Portfolio Monitoring Software: A Formula for Success

Create A Winning Culture

At Altvia, one thing that has been top of mind for me is identifying, building, and maintaining a great corporate culture. I was thrilled for the opportunity to spend some time with a couple of successful PE firms to learn more about how their efforts to build winning cultures have had great impacts in their firms, in the portfolio companies in which they invest, and ultimately lead to greater returns for their Investors.

First, let’s lay some foundation about what culture is. Culture is the cumulative collection of experience, knowledge, attitudes, and values. Culture is communication. Culture is the system of knowledge shared by people. 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 takes performance to the next level.

So what does a winning culture look like for a PE firm? As I learned in preparing for and moderating the panel, it’s different strokes for different folks. One approach is to focus on the Go-To-Market (GTM) strategy for both the firm and the companies in which it invests. One of the firms in the panel spreads the knowledge base for all of their three target channels across their investment teams versus a siloed approach and developed a common set of terms and considerations as it evaluates investment opportunities. Since all members are armed with a common framework, there’s a strong sense of empowerment as a team. They use a “divide and conquer” approach along with a consistent methodology for measuring opportunities in both a qualitative and quantitative way. While adopting this new culture was somewhat cumbersome at first, this team foundation coupled with broader subject matter expertise has become a proven formula to deliver successful performance as reflected in the firm’s Net Promoter Score and channel growth.

Another approach discussed in the panel was to focus on a “team-first” approach; structuring roles and compensation so that all members of the firm were more closely aligned with the interests of its Limited Partners (LPs). In this instance, the PE firm was in a unique situation as it didn’t have a single founder and so its culture was not built around a single personality – instead, there was an open framework upon which to build the company’s culture. This translated into key performance metrics and processes being aligned with their client’s goals and interests. Everyone is aligned around the same goals. And if a team member leaves the firm, then his/her ownership stake is left with the firm. With this structure in place, the firm’s success is aligned closely with LPs success.

And no discussion about winning cultures is complete without a spotlight on the people. A winning culture focused on people can be attributed to hiring the right people for the right job and developing cohesive collaboration among teams that fosters trust and alignment. One PE firm developed a steering committee comprised of their CFO, controller, HR, marketing and senior managing directors who meet every month to improve processes including fundraising, tracking and deal workflow. At Altvia, we conduct cross-functional team “Level 10 Meetings” on a weekly basis as part of the EOS approach (Entrepreneurial Operating System) to identify and solve issues, provide a feedback loop and stay focused.

Consistent Framework for Decision-Making

I can share that for Altvia, having a consistent framework and a regular dialog has been instrumental in us fostering a great culture in everything we do. We are able to efficiently collect input from team members who are able to add insights into decision-making process and take an active role. And to help ensure the right people are in the right job, Altvia provides job candidates a RoundPegg survey for cultural assessment on top of an in-depth interview process. If hired, the new employee takes a Strengths Finder survey that profiles personalized strengths insights, which describes what makes you stand out from others, brings greater awareness to your talents and provides steps to help you leverage your talents for achievement. Then, your top five strengths are folded into a team-wide assessment so that everyone can better communicate and collaborate in support of success at the company level.

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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