The Counterintuitive World of Fund Management Software

Not surprisingly, most people who use or are evaluating fund management software don’t spend their days thinking about proper database structure. They already have a full-time job, after all, and it’s not the most interesting or engaging topic.

But proper database structure is extremely important to firms—or, at least, it should be. Your data has to be structured the right way if you want to get actionable insights out of your fund management software. And you have to be able to access that data quickly and efficiently if you want to make fast, well-informed decisions that keep you ahead of your competitors.

Plus, implementing fund management software requires an investment of time, effort, and capital. So, surely you want to see that investment deliver a solid return.  

(Incidentally, if you really want to do a deep dive on database structure, a good place to start is the Five Normal Forms in Relational Database Theory. Heads up: It gets complicated quickly!)

Common Mistakes 

To use fund management software effectively, you’ve got to store data in it the right way. Unfortunately, it’s been our experience that the right way often feels counterintuitive to fund managers, whether they’re looking to implement a new fund management software system or are in the process of building their own.

An example of this counterintuitive nature is when users want to store everything they know about a given company on that company’s account record. That’s where you might go to determine what stage you’re in with that company or how much you’ve invested in them in the past. So, it makes sense to cram as much historical information about that client as possible into one record, right? Actually, it does not.

Seeing the Big Picture With Fund Management Software 

The reason that loading up a company’s record with all the data about them that you can get your hands on is that you’re likely to evaluate that same organization more than once over its lifetime. And if you’re tracking due diligence on them in your database, one of two things is probably going to happen.

You may end up overwriting past information when you evaluate them again, at which point that data is lost, and with it, the value it still had for your firm. Or you might try to keep everything and create an enormous account record with lots of historical data, but information that’s highly disorganized, very difficult to report on, and from which it’s nearly impossible to gain any valuable insights.

Fund Management Software and Post-Investment Data

Many firms make the same structural mistake as above when tracking post-investment data. We often see situations in which a prospective customer has created many (read: too many) fields at the account level, like “Investment 1,” “Investment 2,” “Investment 3,” etc.

This feels like it might be a good approach. If you’ve never made more than one investment with the same company, the account level seems like a logical place to store investment data. But what happens as your firm grows and you get to investment 10, 11, 12…? You’ve got to add a new field with each investment, which not only wastes a great deal of screen real estate but also makes it very difficult to aggregate that data.

Before you know it, you’re six months or a year or two years into using your database and while it contains a large amount of data, that information is so hard to find that you’re almost wishing you had less of it!

Use the Right Fund Management Software From the Start

At Altvia, we often get called in to help untangle a custom-built system or a competitor’s system and implement our advanced solution with the correct database structure.

We’re happy to assist firms that find themselves in this situation, of course. But a better approach—and one that doesn’t involve downtime and backtracking—is to use Altvia fund management software that’s optimized for effective data storage and access right from the start!

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 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.

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