Watch List: The Most Tech-Enabled PE/VC Firms

Despite a slight dip in 2020, private equity is back on track for record-high investments in the world of enterprise tech. More and more firms are leveraging technology to fuel their success and stand out from the competition. In fact, Gartner forecasted software spending to grow 8.8% in 2021 to roughly $506 billion—and that number only continues to grow. 

From saving time with automated data to maximizing portfolio and operational performance, top-performing private equity and venture capital firms are leveraging technology to keep ahead of the growing competition and stay on pace to make 2022 their most successful year yet. 

The Most Successful Tech-Enabled Firms 

According to a recent article from Protocol, the top five most active firms are HG Capital, Vista Equity Partners, Providence Equity Partners, ABRY Partners, and TA Associates Management, respectively. But they aren’t the only firms leveraging technology to bring about their success. As private equity firms place revenue growth over cost reduction as a key driver of investment returns, they’re finding profitability and sustainability through tech-enablement. 

For example, once rebranding itself for the cloud era and appointing CEO Tony Bates as Chair of Genesys Operating Committee to propel the company’s “Experience as a Service” strategy, Genesys stated it added 800 new customers and had record cloud sales in the past year.

Another tech-enabled firm to have on the radar is Growth Catalyst Partners (GCP), which recently shared immense success after implementing Altvia’s PE-focused CRM to ensure rapid access to crucial conversation details and secure sharing of information with stakeholders. GCP is leveraging Altvia’s purpose-built solution to improve team efficiency and monitor their pipeline, get a transparent view on team notes to pick up conversations wherever they left off, and drive new outreach efforts. 

Where Firms Can Leverage Technology for a Competitive Advantage 

By leveraging technology designed for VCs in a few core areas of the business, firms can gain powerful audience insights and make better-informed decisions on business, marketing, and communication strategies to replicate the performance of the most successful tech-enabled firms.

  1. Operations

    Through leveraging technology, firms can improve operational processes and performance without needing additional overhead. Platforms like Google Drive can help teams track and organize essential documents and shared meeting minutes through the cloud, while tools like Asana and Basecamp can help provide firm transparency and project management on everything from team-specific to-do lists to long-term OKRs and goals. 

    Furthermore, with detailed insights on fund performance and analyses, operations teams can leverage software like Altvia to generate automated reports, so they can spend less time crunching numbers and more time making data-driven decisions.

  1. Marketing

    As Sabena Quan-Hin, Marketing Manager at Flow Capital, states, “There are two crucial aspects of marketing that investors often overlook: automation and analytics.” By adopting a marketing automation strategy, teams can spend less time on tedious tasks, thus boosting their productivity in other areas – an especially crucial benefit for smaller teams.

    Consider building and growing an audience in a CRM designed for VC firms, which powers teams with a single source of truth to support key workflows, contact management, relationship mapping, and the automation of key activities (ie, emails and task assignments) to track members through every stage of the lifecycle—from lead through to portfolio member.

    Firms can also leverage marketing automation for a number of key areas to save time and drive performance, including social media scheduling with tools like Buffer; content to create relevant messaging and resources through tools like Contently; landing page optimization to drive higher website conversions through tools like Unbounce; and collect better data while making surveys more engaging through tools like Typeform.

     
  2. Fundraising

    Firms can raise capital more efficiently through technology and specialized tools designed to help VCs manage and understand their portfolios.

    Platforms like Altvia provide greater visibility to help firms better understand the market and optimize fundraising strategies. Through visual dashboards and forecasting abilities, firms can automate market performance calculations and mine data to identify LPs most likely to find your fund attractive, thus helping to identify the accounts to focus more time on (and identifying those accounts that can be weeded out from the start). 

Make 2022 the Year Your Firm Becomes More Tech-Enabled 

To keep up with—and surpass—the competition, firms need to shift focus to a new strategy that brings their various portfolio companies together to build a “business ecosystem.” This type of diversification, like we’ve seen with Romesh Wadhwani’s Symphony AI, opens up doors of opportunity for cross-selling and other growth-generating benefits.

To get a headstart on tech-enabling your firm, consider all-in-one solutions like Altvia, which offer benefits like faster fundraising, precise deal execution, and end-to-end portfolio management. 

To see how your firm can benefit, specifically, start a conversation with our team about the improvements you’d like to make.

tech-enabled

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.