Software and technology offerings to the private equity industry are evolving rapidly. A disparate set of choices exist for you, the intrepid investor trying to maximize time spent on accretive core activities (such as investing) while minimizing time spent on predicting software failure. Often, you never know whether a solution will work for your platform until you try it, and by then, it’s too late – your team has spent hours in training learning to navigate complex input and output mechanisms. Time has already been spent accommodating finicky technical capabilities. Some members of your team may opt out entirely, creating a rift in the flow of information.
Our ongoing chats with the global institutional investment community – investors, operators, and managers alike – make it clear: everyone needs better technology to advance mission-critical functions. From Tokyo to London to San Francisco, and cities in-between, the institutional private equity industry is ready for good software.
Pick ten of your peers and ask them what kind of technology they use to manage capital partnerships.
Chances are, one or two of those ten will have adopted software to facilitate their partnerships with investors, operating partners and/or managers. Typically, this is a “CRM” system, data room and/or portfolio management software. (If you travel exclusively with those who do a relatively good job of keeping ahead of the pack, closer to six in ten of your peers may have adopted software of some sort).
You may find it interesting to inquire exactly how many of those folks are actually happy with their software choice. You may want to ask whether (and in which use cases) the software adequately performs for them. It is worth the investigation if you’re considering purchasing a system yourself.
We won’t deny that we’ve heard some horror stories. And yet, to avoid technology at this hour is to play fast and loose in a highly competitive, increasingly sophisticated business environment. Rodney June of the $21.8 billion Los Angeles City Employees’ Retirement System pointed out to us that technology decisions are an important component in evaluating a manager. Tom Lopez of the $16.7 billion Los Angeles Fire and Police Pension Plan advises: don’t let technology get in the way of communicating quickly and effectively with your potential investment partner.
The fact remains that software for the PE industry is relatively new, highly fragmented, and broadly untested. However, smart investors will pick a horse and start moving up the learning curve sooner rather than later.
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