Portfolio Monitoring Software and Great People: A Formula for Success

At Altvia, one thing that has been top of mind for us is identifying, building, and maintaining an exceptional corporate culture. For insights in this area, we often talk with successful PE firms to learn more about how their efforts to build winning cultures have had positive impacts in their firms and in the portfolio companies in which they invest, and ultimately have led to greater returns for their investors.

First, let’s lay some foundation about what culture is.

  • Culture is the cumulative collection of an organization’s experience, attitudes, and values.
  • Culture is how an organization communicates.
  • Culture is the body of knowledge shared by people within an organization.
  • Culture is a way of life and an approach to doing business.

It seems that many companies today are committed to building a successful culture that fosters both professional and personal growth, and that takes performance to the next level.

How Portfolio Monitoring Software Supports Positive Culture at PE Firms

So, what does a winning culture look like for a PE firm? That can vary widely. However, having portfolio monitoring software in place to aid in the sharing and management of information is essential in all cases.

One approach in crafting a positive culture is to focus on the go-to-market (GTM) strategy for both the firm and the companies in which it invests. The idea is to spread the knowledge for several target channels across investment teams as opposed to having a siloed approach, and to develop a common set of terms and considerations used to evaluate investment opportunities.

Since all members are equipped with a common framework, there’s a strong sense of empowerment as a team. It’s a “divide and conquer” approach combined with a consistent methodology for measuring opportunities in both a qualitative and quantitative way.

While adopting and promoting a new culture can be challenging, a team foundation coupled with broader subject matter expertise is a proven formula for delivering successful performance as is often reflected in a firm’s Net Promoter Score and channel growth.

Another effective culture takes a “team-first” approach, structuring roles and compensation so that all members of a firm are closely aligned with the interests of its limited partners (LPs). This may be most achievable in firms that don’t have a single founder and therefore no single personality around which a culture develops.

Instead, there is an open framework on which to build the company’s culture. This translates into key performance metrics and processes being aligned with client goals and interests. Everyone is working toward the same objectives.

And if a team member leaves the firm, their ownership stake is left with the firm. With this structure in place, the firm’s success is tied to the success of LPs.

Seeking Synergy: Advanced Portfolio Monitoring Software + Great People

No discussion about winning cultures is complete without shining a spotlight on the people part of the equation. Hiring the right individuals for the right jobs and developing effective collaboration among teams fosters crucial trust and alignment. Here again, having an advanced portfolio monitoring solution in place to support these efforts is crucial.

One PE firm we work with created a steering committee made up of their CFO, controller, HR, marketing, and senior managing directors who meet every month to improve processes including fundraising, tracking, and deal workflow. We take a similar cross-functional approach at Altvia, conducting “Level 10 Meetings” each week as part of an Entrepreneurial Operating System® (EOS) approach. This helps us identify and solve problems, provides a strong feedback loop, and enables our teams to stay focused.

Consistent Framework for Decision-Making

The fact that Altvia has a consistent framework and a regular dialog has been instrumental in helping us develop and maintain a great company culture. We’re able to collect input from team members efficiently and use those insights to inform our decision-making process. The result is that everyone in our company has an active role in our success.

And to help ensure that the right people are in the right jobs, Altvia provides job candidates a RoundPegg survey for cultural assessment as part of a thorough interview process. If hired, the new employee takes a StrengthsFinder survey that enables us and the person to see why they stand out from others. This awareness empowers them to leverage their talents most effectively. An employee’s top five strengths are then folded into a team-wide assessment to maximize the effectiveness of our communication and collaboration.

Ultimately, having great people and teams supported by purpose-built solutions like portfolio monitoring software leads to a positive culture that benefits our company and every firm we interact with.

Data & Tech Guide

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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