Services for investment funds: how they work
Investment companies use a variety of services in their work to coordinate different areas: for project management, tracking metrics, and building business processes. In practice, the number of programs the fund works with reaches 10, 15, and in some cases even more. This is no doubt inconvenient. Managers in the PE / VC markets are increasingly willing to accept and use modern technologies. And since there is demand, there is supply. By 2025, the global investment management systems market will reach $5.76 billion!
In this article, we will see what software for investment companies there is now and how they work.
Need
Fund management software solutions help professional investors perform their daily work better. Such software is used for portfolio management, auditing, and compliance, LP onboarding, generating financial statements, and displaying the main metrics of the fund.
How it works
Using AIRR as an example, let’s see how the software for investment funds works.
The idea of the project was initially to create a common service for managing all fund operations. The user in AIRR can integrate and combine data from the systems he uses. For example, integration with a number of CRM, Business Intelligence systems, accounting programs, programs that work with stock data, DocuSign for signing documents with investors, applications for lead generation, and collection of metrics are configured here. Pipedrive, Salesforce, Xero, PowerBI, Qlik — there are more than 18 integrations at the moment. Almost any system that has an API can be linked to the platform.
Clients
AIRR’s clients are private equity funds, venture capital funds, investment holdings, family offices, and angels. The platform’s functionality will be expanded taking into account the interests and needs of professional managers working in other investment areas: real estate transactions, public markets, investments in other funds (Funds of Funds), etc. The platform can be used by both the fund’s team and the fund’s investors, that is, both GP and LP.
Main
The main page contains general information about the organization. If a client has several investment funds, all of them can be maintained in a single system, information will be displayed for each of them separately. The client sees general statistics of the organization: assets under management, the number of portfolio companies and investors, metrics for the fund, as well as all the data on the portfolio: how much money is invested, what is the share, how many dividends are paid, etc. You can, for example, also see the state of the portfolio, the so-called NAV (Net Asset Value) for a certain date in the past.
My investments
This section provides an investor with an opportunity to see data on his investments. Raised investments, capital call, last NAV, dividend yield and other metrics, as well as dividend distribution and transfers. The fund manager can check this information for each of his investors.
Pipeline
You can show investors any companies that the fund team is considering. All stages of the project funnel are easily customizable.
If the fund integrates CRM, two-way synchronization is enabled. Thus, if the stage where the company in question is in one system changes, the information automatically changes in the other. If the fund does not want to show the pipeline to investors, this option can be disabled. In addition to synchronization with CRM, it is possible to enter data manually. The main feature here is that a lot of data is entered into ordinary CRMs, which funds are not always ready to show to investors, since they contain sensitive information for internal use.
Lead Generation
The service has a lead generation feature. This functionality is available both on the main platform and as a separate product — AIRR Leads. The Fund can connect any databases it uses CrunchBase, PitchBook, Parsers, and others. Then, directly from the platform, it can search for the leads that it needs.
You can work with filters that can be configured by the company, by the last round, by an investor. Additionally, you can enable synchronization: in this case, when new companies that meet the fund’s requirements appear in the database, the fund’s team will receive a notification about this, which decreases the opportunity to miss a potential lead.
Collecting financial data
Collecting financial data from portfolio companies is the pain point of many investment funds. AIRR has several solutions to this. Firstly, you can enter data manually, and secondly, you can configure the receipt of information through the API — in this case, data from BI systems of companies will automatically appear on the platform. You may also connect Google Sheets, when connected the configured metrics will automatically appear in the system.
Another, perhaps the most convenient, an option is the junior product AIRR Metrics. Its idea is that the fund team sets up the metrics that need to be collected from portfolio companies and provides companies with access to the platform. The cool thing is that the system sends companies forms to fill out automatically: weekly, monthly, quarterly, annually.
In the future, it will be possible to make automatic reminders. If the fund has many portfolio companies, you can have the platform automatically send them reminders as often as needed, until the company enters the required data into the system.
AIRR Mobile App for LPs
All the data that is available to investors on the site can also be viewed through the interface in the mobile application: data on the fund, pipeline for each portfolio company, any documents.
The original article could be found here.
