Altvia’s Charlie Kuhn recently attended SOCAP ’11, the Social Capital Markets’ annual conference that challenges its attendees to contemplate the future of the impact investing space.  Here are Charlie’s thoughts after returning home.

By Charlie Kuhn, Altvia

When I think back to my week at SOCAP I am slapped in the face by one emotion: it was overwhelming.  It is important to remove the negative connotation from the word for there were no negative feelings at the conference; the people, ideas, conversations, innovations, and amount of effort at the conference were truly amazing.  More than 1500 individuals from nearly 75 countries all came together to grapple with what happens when “money and meaning intersect.”   Think about that–75 countries!  That’s a lot of different perspectives.

Not every moment was spent listening to panels or hearing about new creative ways to better the world at the “Innovation Showcase.”  Thoughtfully, the SOCAP schedulers build in plenty of time to speak with fellow attendees.  To me, that is the best aspect of the conference.

Representing Altvia, I felt I was coming into SOCAP—and the impact ecosystem as a whole—with a unique point of view.  As the PULSE manager, we sit between the money and the impact investors.  Our job, and the job of PULSE, is to make sense of this complex and often frenetic corner of the investment world.  To what initiative is all that money going?  How much good comes out of that investment?  And how does the efficacy of one impact investment compare to another?  I was proud to be able to say that PULSE has helped many of our clients realize that the answers to these questions can be found in their data.

A reoccurring theme I heard throughout the conference was the need for alignment and consistency within the section.  Attendees were calling for industry-wide benchmarks, defined metrics that every organization could use to quantify the effectiveness of their investments, and more visibility into the performance of their capital.  I was struck by how much of this can be accomplished using PULSE.  Aligned with the Global Impact Investing Network’s (The GIIN) Impact Reporting and Investing Standards (IRIS), PULSE adds validity and confidence in this growing asset class.  I’m not at all suggesting PULSE has the ability to single-handedly solve every issue in the impact space but through PULSE, we are further on the way down the path.

SOCAP was rejuvenating, thought provoking, engaging, and most of all, an opportunity to share time with the true innovators in the world trying to make this a better place—for everybody.

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.

investor relations