Case Study: Spire Capital Leverages Altvia to Monitor the Portfolio

About Spire Capital

Spire Capital is a private equity firm focused on lead and control investments in middle-market companies in the technology-enabled business services, media, education, and communications sectors. Founded in 2000, the company has had tremendous success in building industry-leading companies and driving outsized returns for its investors. Spire Capital leads buyout investments, providing deep industry experience and a network of business relationships that enable its portfolio companies to grow and create value. The company is investing out of its fourth fund, has managed over $900 million in private equity commitments since its founding, and has invested in 26 platform companies and consummated over 90 add-on acquisitions. Spire Capital was in need of Atlvia’s help with portfolio monitoring.

The Challenge

Don Stewart is CFO of Spire Capital. A hands-on executive, he also handles CCO responsibilities. He has extensive leadership and expertise in creating scalable revenue for businesses across a variety of industries, from entrepreneurial startups to Fortune 500 companies. This includes experience in directing all facets of treasury, accounting, investor relations, and operations.

Stewart and the entire Spire Capital team had found that managing information using Excel spreadsheets was “brutal.” They were using spreadsheets to record financials for their portfolio companies, provide information for monthly financial reviews, and produce quarterly and annual reports and related communications, among other things. Handling all of those tasks was extremely labor-intensive and time-consuming.

The Solution

With Altvia’s help, Spire Capital implemented a portfolio company dashboard in its LP portal, which enables them to easily pull up mark-to-market valuations (cost, fair market value, etc.) at a fund level for each portfolio company. The time savings and increase in transparency have been significant, and the ability to better serve LPs has become a major differentiator for the company.

“I’m on the front line for LP requests, whether it be quarterly, annually, or whenever,” says Stewart. “Two-thirds of the time, those requests are about portfolio company data. That got me thinking about what else I can present to stakeholders to help them make decisions—taking off my financial hat and putting on my marketing hat, so to speak.”

He also noted that with the type of advanced portfolio monitoring functionality provided by Altvia, you have to re-educate contacts who are used to only having access to “stale” data. “The access to data is great,” he says, “It’s a matter of training people on how and where to find that data. But once you do, stakeholders like our more sophisticated institutional partners love it. Used the right way, an LP portal can serve as a key marketing function.”

What advice would Stewart give to his industry peers about how to approach and prioritize technology and the role portfolio monitoring can play in a firm? “I think the attitude ‘If it ain’t broke, don’t fix it’ is pretty prevalent in our industry, with many firms still working in Excel, posting PDFs as a way to provide information, etc.,” he says. “But it’s important to be forward-thinking and not get stuck in your ways. You’ve got to take the time and make the investment in implementing new solutions, and you’ve got to believe it will work. But if you do, it’s totally worth it.”

Stewart goes on to say that good returns are essential, but achieving good returns plus providing an excellent stakeholder experience can set your firm apart from the competition. It can also make your job easier, as he estimates that the greater LP engagement they generated going into their fourth fund allowed them to complete the raise in half the time of their third fund.

“Altvia isn’t a vendor, but a true partner,” he says, summing up the relationship. “Altvia listens and uses creativity to solve problems.”

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 Salesforce.com 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 Salesforce.com 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 Salesforce.com — 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.

digital transformation