Highlights From “Future Proof Your PE/VC Firm” Virtual Event

Recently, Altvia Chief Revenue Officer, Kjael Skaalerud, hosted a virtual event,  “Future Proof Your Private Equity or Venture Capital Firm” focused on issues like the role technology can play in a firm to keep the organization operating at peak performance, the technology maturity curve and how firms can assess where they are on it, and hurdles to technology initiatives. 

The session, which was recorded for those who couldn’t attend, also provides actionable insights on how to move forward with implementing technology.

We’re in a period where many records have been set in private capital markets—from VC dollars invested to the total number of IPOs, etc While that’s great news for the industry, it also means that firms that historically based their success on “ a great team” and being “connected” within the industry are feeling some pressure to up their game.

Implementing advanced technology is a great way to do that. As Hugh MacArthur, global head of PE at Bain & Coobserved, “Speed to insight is everything in private equity.”

The Panelists

Along with Kjael, two industry experts provide their insights on how to future proof your firm. 

Jennifer Meyer is a director at Greenspring Associates. She’s an expert in technology companies, particularly SaaS-based services, and leads Greenspring’s technology operations team. 

Richard Grajewski is VP, business development at Huron Capital Partners, where his primary focus is deal origination. 

Frameworks – The Role Technology Can Play in a Firm

Grajewski says what’s key for his firm is knowing what deals are coming to the market before getting the “teaser”. In the current market, if the teaser is your first knowledge of a deal, you’re already behind. 

Huron Capital gets ahead of the curve by establishing and maintaining relationships with what he calls “centers of influence” in the market. Screening deals and educating the market on his firm’s investing criteria are also important to him. 

“Having a powerful CRM is vital to everything Huron Capital does.”

He also notes that the firm works closely with Altvia to understand and adopt best practices for gathering and assessing data and setting goals for their operations. 

Skaalerud points out, many firms suffer from “blank canvas syndrome,” meaning they want to implement technology but don’t know where to start, so Altivia’s guidance can be extremely helpful.

Meyer addresses how technology helps firms meet a need for something they’re all pursuing:  actionable outcomes and delivery mechanisms. She points out that her firm has $15 billion in assets under management and 21 years of data that’s helped them achieve that level of success.

But with all that information, the question becomes: “How do you manage that amount of history and data in a meaningful way that gives everyone high confidence in what’s being outputted and delivered across the firm?”

She notes technology enables the people who rely on it, and who ultimately have to make important decisions. If you view solutions from that perspective, you’ll be better positioned to achieve the outcomes you’re looking for. 

You’ll get better adoption if you’re clear about technology’s role and about the fact that it can give your firm a competitive advantage.

Skaalerud agreed, sharing Altvia’s observation of firms that embrace technology tend to be less siloed, with teams that engage fluidly and productively with each other. 

Skaalerud asks about the importance of high-value work and that repetitive, mundane tasks are minimized as much as possible. Meyer some people see “chaos” in a firm’s operations, but emphasizes the importance of taking a closer look at what’s going on and being able to change perspectives from strategic to tactical and back again easily. This allows you to identify the issues that impede the fast and effective delivery of data across the organization.

One example that Meyer gives is data entry. It’s a critically important task but one where errors can occur if people aren’t focused on their work. That focus can be improved by giving the people doing the work what she calls “more high-value outcomes” and the accompanying boost in job satisfaction and engagement across the organization.

Gajewski points out that one of the best measures of the effectiveness of a system is how well it handles exceptions, and that people who know more about how processes affect a firm are better positioned to react properly to unfamiliar scenarios. His firm uses technology, in part, to isolate the variables that can help them be more effective. 

Skaalerud asks how firms—especially those that have been in business for decades—can go about analyzing data over the long term.

Grajewski responds that Huron Capital Partners has historically been “good” at this, but that with an assist from technology, they’re on the path to being “great” at it. He goes on to explain that his firm has created automated dashboards with Altvia’s help that can assist them in assessing the impact of certain factors on their success—things like intermediary, sector, geography, executives or service providers involved, etc.

The Tech Maturity Curve – Understanding Your Current State & How to Progress

Another conversation involves tech maturity in firms and their well-known resistance to change since there’s a certain amount of lift that’s needed to reach a point where the return on their technology investments is clear. 

Meyer mentions identifying true technology “champions” within the firm is vital to success, as is achieving small wins that begin to build momentum toward full adoption of tech solutions. She emphasizes the importance of automating things like reminders so that team members can focus on other tasks.

The group tips for successful technology implementation, including:

  1. You need an overarching strategy
  2. It’s important to “eat the elephant one bite at a time.”

Watch “Future Proof Your Private Equity or Venture Capital Firm” in Its Entirety

“Future Proof Your Private Equity or Venture Capital Firm” provides a wealth of information both for firms that have cutting-edge solutions in place and for those considering a technology initiative. 

View the virtual event in its entirety here.

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.

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