The Transformation Trend: A reality in the PE/VC Sector




Structuring Solutions for Transformed Operations:

While working in finance, We found that investment software was mostly outdated and very complex to use. In addition, 70% of installations of this type of software failed. At the same time, in a growing and evolving sector, despite COVID, many Private Equity players feel the need to rely on software to structure their business. Indeed, operations for PE/VC Players need to take into account several factors such as:

  • The creation of new asset classes
  • The enthusiasm of investors for new geographical areas
  • The increasing complexity of fund structures and their investment vehicles,
  • A greater variety of investors,
  • Constantly changing regulations,
  • More and more requirements and tailor-made requests,
  • Increased consideration of ESG criteria in deal sourcing strategies and investment strategies.

The stake of the Transformation:

While the private market as a whole is still in the early stages of digital maturity, major players are increasingly investing in digital and analytics solutions.
According to McKinsey, large multi-strategy fund managers with more than $10 billion in assets under management typically spend $1-5 million per year on third-party solutions and software per asset class. Adding in-house capacity spending, top managers, fund administrators and institutional investors invest tens of millions of dollars a year. This need for digitization has increased with the Covid-19 which has generated new problems that had to be addressed urgently.
It is now essential for players in the management of alternative assets to build a quality digital infrastructure, as well as precise processes in order to guarantee efficient and secure data management.
Players in this market are increasingly looking for tools that automate repetitive tasks such as accounting, booking and investment cash flow monitoring. In addition, the orchestration of Front Office processes such as fund raising or deal flow has made it necessary to use CRM type tools to manage a database of contacts, deals and investors and accentuate internal collaboration on the various files.
Tighter regulatory constraints and increased demands from investors have prompted management companies and asset servicers to automate the production of reports and to invest in data processing and analysis in order to guarantee their quality and accuracy.
The customer experience is now also the key to differentiating oneself in such a competitive market. It is necessary to optimize the quality of service and facilitate the user experience. One of the solutions that is increasingly emerging is the establishment of investor portals. This improves collaboration between investors and managers, and the time saved for these two parties is significant and now makes the difference.

The major trends in the digitalization of private equity players, such as the automation of processes and reporting, data security, data quality or the digitalization of investor relations, require the use of qualified profiles who understand both data and private market businesses. It is important that investment players surround themselves with the right skills in order to quickly develop and deploy a digital transformation roadmap.