White Paper | Own Your Edge
For Private Equity & Venture Capital
Table of contents
Every Firm Is Becoming Software
It isn’t just that businesses use more software, but that, increasingly, a business is defined in software. That is, the core processes a business executes—from how it produces a product, to how it interacts with customers, to how it delivers services—are increasingly specified, monitored, and executed in software.
Jay Kreps, CEO of Confluent
CEO of Confluent
Consider the core processes your firm executes – launching funds, fundraising, sourcing deals, managing deal flow, measuring portfolio performance, engaging LPs to invest in the next fund…
Altvia is the only place you can capture your firm’s proprietary edge digitally (vs a commodity accounting software or standalone CRM).
Chapter 1: The Traditional
Pillars Of Enterprise Technology
The pillars of enterprise (business) technology are traditionally distilled down to the applications that help you manage your:
Finances (Books / GL)
Technical term: Enterprise Resource Planning (ERP), Accounting
Industry definers: Oracle Netsuite
Quickest overview: What is ERP?
Enterprise Resource Planning is a type of software to manage business activities such as accounting, procurement, project management, risk management and compliance, and supply chain operations. A complete ERP suite also includes enterprise performance management, software that helps plan, budget, predict, and report on an organization’s financial results.
Customers
Technical term: Customer Relationship Management (CRM)
Industry definers: Salesforce
Quickest overview: What is CRM?
Customer Relationship Management is a technology for managing all your company’s relationships and interactions with customers and potential customers. A CRM helps provide visibility and improves business relationships to grow your business.
Employees
Technical term: Human Capital Management (HCM)
Industry definers: ADP, Workday
Quickest overview: What is HCM?
Human Capital Management transforms the traditional administrative functions of human resources departments—recruiting, training, payroll, compensation, and performance management—into opportunities to drive engagement, productivity, and business value.
At this point, you might be asking yourself, ‘but what about in private equity or venture capital? For instance, your customers are your investors and you need a way to manage deals and portfolios…
Chapter 2: A Tech Stack Through
The Lens Of Private Capital Markets (PCM)
How is modern technology infrastructure unique in private capital markets?
We’ve found the firm lifecycle is the best framework for answering this question:
Building on traditional pillars of technology talked through in Chapter 1, here are the nuances firms need to understand:
A traditional CRM was built for general ‘customer’ scenarios
The scope must account for all relevant stakeholders and value drivers in a firm setting (i.e. investors, portfolio companies / assets, investment vehicles, service providers, etc.)
A cohesive view includes all historical interactions (notes, conversations, email exchanges) and leverages 3rd party data enrichment to serve up publicly available information for additional context
Stakeholder reporting and communication (investor relations) draws on a range of datasets
Data is the backbone of objective storytelling, and LPs demand proof of execution and repeatability of a thesis or investment strategy (aka ‘your edge’)
Many firms rely on consolidating data into static spreadsheets (from the CRM, fund accounting and portfolio performance), which do not showcase insights and are difficult to comprehend without manual analysis and visualizations
Firms need a digital method to engage stakeholders (ie investor portals)
LPs increasingly demand real-time, self-service access to information, though most portal environments are completely disconnected from the rest of the technology stack, serving only as a document storage tool
Few firms have visibility into how / when stakeholders engage with the materials they share or include in a digital forum, and engagement is the best way to inform priorities, follow up activities and talking points, etc.
Are there nuances your tech stack doesn’t solve? It’s important to find a product that has some configurability to minimize the workflows left incomplete.
Chapter 3: Capital Raising
capital markets?
In the first three quarters of 2020, just 39% of funds closed in 12 months, according to data by Preqin.
The pandemic revolutionized the way relationships are built and prolongs fundraises.
Firms that leverage technology are able to define and measure workflows, while answering critical questions like the following to improve effectiveness over time:
- Who are my top capital raisers?
- What regions are we most successful in?
- Where are our best introductions coming from?
- What are the characteristics of our most committed LPs?
With this laser focus, firms target the right prospects and close a fund faster.
Can you target the investors that have historically yielded the most success with your current tech stack?
Chapter 4: Deal Management
In a Blue Future Partners survey, 59% of firms were motivated to update their tech stack to find and execute deals better.
How are these firms using new capabilities to monitor deal flow?
- Real-time access to a centralized database
- Prioritization of deal sources based on returns
- Visibility into networking and communication efforts
- Supplementing data with tools like Pitchbook, DataFox, and SourceScrub.
What does the above mean for pipeline management?
It means: firm-wide visibility into the pipeline, follow-up activities based on deal priority, clear accountability across the deal team, and third-party supplemental data for updates that could accelerate/derail the deal.
Spend time efficiently with a data-driven approach to focus on priority areas like deal sources and stages. Use historical data to determine where you can improve deal progression and optimize performance for better returns.
Chapter 5: Investor Relations
PEI asked 120 Fund Managers about their communications with investors and 61% stated LPs request more frequent reporting about portfolio company revenues in light of COVID-19.
This is an issue we hear frequently from firms, even before the pandemic. IR teams feel stuck in a reactive state with limited tools to improve communication and visibility.
For IR teams to drive key relationships and continue everyday engagements they need to:
Automate common workflows like PPMs, Cap Calls, and Distribution Notices
Review communication coverage of investors and stakeholders
Measure engagement to inform follow up activities, and talking points
Provide self-serve analytics in a secure portal
What does the above mean for investor relations?
It means: proactive outreach by reducing time on administrative tasks, follow-up activities based on previous interactions, accountability across the team, and ease of sharing analytical rich reports with LPs through a secure portal.
Reduce time spent on one off requests and take advantage of your data, interactions, and industry knowledge to build stronger investor relationships.
Chapter 6: The Final Chapter
Reconsider the core processes your firm executes – launching funds, fundraising, sourcing deals, managing deal flow, measuring portfolio performance, engaging LPs to invest in the next fund…
Altvia is the only place you can capture your firm’s proprietary edge digitally (vs a commodity accounting software or standalone CRM).
Distribute personalized content (PPMs, K1s, Capital Calls, etc.)
Enhance the investor experience with a secure portal
Organize, harvest, and execute on critical data
Leverage workflow automation
Unify data across multiple sources to inform internal decisions
Empower external communication
A platform built for private capital workflows enables your front office and back office to create a single-source of truth. Allowing you to build relationships, optimize performance, and differentiate.
he Altvia team has been fantastic, bringing efficiencies to every facet of our business–fundraising, marketing, deal execution and fund administration. They understand what we do and their team has changed how we manage our business.
Michael Painter
Managing Partner & Co-founder, Plexus Capital