LISTEN: InCloudCounsel’s Pospisil on the future
Alice Murray talks to Troy Pospisil, founder and CEO of InCloudCounsel about the future - specifically how the regulatory landscape for private capital funds is evolving, how investor demands are changing and how InCloudCounsel’s offerings aim to support these developments.
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Excerpts from the interview:
Managing private capital funds is becoming increasingly complex, thanks to new regulations and growing investor demands. How are you responding to this?
“We’ve been investing in building tools to capture and use data associated with that data. Even looking at simple documents like NDAs, we’ve built tools that allow clients to maintain compliance around things like standstill agreements. We’ve built lots of workflow tools in managing restrictive lists.
“We’ve also created tools to automatically allocate costs to funds. Cost allocation has been a hot topics for a while, especially with the SEC checking to see good systems in place, it’s critical that you’re allocating the right coast to funds, manager and portfolio companies. We’ve built tools where we process contracts and associate it with the appropriate fund, we’ve built our own invoicing system that allows for invoicing in customised way that meets those needs.”
What do you think are the major trends that will impact private equity over the next 12 months?
“Covid has put digitisation into warp speed. Digitising every process in an organisation is inevitable. Anything that happened over the phone or email will be put into a digitised process and we’re a part of that trend.
“Data-led decision making has been happening, for investment decisions especially, the most sophisticated PE funds now have 100s of data subscriptions which they are using to make more data driven decisions. That will extend to every part of the business. In legal, the use of data allows for benchmarking and being able to negotiate from a more informed perspective. We’re part of that.
“It’s no secret that private funds are growing; we continue to witness increasing allocations to alternatives. What was a very small allocation is now one of largest allocations. With competition you’ve got to get better on everything you do; raising capital, negotiating, performance and so on. If you’re organised and have the data and you’re proactively managing your obligations you’ll be better off. Investors will see that you’re organised, they will appreciate your relationship, especially as this market becomes more competitive. On top of that, being better at negotiating will ultimately lend itself to better returns.
“We’re not a cybersecurity provider but we invest a great deal of energy and money ensuring all of the data is secure. For private equity, and for anyone managing sensitive information, they need to get smart on this. Leadership of every organisation needs to educate themselves on data security and the risks. They need to ensure they’re doing everything they can to protect their data and their investors’ data, and that includes partnering with organisations that are making that a priority.”