In order to be successful in today’s competitive economic environment, fund managers have to be able to differentiate themselves from the competition. If you are looking to help your organization stand out from the crowd, effective communication, relationship management, and business intelligence capabilities are crucial.
You have to get the intention of investors, understand their objectives, and provide them the information they need when and where they need it.
This is no easy task, and it is made even more difficult if you are using outdated methods to gather, manage, and assess investor data. Relying on spreadsheets or a rudimentary data collection system to store data is inefficient and increases the risk that key facts either are not tracked or are lost at some point in the process.
Plus, there are inherent security issues with that approach that can result in a data breach that is costly to resolve and damaging to your organization’s reputation. In addition, not using a business intelligence solution to gain insight about investors means you are failing to maximize the value of the data you are working so hard to collect.
For these and other reasons, purpose-built data/relationship management and business intelligence solutions are essential.
Gain Insight with a Technology Assessment
Where does your company stand in terms of having the systems you need to engage with investors in a way that drives better outcomes? It can be hard to get the proper perspective from inside your organization.
What many companies find to be enlightening is getting an unbiased opinion from outside experts. Our private equity technology assessment produces a detailed evaluation of an organization’s ability to collect, manage, and act on investor data.
With that appraisal in hand, they can determine what systems are needed and how they can move from technology that is a liability to solutions that provide a competitive advantage.
Transition to Advanced Private Capital Technology
There are four phases of investor relationship management. The Reactive phase is described above. Data is stored and managed in spreadsheets or in some other simple way. The information repository isn’t centrally located and accessible, and there are significant security risks with this data, which can contain sensitive information. It’s not unusual for companies to start in the Reactive phase. The problem arises if they stay there.
For organizations that are trying to be more strategic in how they manage investor relationships, next comes the Informed phase. Here, an effort is made to consolidate investor data into a centralized system. This makes the information available to people who need it and helps them better understand who the investors are that they are communicating with, what those investors are looking for, and how the company has interacted with them to date.
Where companies really start to develop a competitive edge is when they move to the Proactive phase. This involves being more intentional about the information they collect from limited partners (LPs). In some cases that means tracking things like the co-invest interests of LPs and noting what the company has presented to them and their reaction to the offers. This makes it easier for the company to reach out to the right investors in the right way when new opportunities arise. Organizations at this phase in their technology evolution typically use a powerful customer relationship management (CRM) solution specifically designed for the capital markets.
Finally, in the Predictive phase, a company uses tools to share reports and fund information and then track what investors do with that information. Monitoring and carefully recording an investor’s interests, and analyzing this data using business intelligence capabilities, enables an organization to understand investor behavior more fully. With these insights, the company can improve targeting and tailor communications to help increase interest and engagement from investors.
The Goal: Reduce Friction in the Fundraising Process
In short, the value of implementing advanced CRM and business intelligence solutions is that they simplify, streamline, and improve the fundraising process. Being proactive and predictive enables companies to interact with investors easily and effectively, and achieve their capital raise goals more quickly.
Learn more about how to differentiate your company in the private equity markets. Click to download the Investor Experience Guide now.