The private capital funds industry is often criticised for being behind the curve when it comes to tech. And in some ways that criticism is warranted - put a private equity firm’s tech capabilities next to that of a bank and one is certainly less advanced.
In response to this, many have cited a lack of tailored tech solutions for private capital funds. Indeed, until very recently, there were a handful of incumbent tech solutions that most firms had to adopt in the face of having no other options.
That has changed dramatically in the last few years. A quick glance at the shortlist for The Drawdown Awards this year highlights the sheer number of tech solutions that have recently cropped up, aiming to bridge the industry’s tech delta.
So if private funds now have a range of tech solutions available - why is there still a lag?
Could it be a people problem? Private capital funds are staffed, largely, with investment professionals. While the operational function has grown in recent years, the number of tech-focused professionals remains sparse.
Furthermore, the limited number of tech professionals in private capital funds are working alongside investment professionals, and both parties have very different ways of thinking.
Kevin Muller, head of business change and services at Coller Capital (and one of our original Techworkers) frames this tension as ‘left to right thinking’, and ‘right to left thinking’.
“A lot of the conversations around tech come from left to right thinking, ie ‘We need a CRM system’, and when we start there we tend to fail because we’re not thinking about people. It’s more important to think about the outcomes first. For example, starting at the left, a reason you might put data into a CRM is to track contacts, leads and opportunities, where a simple spreadsheet isn’t manageable. Instead, we should start at the right and work backwards. Understand the desired outcomes, and then think about the people, the processes, and only then the right tech to underpin it all.”
Indeed, when it comes to private equity’s digital upgrade, the focus is far more on putting tech systems in place, rather than what is actually trying to be done. From a tech perspective, the focus is better placed on the business, on the operating model itself.
But for now, tech professionals working in private capital funds need to support each other. All are facing shared challenges, and until there is wholesale change in the way in which we think about how operating models for funds (don’t hold your breath), leaning on those who can sympathise at the least and offer solutions as best, is key.
“A big problem for tech professionals is that everyone is so busy; not many people are given the time and space to think about this. There’s so much pressure to just deliver. But I’m sure lots of people are thinking about new solutions and that’s why it’s so important to speak to peers who can help you leverage different thinking and ways of doing things,” says Muller.
And it is exactly for this reason that we created the Techwork; a ready made network for tech professionals in the industry to identify peers and find out what they are working on, what challenges they are facing and the outcomes they have achieved.