It seems the AI industry is “taxiing for takeoff.” Staying on top of industry developments and in touch with stakeholders requires purpose-built software. Contact us today to learn more about the Altvia platform—a solution that is as powerful as it is easy to implement.

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.