Case Study: Plexus Paves The Way For Firm Growth With Altvia

Plexus is a private equity firm based in North Carolina with a focus on the lower end of the middle market. As they’ve grown, they’ve stayed true to their core competitive advantage: sourcing, executing, and managing transactions with companies under $100 million in sales. To scale the model and keep their investment discipline, they had to transform their firm with fund management software.

The Challenge

“We had over 30 portfolio companies, multiple transactions in varying stages of due diligence, and a diversified and growing LP base. Our execution and reporting requirements were growing exponentially, yet we knew our core competency was smaller deals—and we wanted to continue growing. We just reached a critical mass where we had to address the consistency of data across all our reporting platforms and bring institutional processes to our deal flow, execution and portfolio oversight.” Says Plexus Partner Michael Painter.

The team at Plexus learned about Altvia from a fellow fund manager and chose to go with AIM, a CRM solution specifically designed for Private Capital Markets, based on conversations with other Altvia clients.

Plexus started with AIM, fund management software designed to track incoming deals and run analytics on deal flow to accommodate the increased number of deals that they were evaluating (800+ per year). The next step was to address the very detailed portfolio company financial and operating metrics that they had been capturing in a massive spreadsheet on a monthly basis. Altvia helped Plexus import this data into AIM, streamlining the upload process and pushing the portfolio company metrics into a shared AIM database that provided everyone on the Plexus team with up-to-date data. Altvia also helped Plexus pull accounting information from QuickBooks into AIM to help track historical portfolio balances by a portfolio company.

The Solution

“Altvia has a lot of experience with what works and what doesn’t work,” says Painter. “They are a good governor for what is realistic versus what is possible and they helped us start small and grow into a system that has allowed us to scale while institutionalizing our processes and staying true to our core competency of investing in the lower middle market.”

Almost immediately, AIM started saving the Plexus team time and making them more efficient. The 20-page Monday morning meeting reports that used to take up to 10 hours could now be compiled in 15 minutes. They are also now able to more efficiently manage their deal flow, due diligence, portfolio and overall fund management processes. Says Painter, “We would have to add two full-time people if we didn’t have AIM – and even then it wouldn’t have been scalable given our strategy.”

Most importantly, the Plexus team now relies on AIM to monitor and report their deal flow. “We are able to report on performance on a real-time basis with stats on deal generation, quality of referral sources, and the status of key accounts and more,” says Painter. “Having that information in front of our entire team every Monday has made us better; we are more disciplined, more accountable and we are finding more ways to be smarter about how we generate deal flow.”

Painter says that much of the benefit of using AIM comes from working with the team at Altvia. “They’ve worked with a lot of people in our space and they know what they’re doing,” he says. “And they’re also good guys,” he adds. “Our market is so relationship-driven—we really get to know our business partners and understand their needs. With Altvia, it’s clear that they value having a relationship that comes along with the software.”

A traditional crm was built for general ‘customer’ scenarios

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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