Free Guide | The Buyer's Guide To Private Equity Technology

The Buyers Guide To Private Equity Technology

Operational efficiency is a key priority for Private Equity, according to the 2018 Ernst and Young Annual Global Private Equity Survey, which found that two-thirds of CFOs invest or plan to invest in next-generation technology. Using technology to streamline fundraising, deal management, and investor relations is top of mind for firms these days.

The alternative investing world is complex. General partners must track the progress of fundraising and investor relations, perform due diligence, and document every interaction along the way. At the same time, Limited Partners expect real-time, information-rich reporting.

Today’s software not only brings the kind of efficiency both firms and Limited Partners expect, but it also differentiates you from the competition.

Today’s software not only brings the kind of efficiency both firms and Limited Partners expect, but it also differentiates you from the competition. But, it can be difficult to filter through all of the technology that exists to determine the option that’s best for your firm.
In this guide, we cover what to look for when evaluating Private Equity software and provide the questions to ask to determine how to select the best solution for your firm’s needs.

The Growing Importance Of Private Equity Tech

The Private Equity industry is at a technological turning point. Every year, Limited Partners are demanding faster, easier access to information while General Partners are struggling with how best to use technology to support these critical investor relationships.

As a result, Private Equity firms are focused on technology transformation and Improved investor reporting to meet this important challenge. Every year, the value of technology in Private Equity is becoming more widely recognized.

Consider the answers Private Equity CFOs surveyed in the Ernst and Young Annual Global Private Equity Survey gave in 2018:

To evaluate the value of technology investments, Private Equity firms must understand how the solution’s features and benefits will impact their firm’s Limited Partners, internal processes, and back-end operations.

We really needed someone who understood our industry and who got what we were saying. What we wanted was someone to tell us what works best in the industry, what other groups have used, and how they have ideally set up systems that work at other organizations like ours.

Crosslink Capital

5 Common Problems Firms Face
That Private Equity Software Can Solve

Problem 1: Investors Percieve You As Unorganized Or Out Of Date

Many firms rely on Excel spreadsheets and disparate systems to manage the fundraising process, which can lead to lost information or miscommunications that impact a firm’s reputation among investors. Today’s solutions are designed to help firms provide investors with a high-touch experience; thanks to mobile ready applications, and powerful reporting and communication tools. Not only do these solutions make it easier to share information with investors, but they are also designed specifically for Private Equity and meet standard industry needs.

Problem 2: Your Team’s Current Processes Increase The Risk Of Errors

With disparate or archaic systems, individual spreadsheets, and manual processes, the integrity of the information firms provide to their investors put them at risk. Today’s solutions are designed to work together, so once you put data into the system, everyone involved has access to a single source of truth. Many Private Equity solutions also include a built-in process for auditors and investors to ensure compliance.

Problem 3: Managing The Process Takes Too Much Time

From fund details to due diligence to compliance, keeping track of relevant information for individual investment deals often takes up too much time. Software today can help streamline how your team captures and shares critical information. When pursuing a deal, for example, you can see everything from meeting notes to investor contacts at a glance, plus easily email stakeholders to keep your team on the same page. Everything is stored in one place so you don’t have to hunt through an email chain to find the information you need to move forward.

Problem 4: Lack Of Visibility On LP Communications

Sharing information with Limited Partners often involves multiple phone calls and emails. Not only are these traditional communication methods slow, they don’t offer the kind of transparency Limited Partners require. Today’s solutions often include an investor portal that empowers Limited Partners to find the information they need quickly, easily, and efficiently. A robust investor portal will allow firms issuing documents in a secure platform to request signatures, track and manage documents, and see who has already viewed the document.

Problem 5: Multiple Systems Slow Down The Internal Process

Many firms have the information they need stored in siloed systems. Logging into and transferring information from various locations slows productivity, and even increases human error if not checked properly. Today’s solutions are designed to work with one another—either within one solution or through a third-party integration that connects to other solutions. Private Equity firms can enjoy a faster, more efficient process when connected important systems such as data and analytics reporting, financial accounting, investor relations, customer relationship management, and portfolio management.

Ask: What Challenges Does Your Firm Hope To Solve With Private Equity Software?

Overview Of Private Equity Software Benefits

When comparing technology providers, Private Equity firms need to determine their firm’s particular problems and priorities by department. Knowing what your firm’s bottlenecks are will help you choose software that offers the features that will meet your business objectives.

Below, we break down the activities that your technology should support across the following disciplines: Fund Inception, Portfolio Management, Accounting, and Reporting.

Fund Inception Activities Features

Prospecting, marketing, mass communications, Limited Partner due diligence, contact management, third-party data integration.

Portfolio Management Activities

Investment Sourcing:
Relationship management, target identification, due diligence support, document management, pipeline monitoring and workflow and third-party data integration.

