Altvia SVP Jeff Williams Interviewed for Preqin Special Report

Preqin, a leading provider of data, analytics, and insights to alternative assets professionals around the world, has released Preqin Special Report: Service Providers in Alternative Assets. For one section of the report, Preqin interviewed Altvia Senior Vice President Jeff Williams about the increasing demand for data and transparency in the industry, and how firms can provide it.

Jeff shares his perspective on three questions:

As PE/VC matures and more LPs allocate to a market with no shortage of managers, how has the relationship between LPs and GPs evolved?

Jeff observes that the GP-LP relationship, which should be a partnership, is sometimes seen by LPs as not exactly equal. However, he believes that the “balance of power” is shifting, in part because of increased interest from institutional investors who typically expect a high degree of transparency. He also feels that the growing number of managers and their need to compete with larger GPs has “led to greater acceptance of LP demands for transparency.”

PE/VC has seen significant consolidation with larger GPs assuming a greater share of LP commitments. How have factors like portfolio transparency and on-demand data shaped the competitive landscape?

Jeff points out that differentiation, especially for emerging managers, is harder than ever to achieve today. Those who have the most success are turning to technology for their edge. They’re using advanced, purpose-built solutions to tell data-driven stories and create better “customer experiences” that enable LPs to explore data on their own.

The GFC put risk management back into focus, which was further honed by the COVID-19 pandemic. How have LP demands for data and transparency evolved over the past decade, and are GPs willing to meet those demands?

What Jeff has seen since the GFC is a desire by LPs to better understand the underlying assets. And since many portfolio companies are privately held, GPs must provide data to LPs that they can use to assess their risk. He says that it seems more GPs are willing to meet the demand for greater transparency, with COVID-19 creating additional pressure in that direction.

More Important Information in the Report

Preqin’s report has more than 50 pages of interesting and enlightening information in sections on topics like:

  • Why Sound Operations Are the Platform for Success
  • Representation and Warranty Insurance Can Be a Leg Up, but May Not Be a Silver Bullet
  • ESG Regulations and Legislative Changes on the Horizon?
  • How Technology is Changing Fund Administration
  • Why Process Automation Is the Future

The report also includes lists and data on the activities of fund administrators, fund auditors, law firms in fund formation, hedge fund administrators, hedge fund custodians, and many other industry stakeholders.

Click here to get your copy of Preqin Special Report: Service Providers in Alternative Assets.

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.