Private Equity Fund Management System: What Your Firm Needs to Know

With Private Equity Data Delivering More Insight Than Ever Before, It’s No Surprise More Firms Are Using Technology To Stay Competitive.

Making deals and raising funds may seem to be all about the numbers. However, any experienced fund manager will tell you that success depends on how effectively private equity firms can leverage relationships with a fund management system.

These days, managing relationships requires tracking vast amounts of private equity data. Deals move fast, and the competition is fierce.

You can’t afford to fall behind because you don’t have all the information you need. In an industry where trust and confidence are key, you can’t look like you don’t know what you’re doing.

Today’s top-tier private equity firms have a holistic view of their network and the influence they yield at their fingertips. Firms do this by using a CRM system built specifically for the unique and evolving needs of private equity.

Chances are you’re currently recording contacts, conversations, and notes in multiple disparate ways:

  • Spreadsheets
  • Emails
  • Calendar invites
  • Handwritten meeting details
  • Sticky notes

Obviously, this is no way to manage your crucial relationships and funds effectively.

Private equity data management systems like CRMs, connect data from reports, conversations, emails, and meeting notes seamlessly. A CRM records the history of each contact—from how they are connected with the firm to their current industry position to previous roles.

When you’re ready to improve your firm’s efficiency by leveraging your valuable private equity data, here are the considerations to make for your CRM system.

Connect Data to Your Fund Management System

No doubt about it: Companies that know how to harness their private equity data and the insights it provides are the ones that will succeed in today’s digital world.

Private equity firms have been collecting data for years. However, many struggle to use it due to a lack of integration. Add in the rapid advancement of technology and it’s easy to understand why fully leveraging private equity data is the number one challenge reported by industry executives.

Accurate private equity data is crucial during every stage of a deal. Yet accuracy isn’t always a guarantee. Private equity firms have access to more data than ever before. However, many use inefficient reporting and tracking systems that slow down the process and degrade the quality of the data.

With no consolidated repository for important information, teams face many challenges and risks, including:

  • Hours wasted hunting down data
  • Time spent creating workarounds to make sense of disconnected facts and figures
  • An increased chance of errors and greater risk to the firm
  • Making investment decisions based on inaccurate information
  • Failing to keep up with regulations
  • Wasting budget on solutions that don’t work

Centralizing all of your deal data in one place frees up valuable resources and increases the accuracy of your data to improve decision-making.

Your fund analysts, for example, can spend less time on administrative tasks like sorting through emails, calendars, and Excel (read 10 Reasons Excel Falls Short for Fund Managers) and more time deriving value and meaning from their private equity data to inform your firm’s strategy.

More importantly, having confidence in the accuracy of the data also leads to confidence in the decisions made based on it.

Choose the Right Fund Management System

If you remember one piece of advice from this article, make it this: You must develop your data analytics strategy to solve the problems you need solved, not around your current systems.

Your private equity data management system should be tailored to the industry’s unique demands. When evaluating solutions, ask the following about the platform:

  • How well does the provider understand our firm’s particular fundraising requirements?
  • What kinds of workflows does the system offer for deal tracking?
  • Do the tools and the team demonstrate an understanding of how investors think?

The system you select should be backed by people who are committed to serving as your business partner, not just your software provider. Adopting any new software is a change, and the switch to a new CRM requires change management, particularly during the implementation phase. You will need a support team that is committed to serving your team as you transition and understands the private equity business model. (Find tips on managing the implementation process here.)

Finally, decide whether you want a standard or customized solution. While a standard solution may promise the convenience of an integrated suite of technologies, you’re often stuck with lackluster capabilities that don’t serve the specific and unique needs of your firm.

Customized solutions, on the other hand, offer more flexibility to meet your evolving business requirements. This is especially important if you want to continue using current applications, meet your investors’ unique needs, or even help your team adopt a new approach to their work.

This is why Altvia partners closely with Salesforce to develop the most successful CRM platform for private equity firms and one that is continually evolving and improving.

How to Find the Right Private Equity Data Tool

Are you in the process of determining if your firm needs a technology solution for private equity data management? If so, our Buyers Guide to Private Equity Technology can help you find the partner you need to ensure your firm is on the right track for growth.

Read the guide to learn what questions you should be asking before you decide on a private equity data management tool.

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 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 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 — 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.

fund management system