The Growing Importance of Private Equity Technology

Private Equity technology is advancing at a breakneck pace, forever changing the way we do business. 

While the Private Equity (PE) industry has been notoriously slow to adopt new technology, that is changing. From the Blackstone Group to TPG Capital, more PE firms recognize how investor relations technology is transforming the industry. 

The EY 2020 global private equity survey found that CFOs at PE firms are increasingly tasked with leading the effort to find new ways to deploy innovative technologies. The technologies that they choose streamline everything from data management to compliance reporting. 

Investor relations, specifically, is an area that has seen high adoption rates. 62 percent of PE CFOs invested in investor relations software in 2018—showcasing an industry-wide move towards leveraging technology to manage their most important relationships. 

The CFOs leading the charge towards technology will also be called upon to demonstrate the ROI for the technology they adopt. In order to do so, the technologies that firms choose need to address the top five problems that PE firms experience and be able to illustrate an impact on the bottom line.

The Top 5 Problems Firms Can Solve with Private EquityTechnology

  1. Appearing Outdated to Investors

Being “old school” in PE is not a good thing. Lack of technology in investor relations becomes apparent to investors by an obvious lack of organization. Those using technology know more about their investors, can closely manage the sales pipeline, provide data visualizations, and easily communicate portfolio metrics and forecasting. Without the ability to quickly complete these tasks, PE firms appear disorganized and damage their reputation and ability to raise capital.

  1. Slow Process for Audits and Compliance 

Time is money. What PE technology can do in seconds could take humans hours, days, or weeks. Technology reduces the margin for error. That’s super important when it comes to audits and compliance. Firms can speed up these costly processes and concentrate on more lucrative activities with the right technology partner.

  1. Failing to Do the Proper Due Diligence

The due diligence process represents a priceless opportunity to gather information about potential investees. Firms use the information collected in the due diligence phase to make an informed decision before investing. Technology can help manage these fund details and support a firm’s investment decisions—helping them avoid potential disasters and potentially locate a diamond in the rough.

  1. Lack of Transparency in LP Communications

Many firms claim that hiring good people is their secret ingredient to building lasting relationships—which ultimately leads them to success. Not to say those good people aren’t necessary, but there is only so much any one person can do. Intuitive solutions like Altvia give customers, investors, or constituents easy, self-serve data access and important functionality right on their desktop. This transparency removes time-consuming back-and-forth and gives everyone what they need to know at their fingertips.

  1. Information Gets Lost in the Shuffle of Multiple Systems 

Centralizing your data, research, and history of relationships creates more focus for your firm and puts everyone on the same page. With a single source of truth, not only do firms drastically increase efficiency, but they also experience new insights, better decision making, and streamlined communication. 

Avoid These Problems and Increase ROI with Private Equity Technology

Solving these five most common problems eliminates headaches and makes firms drastically more informed and efficient—leading to less waste and more revenue. With the right technology in place, organizations will be ready for healthy growth and better prepared for whatever storm lies ahead.

If you’ve been putting off the work to incorporate technology into your organization, the time has run out. Now is the time to invest in a transformation. If you’re interested to see how a private equity technology solution could work for your firm, contact Altvia today.

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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.

private equity technology