Benefits of Real-Time Analytics and Comprehensive Reports in managing PE/VC investments
September 7: A PE or VC firm has a vast amount of data to process and manage – not only of their own but also of different portfolios they have invested in. Despite the uncertainty caused by COVID-19, the global VC and PE investments are hitting all-time highs. The more these alternative investment firms invest in purchasing stakes; the more and more data is generated, making it complex to analyze and derive meaning, sitting remotely, based on historical and current information. Alternative Investment firms today are looking for advanced tech solutions that can help them make data-driven decisions not only in uncovering new opportunities but also in better managing their existing portfolio.
As far as the Alternative Investment Process is concerned, there can be multiple sets of data related to Deals, Investments, and Funds. Accurate analysis of this data is of utmost importance to arrive at correct business decisions – pre-investment as well as post-investment. Prior to making investments, a PE or VC firm has to evaluate numerous deals. Applying filters, slicing & dicing, and analyzing costs and risks associated in real-time definitely lead to not only quicker but more informed decisions.
A PE or VC firm may be using numerous excel sheets and access databases that contain actual cashflows, expected cash flows, and valuations of different investments running through various years and quarters. Then there are key financial data from portfolio companies during the complete investment lifecycle of the fund from first investment to exit. All this data has to be analyzed not only to monitor and grow their portfolio companies but also to make informed decisions about exit strategies. An advanced tech solution that ensures all relevant data is in a single repository can really help investment managers to focus on real-time insights and identify areas that require more attention.
As a standard industry practice, Alternative Investment firms share performance reports with investors on a quarterly basis. Investors (either private participants or institutions like pension funds, and insurance companies) are becoming more demanding as they have to fulfill their regulatory obligations as well. To accomplish this important compliance activity, fund managers spend a lot of time and effort analyzing and creating complex reports. Furthermore, the need of adopting standard guidelines such as ILPA, to make investor reporting more consistent adds to their already heavy workload. Tech solutions offering strong reporting and analytics tools capable of presenting complex scenarios and generating comprehensive reports with a single click of a button can come to aid and make the lives of Alternative Investment professionals a lot easier.
An ideal tech solution should not only offer the capability to perform real-time data analysis and generate comprehensive reports but also assist in the adoption of standard reporting formats. Many new-age tech solutions such as PE Front Office have developed reporting solutions on the same lines offering quick data analysis and report generation features along with pre-defined standardized formats (e.g. ILPA). Some of these solutions also offer added flexibility to customize reports and analytics as per customer needs thus empowering them to easily present their data in the desired format without worrying about the hassles of working with traditional report creation tools like Excel. Such technology solutions can really help PE/VC firms reach a higher level of operational efficiency, greater compliance, and adherence to new regulations, support and handle more scrutiny and inquiries from investors and support a constantly evolving investment strategy.