Once in a lifetime transformational shift will create an industry standard for business operations using technology.
Since the pandemic started, LPs are asking more questions, causing GPs to take a new perspective at their current internal processes for communication.
With the reduced opportunity for in-person communication and disruption to standard modes of operations, it’s evident Private Equity and Venture Capital firms that haven’t chosen a digital-first strategy are in a risky position.
The “new normal” remote-life surfaced challenges Private Capital firms must now respond to or risk being left behind:
- LPs demanding greater transparency into portfolio performance
- Disconnected systems across the firm with no single clear source of truth making real-time visibility and reporting a time-intensive task
- Undefined processes for sharing information internally or to investors
- Lack of visibility regarding fund manager and investor activities
To stay a step ahead in the Private Capital Markets industry, firms will have to evolve their technology strategy to solve pain points across multiple functional areas. Altvia’s SVP of Revenue, Kjael Skaalerud regularly identifies where firms make the most impact with technology. Kjael shares his perspective, “For a firm to still use Excel spreadsheets for mission-critical workflows is like someone relying on a horse and carriage when the rest of the world is driving a Tesla.”
“For a firm to still use Excel spreadsheets for mission-critical workflows is like someone relying on a horse and carriage when the rest of the world is driving a Tesla.” – Kjael Skaalerud, Altvia
While increasing stakeholder requests is far from new, firms must rethink how they communicate and handle in-person engagements with current and prospective investors and portfolio companies. They must evaluate the technology firms currently use to drive excellence in relationships and internal operations. In addition to clearly defined internal processes, the technology needed to compete in this new environment includes:
- A CRM built for the Private Capital Markets to consolidate data in a single-source of action, enabling visibility into internal activities, and inform all external conversations and interaction
- An email communication tool integrated with their CRM to make the most of data via basic automation
- A Self-Serve Engagement Portal for Investors to review portfolio metrics, sign documents, and ultimately drive engagement
- A Business Intelligence layer to turn data into actionable insights, underpinned by the firm’s proprietary data, brought into the right context via data from the CRM
It’s worth considering the private equity firm lifecycle to identify the areas ripe for technology enablement:
Tim Friedman, CEO & Founder of PE Stack backs this up with a statement shared with Altvia, “The best solutions, implemented according to best practices, should be able to digitize and centralize the workflow to the greatest extent possible if it is to maximize value to the end-users.”
“The best solutions, implemented according to best practices, should be able to digitize and centralize the workflow to the greatest extent possible if it is to maximize value to the end-users.” – Tim Friedman, PE Stack
A full Private Equity software solution should be equipped to handle the majority of the firm lifecycle stages so information is managed in a single place. If the platform of choice does enable the firm lifecycle, it is critical for other external platforms to integrate well with the main system of truth or the business impact will not be realized.
Committing to a complete digital transformation puts firms on the offense and prepares professionals to react to the events and revolutions in the market quickly and consistently. Firms and deal teams that try to “duct tape” their existing processes until the business world “gets back to normal” will be in trouble if it never does or until the next unpredictable event unfolds.
Download our free guide, Winning Deals in a Hyper-Competitive Market, for more information on how your firm can use technology to execrate deals in your pipeline.