Lead for Success: How to Differentiate in the Private Equity Crowd

What does differentiation look like for a Private Equity fund manager?

This is a rather loaded question so let’s break it down. We’ve covered the building blocks for processes and systems that capture and warehouse data so that Private Equity firms can leverage new insights.

Now, with Altvia’s VP of Customer Success, Jill Montera, let’s discuss how this foundation can lead to differentiation.

Differentiation is the result of efforts to make a product or brand stand out as a provider of unique value to customers in comparison with its competitors.

How does this translate into private equity?

In Private Equity, differentiation oftentimes stems from a firm’s “secret sauce” for how they source deals and find the best investment opportunities. This typically involves intricate processes and models to produce the best returns and ultimately differentiate from the competition.

While this has worked for a long time, differentiation is changing. Many of our fund manager customers are in the process of raising their 8th or 9th fund and they are looking at how to continually improve investor perception and deliver more value-add services (on top of performance). So differentiation is not just performance but the entire experience. This raises three questions:

  1. What is the investor experience?
  2. How are investors getting information?
  3. How are their requests being met?

Is information coming across in spreadsheets or in branded, visually enhanced formats that are easy to understand and access? As a trusted advisor, we look at the big picture to understand what differentiation means to our customers and then collaborate to establish the processes and systems/tools to make it happen.

Key point: differentiation for Private Equity fund managers involves the whole wrap of the investor experience – what unique practice do you have to stand out in the crowd?

Personalized communication

In managing the investor experience towards the goal of differentiation, there are a number of variables that affect the dynamics of this relationship from clear and consistent communications to reporting and transparency.

For example, communications, frequency, personalization, and tracking are among key requirements to consistently connect with investors and provide updates as well as official investor documents. While personalized communications like this via Altvia Correspond Investor Edition certainly work well.

LP Portal

Investors also expect 24x7x365 access to investment-related materials at their convenience. This is why an LP portal is so critical – it actually becomes the “hub” of the GP-LP relationship.

For instance, fund managers using ShareSecure can securely post and share documents along with multimedia files with investors and then track materials that are viewed – a great insight to see what’s really relevant and important to your investors.

For your investors, this LP portal delivers a high-touch user experience that’s all about ease-of-use to ensure they get what they need, quickly, and you get fewer questions and requests that strain your front and back office.


Another key component of the investor experience that’s part of differentiation is reporting – what type of data is reported, and how this data is delivered to the investor.

For instance, if quarterly reports are capturing the conventional data points and are delivered in spreadsheet format, the investor perception is rather lackluster – nothing special.

Yet if the quarterly report offers additional data points with new insights presented in a visually rich format, then there’s a clear opportunity to really engage with the investor about this information.

This is the direction of data in the world of Private Equity – going beyond the static report to interactive data that provides fund managers and investors new insights that lead to discoveries and answers to questions they didn’t even know they had.

How to lead for success in private equity

In the SaaS world, there’s always an ebb and flow of being proactive and reactive. In Private Equity, for a long time, it was more along the lines of being reactive to information and data requests from investors. Fund managers would over time build processes to meet these requests and then add technology-based tools to gain operational efficiency.

To really provide value to stakeholders and investors, fund managers need to be more proactive and avail information in highly consumable ways. The value of the GP-LP relationship is based, in part, on the fund manager getting in front of these requests, providing key data in a visually enhanced way that’s easy to understand and easy to access for investors. It has to be progressive.

Enabling more meaningful and visually enhanced data reporting is actually a process and you have to go through certain steps to establish this process – i.e., operationalizing investment data, capturing institutional knowledge – that makes your data-rich enough for modeling, insights – data points that go above and beyond.

By interacting with the data and leveraging new data sets, fund managers are able to make new discoveries – with a full spectrum of data visualization. Now, the fund manager has a whole new set of questions – like never before – because of how the data is connected, presented, and made easy to understand. Through enhanced reporting for investors, these discoveries can be shared to further strengthen both investor confidence and transparency.

The fund manager has become differentiated from the rest – it’s the reward for many years of creating a process for how data is captured, warehoused, analyzed, and harnessed.

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.