How to Digitize with Private Equity Software in 2022

If you’re still using Excel to run your firm and analyze large sets of data, continual monitoring, as Sajjad Jaffer, co-founder of the advisory and investment firm Two Six Capital, puts it, can feel a lot like trying to lose weight: “If you really want to see results, you need to step on the scale every day.”

So it makes sense that, from The Blackstone Group to TPG Capital, more PE firms are beginning to recognize how investor relations technology is speeding up processes and transforming the industry. In fact, 62% of PE CFOs invested in investor relations software in 2018, and this number is only growing. 

Why? To start, non-digitized private equity firms are starting to be perceived as out-of-date, with limited partners passing judgment on general partners regarding their data savviness, damaging long-standing reputations and future ability to raise funds. 

Along with the perceived risk of being outdated, private equity firms that aren’t innovating through disruptive technology not only lose out on streamlined internal processes but also on the ability to fully understand a business from the bottom-up through board-level insights and understanding of true performance and future projections. 

By leveraging advanced analytics and technologies, fund managers can gain instant access to detailed information about a target company and its competitive position, significantly improving the firm’s ability to assess opportunities and threats, while standing out from the growing competition. 

5 Steps to Gaining a Competitive Edge in 2022 

To overcome these risks and gain a competitive edge in the 21st Century, firms can take action and leverage Investor Relations technology to tackle the industry’s leading challenges head-on. 

  1. Leverage AI to Stay Relevant In a Competitive Market

    In order for firms to maintain, and grow, their reputations, they need to leverage disruptive technology to stay relevant, which means straying away from spreadsheets and software with limitations. As featured in an article from Knowledge@Wharton, while Salesforce can be great, it’s really just a place to log data, and doesn’t offer any informed data intelligence.

    To gain the edge, firms need to begin embracing AI and data intelligence platforms that can provide actionable insights down to the fund-level within minutes, and then be able to analyze that data to help LPs make better informed strategic decisions.

  1. Speed up audits and compliance processes

    Data analytics tools are transforming how decisions are being made, not only throughout the investment lifecycle but also internally. For firms looking to better operationalize their internal teams, digitizing their processes is a great move to save teams time through streamlined audit and compliance processes that can run on set and forget automated workflows, while opening up the doors for newfound clarity and team alignment.

  2. Manage Fund Details with Due Diligence

    Businesses create a lot of data they can’t manage properly, leading to firms operating at suboptimal levels in Excel (and the limitations it has on providing insightful data).

    Through data-driven, digitized dashboards, PE firms can more effectively, and efficiently, manage operational performance across their portfolio.
  3. Increase Transparency in LP Communications

    Access to the same data drives consistent decision-making across investors, LPs, and firm decision-makers and stakeholders. Through a centralized portfolio dashboard, firms can prove differentiation and create more value at a fund level, arming LPs and key stakeholders with transparent, actionable data and insights to help drive better decision-making.

  4. Reduce Multiple Stored Systems and Internal Process Inefficiencies

    Firms reliant on error-prone spreadsheets, manual processes, and multiple storage systems not only lack clear visibility into performance, but also aren’t empowered to make strategic, data-driven decisions when it comes to people, processes and technology

Through centralized, digital systems, VCs can ensure teams are consistently focused on the right priorities while eliminating the ability for under-performing team members to hide behind manually manipulated data, and reveal insights and growth trajectories that otherwise may have never been exposed. 

Step into the 21st Century by Streamlining Your Private Equity Software Stack 

Ready to digitize your firm’s private equity software? From streamlined operational processes to the ability to empower LPs in your portfolio with actionable, data-informed insights, shifting your PE Software Stack to a centralized digital platform could just be the competitive edge your firm needs to land its place on top in 2022. 

Altvia combines all of these powerful solutions into one centralized platform, empowering your firm to stay up to date and maintain its best-in-class reputation. 

How, specifically, could Altvia help you benefit from digitizing your private equity software in 2022? The best way to find out is to talk with us about how your firm operates today and the improvements you’d like to make.

Request a Demo

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.