Investment Monitoring:
Cash flow and valuation data storage, portfolio data storage and analysis, benchmarking and forecasting, and portfolio data collection.
Accounting Activities

Financial Accounting:
Ledger, fee calculations, management company accounting, capital account and waterfall allocations, reconcilliations, and controls.

Cash and liquidity mangement, cash planning and forecasting, financial risk management, banking relationships.

Tax books and records, tax and REIT compliance, tax forms, reports and estimates, and document management.
Reporting Activities

Financial Reporting:
Financial statements, general reporting, fund performance and analysis, other financial reports.

Stakeholder Reporting:
LP Performance and analysis, and portfolio performance and analysis

Stakeholder Interface:
Data sharing and dashboards, workflow management, document management and relationhip servicing

Communications document distribution, mass communication

Ask: What Activities Does Each Department Need To Meet Business Objectives?

Must-Have Features For Private Equity Firms

From fundraising to deal management to investor relations, today’s solutions designed specifically for Private Equity can provide a host of benefits for your firm:

  • Manage multiple relationships, deals, and funds all from within a single system or mobile application
  • Provide the real-time reporting Limited Partners are demanding with a convenient self-serve portal
  • Unify data from disparate systems and increase productivity
  • Get deeper insight into contacts and deals with third-party data integrations
  • Ensure the security of your data, your firm’s compliance, and reduce errors while raising and deploying capital
  • Adopt a holistic technology strategy that unifies data needed by internal and external stakeholders

Ask: What Is On Your Firm’s Feature Must-Have List And Does The Solution Offer Those?

“[Altvia] helped us start small and grow into a system that has allowed us to scale while institutionalizing our processes and staying true to our core competency of investing in the lower middle market.”

Michael Painter
Managing Partner, Plexus Capital

Customized Vs. Standard Platforms: What To Consider

One of the primary decisions to make when buying Private Equity software is whether you need a customized or a standard out-of-the-box solution. Below, we’ve outlined the pros and cons for your firm to consider.

When performing your due diligence as you go through the purchasing process, make sure to identify any gaps and account for the additional systems expenses you might incur if you take on an out-of-the-box platform. To truly understand if a system is going to support your firm’s growth over the long-haul, determine the demands your organization will have as your firm grows and if the solution will support those demands in the near future—the next three to five years.

It’s also important to consider the product roadmap and priorities of the systems you evaluate. What are the company’s plans for continued product development and improvement? And if you purchase something out of the box, is the relationship a one-time engagement, or will it be a longer partnership that will support your firm’s evolution and growth over the long-term?

Customized solutions, on the other hand, offer more flexibility to meet your evolving business requirements.

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 strategy for approaching their work This is why we partner closely with Salesforce to develop the most successful CRM platform for private equity firms that is continually evolving and improving.

Ask: Is An Out-Of-The-Box System Actually Less Expensive? What Does Your Firm Need To Meet Future Business Goals?

Leveraging Third-Party Tools:
The Importance Of Product Integrations

The ability to connect multiple platforms is critical. Whichever system you choose, make sure that it supports integrations with external systems to support:

  • A comprehensive integrated platform. It’s common that multiple systems are used across firms—your investor relations team might use a different system than your accounting and deal management team. With the ability to connect each platform, you will be able to marry your data across the organization into a single source of truth.


  • Data and insight enhancement. Many firms use third-party data providers to augment their existing data. This additional data provides a richer understanding of relationships, deals, and investors.

Choosing A Technology Partner That Enables Third-Party Integrations Allow You To:

  • Share information across different systems

  • Achieve a deeper understanding of your data

  • Increase employee productivity and efficiency

  • Improve insight and transparency for all stakeholders

  • Save time by providing all data easily through one platform

Ask: Which Systems Does Your Firm Need To Connect Across Your Organization?

It was good that Altvia understood our industry, that we weren’t exactly like everybody else, and that we had different needs… We now know what a portfolio is valued [at], we know what amounts our companies have raised, and we understand our companies better.

Tony Shouse
Director, Finance Operations, Techstars

Conclusion: Choosing The Right
Software Is Critical To Your Firm’s Success

Whether your Private Equity firm is trying to connect disparate forms of data across multiple platforms or use technology as a market differentiator to attract investors, there’s no question that you must pay careful attention to your technology investment strategy. The system you choose should be powered by a team of people that are committed to serving as your business partner. Adopting any new software is a change and CRMs require 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. Choosing the right software to meet your firm’s immediate needs and long-term goals will not only streamline operations today, it will position your firm to flourish in a competitive environment tomorrow.

As your technology strategy evolves, your budget will play an important role in your firm’s decision-making process. An out-of-the-box solution may be attractive because you’ll get a solution in place faster than a customized one, but most out-of-the-box solutions have system gaps that your organization is going to have to accommodate for with investments in other systems. In the long-run, investing in a customized solution can save your firm money, and can even provide a way to differentiate your firm from the competition.

Learn More About Altvia’s Solutions For
Fundraising, Deal Management,
And Investor Relations.