Join us: CTOs & digital networks
Operational private equiteers are typically lonely roles within PE houses, however, role-focused networks provide much needed support.
As these groups have evolved at varying paces, what do they tell us about the various operational functions within PE? Does the level of formality, ways in which they’re used, or types of people they include reflect the way in which these roles are perceived in-house? And how effective have they been in responding to the recent crisis?
“There are lots of things that can be shared freely without compromising competitive advantages…roles like mine are like a superpower to the deal team!”
Christopher Conradi, FSN Capital Partners
It’s fair to say the tech side of PE is missing out on networking opportunities. A COO from a midcap private equity firm says there aren’t any formal or informal networks available, and they don’t know where best to seek advice. “My network is based around the CFOs and COOs of the industry rather than a tech-specific network,” they say. “Other than emailing my peers for recommendations, we’re relying on CTO-firms, which have experience with all the systems across the board to take advantage of that knowledge.”
From recent conversations, there is little in the way of PE tech networking. Firms rely on their outsourced providers and advisers to understand what their peers are doing when it comes to tech.
Christopher Conradi joined FSN Capital Partners as chief digital officer in June 2019. He previously worked for IBM and most recently Google. “I personally don’t have any PE tech-related networks to go to and I’m not aware of any that exist,” he explains. “I mostly rely on my external tech-industry network.”
Conradi notes the news, YouTube and podcasts as his top ways to keep abreast of industry trends. “I also attend key tech conferences and talk to technologists who cut away the fluff and sales material,” he adds.
Microsoft Ignyte is one example of a tech conference usually held at the London Excel centre. The event offers seminars and networking opportunities to find out about the latest products and services on offer. It is attended by professionals from different industries. There are further events held across Europe annually for specific areas including cybersecurity, of which the majority of attendees are from financial services.
Technology within PE is advancing via new systems created in-house or by third parties. An issue for smaller houses is figuring out the platforms they need and where to seek advice. “It would be great to have some sort of directory of all the service providers, systems and functionality available in one place to streamline your decision process,” says the COO.
It would also be beneficial to have a safe space within a network for peers to chat on an informal level about the different models. “That’s where the strength of the informal networks comes in,” adds the COO. “Once the trust is built within a network, you’re able to ask really direct questions and receive truthful feedback.”
There are a number of areas that could be greatly improved if more collaboration took place. This includes team structures; how teams operated before and after digital transformation, the value it brought to the organisation, the types of systems used as well as the hot topic of cybersecurity. What would be most useful is understanding the before and after of any reorganisation or transformation, and the challenges faced, to enable peers to learn from each other.
Conradi agrees that since PE is hiring from a wider talent pool when it comes to tech, new tech knowledge and skill sets are assets the industry could lean on to create a new shared space. “There are lots of things that can be shared freely without compromising competitive advantages,” he says. “These could be anything from minimising travel and carbon footprint, increasing cybersecurity across the industry, how to work together to ensure we’re investing in things which make the world a better place - roles like mine are like a superpower to the deal team!”
The IT department is increasingly top of mind for LPs. By sharing information around tech, GPs can better understand what investors are looking for or prefer when carrying out operational due diligence.
One commonality is how tech has helped during the coronavirus crisis. Technology has enabled those who have invested in the necessary systems to transition from office to remote working.
Examining the various networks across the private equity market neatly reflects the way in which the industry has evolved. Looking closely at the operational roles, finance and HR functions have established strong networks to support these typically isolated positions. This is also a function of the high levels of regulation these functions face; meeting regulatory demands appears to be a major driving force in peer collaboration.
Unsurprisingly, the tech function is the least networked, because it is such a nascent role within PE. But as the recent crisis shows us, having robust tech infrastructure is paramount to managing a fund in today’s world. Investors and regulators alike rightly demand BCPs based on secure and high-functioning systems. A forum to share best practices in this field will likely emerge as the pressure to get this right continues to mount.