The Foundation of a Modern Fund's Operations.
Doing things better and making jobs easier usually means finding ways to create order out of chaos.
That’s likely what Mary Shelly, author of the 1831 classic Frankenstein, meant when she wrote, “Invention, it must be humbly admitted, does not consist in creating out of void, but out of chaos.”
Most limited partners (LPs) find themselves in a state of chaos despite all of the powerful technological solutions they use to manage their investments. The root of this dilemma lies in a few essential tasks that have stubbornly resisted automation.
All the systems that LPs use, no matter how powerful, require large amounts of data to be fed into them. Data that has been given to them in a variety of formats (Excel, Word, email etc.) from their General Partners (GPs).
This is the first step of a time-consuming cycle that's repeated every quarter for every fund that LPs have invested in.
The cycle begins with collection. Every quarter LPs must collect financial and performance data from their investees. Some GPs will accommodate their LPs by sending data regularly and in a form tailored to their LPs’ needs. Others will be late or ignore requests for specific formats — or both. Those GPs make the next part of the cycle necessary: transformation of the data.
Once that part of the cycle is done, the next part, validation, is required to ensure accuracy — only then can the cycle close with report delivery.
Calling this process cumbersome would be an understatement.
What LPs have long needed is a portfolio management system that is able to automatically collect data across their portfolio, transform the data into usable formats and deliver required reports on time. Such a system will free LPs from slow and expensive data processing.
It will also free up LPs time for core tasks like portfolio performance analysis — allowing them to gain insight and optimize returns.
After all, collecting and processing data isn't their job; investing is.