Case Study: RCP Gets Insightful Data Through Enhanced Reporting From AIM

RCP Advisors, LLC is a private equity investment management firm that provides access to lower middle-market private equity fund managers through funds-of-funds and through direct co-investments. The firm is invested in nearly 100 funds and close to 1,000 underlying portfolio companies and while each of the members on the firm’s investment committee is familiar with a specific part of the portfolio, it is impossible for all of them to closely follow the entire portfolio because of the firm’s size.

The Challenge

RCP’s 2-man portfolio monitoring team, then, is charged with providing the investment committee with a summary of the entire portfolio on a quarterly basis, as well as ensuring that the valuations provided by underlying managers are reasonable and maintaining a constant high-level view of the portfolio.

“Taking all the data surrounding each investment and condensing it into a 5 or 10 minute summary on each fund can be a real challenge,” says Principal on the Portfolio Management team Andrew Nelson, “but it’s crucial that each member of the investment committee knows the entire portfolio rather than just the 10 or 12 specific relationships they’re close to.”

Since 2005, RCP has been using the AIM software system by Altvia to track fundraising, investment due diligence, and portfolio management. And over this time period, they have amassed a great deal of data on each fund and each operating company in their portfolio.

From this data, the portfolio monitoring team could produce reports that showed the current amount the firm had invested in each fund or operating company. These reports, usually built-in spreadsheets, produced a limited view of the entire data set and were often just a snapshot of the current state of investments. For example, they provided no historical data about investments the firm had made at any given time in the past.

Without a regimented and flexible method for creating reports, the portfolio monitoring team was limited in the completeness of the picture they could provide for the investment team. Says Nelson, “We had all the data and we knew what reports we needed. We just didn’t have the technical skills necessary to turn those ideas into a nice, clean report that contains all the relevant information.”

The Solution

In 2011, Altvia reconfigured RCP’s AIM database to accommodate enhanced reporting. RCP then invited Altvia back to Chicago later that year to help them leverage the functionality of their new database by configuring the customized reports the portfolio monitoring team needed.

Once on-site, Altvia and the portfolio monitoring team started by brainstorming ideas for the kind of information they would like to get out of their database. Eventually, they outlined a set of 10 reports that they wanted and Altvia went to work creating them.

“We had all this data and information and we knew how to do it but they made it more efficient,” says Portfolio Management team member Adam Ciborowski. “They helped us automate all of the enhanced reporting capabilities that we had been doing manually and it improved our ability to present the data in a usable form.”

The end product was a set of reports and a reporting framework that facilitated RCP’s consumption of data in a way they had never done before, providing them insight into the portfolio but also into their managers and industry trends.

“We had our set ways and Altvia opened our eyes to different ways of how to report and what we can use within Salesforce and excel,” says Ciborowski.

“They know our business and they understand our language,” says Nelson. “As a result, it was very easy to describe what we wanted and they were able to contribute ideas of their own.”

Leveraging their new enhanced reporting capabilities, the portfolio monitoring team is providing RCP with data that is more informative, more insightful, and more accurate, letting RCP ultimately make better-informed decisions.

“Altvia gave us the ability to fine-tune our reporting more to our liking and also made it more flexible so we could do more with what we have,” says Nelson. “At first we had a limited view and they expanded our horizons with what else can be done.”

“I think it helped us look at our data in a different way,” says Ciborowski. “We had been looking at it at a very high level and now we are able to break it down and be more specific. We have more accurate and more meaningful data and we can do everything more in real-time. I think we became a lot more efficient.”

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.

fund management software