5 Reasons Why Excel is Hurting Your Fund

For fund managers, Excel spreadsheets are the tool of choice for portfolio monitoring and analysis. They are particularly ubiquitous in small investment funds because they are easy to use, easy to learn, and less expensive than dedicated software.

But, they also introduce a slew of problems that can cause fund managers more harm than good.

More often than not, the use of spreadsheets results in mistakes and problems that arise at the expense of efficiency and accuracy. This results in hours of valuable time being squandered, often to the detriment of investor and portfolio relationships. As a result, we believe that spreadsheets are the wrong tool for advanced portfolio monitoring and analysis.

If you're running your firm on spreadsheets, below are reasons why you may want to reconsider.

Here are the five reasons why Excel is hurting your fund.

Security Issues

Not all data is suitable for everyone at your firm to see. For instance, key financial information on an investment (ex: quarterly revenue, burn rate, churn) shouldn't be accessible to just anyone. Not only does faulty security put you at risk, but it also exposes your fund to potential lawsuits.

So, what's Excel's answer to spreadsheet security? Password protection. In other words, an employee can either see the entire spreadsheet or they are blocked entirely. Needless to say, this is not an ideal solution when users require different degrees of access, falling somewhere between everything and nothing.

Moreover, because security isn’t attached to accounts, Excel has no way of knowing who is accessing your spreadsheet. This means that all it takes for your portfolio data to be hacked or stolen is for a password to fall into the wrong hands.

Lack of Data Integration

Regardless of the size of your fund, chances are your data is everywhere. It’s not just living in spreadsheets anymore; it’s stored in emails, the CRM system and on physical documents scattered throughout the office.

It’s called big data for a reason, right?

Transactional data, portfolio records, BOD contact details and web analytics are just a few examples of the mushrooming information that can’t be properly integrated and analyzed in a spreadsheet.

As a result, Excel users are often forced to use subsets of data for ad hoc analysis, yielding only a glimpse of the answers they seek. The reality is that if you try to review a spreadsheet with a million rows, you’re going to hit a wall.

Poor Visuals

Data visualizations are meant to be easy and fast to read. Number-based tables and spreadsheets, on the other hand, are often the exact opposite. Sure, spreadsheet tools let you create basic built-in charts but, in today’s market, these standard graphs are just table stakes. The real data wins are found in multiple types of advanced visuals.

Not everything has to be a pie chart or a bar chart. The human brain processes a number, a visualization, and a picture as a single “chunk” of information. The process of comprehension and gaining insight is dramatically faster (60,000 times faster, to be exact) when the data is displayed visually on a dashboard, and in various types of graphs and charts.

Unfortunately for fund managers, Excel doesn’t provide any of these types of visualizations. 

Manual Updates

The number one spreadsheet challenge that we continue to hear from fund managers is that Excel requires manual data entry. More specifically, that the spreadsheet process is incredibly time-consuming, tedious and, most importantly, error-prone. In fact, a University of Hawaii study found that 88% of spreadsheets contain some type of error.

The risk for fund managers is that they could be reporting inaccurate data on how investments are performing to LPs and other key stakeholders. These are numbers that you can’t afford to get wrong.

Not Mobile Friendly

Chances are, you don’t only need your data when you’re sitting at your desk during regular business hours. In today’s fast-paced market, getting out into the community is essential for funds to network and develop strong deal flow. To accomplish this, you and your colleagues need to keep your data at your fingertips — spreadsheets that are only accessible on a desktop can’t deliver this.

As you can see, Excel is anything but a time- or money-saver. In fact, spreadsheets can do your fund more harm than they're worth without you even knowing it. 

Dedicated Technology

If Excel spreadsheets are the past then dedicated technology is the future. Fortunately, the future isn't always expensive. There are plenty of lightweight portfolio and contact management apps available today that are specifically built for the smaller fund’s needs and budget.

They have the power to transform portfolio company reporting and analysis, with the benefit of freeing up investment professionals to originate and complete deals and to track portfolio company progress, value, leverage, job creation and many other performance metrics in granular detail with just a few clicks.

If you'd like to guarantee that your portfolio data will never slip through the cracks again, consider getting a demo of Hockeystick’s automated and secure portfolio management tools.


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