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CXOToday participated in an exclusive interview with Atul Arora, Managing Director, Equipped AI.
- What is the state of technology adoption among venture capital firms and private clients?
The private equity market is driven almost entirely by people-to-people contacts, which until recently proved to be a significant barrier to technology adoption. The vast majority of professionals and asset managers take great pride in their personal directories and contacts – an evolution of the Rolodexes of the old generation.
However, the pandemic has completely reoriented their approach to work, with one of the key lessons learned being the utility of technology in addition to core human tasks. Today, general partners at many VC, PE and other private equity firms have realized that the level to which technology is allowed to permeate the investment ecosystem is ultimately a choice they must make. This implementation enabled the gradual adoption of point solutions (such as CRM modules).
While there is still reluctance in some cohorts to adopt technology even in silos, we believe the growing pressure to reduce the management fee will eventually force most investment houses to embrace technology as a means to better manage their portfolios .
- Is there specialized software available for institutional investors such as venture capital or private equity firms?
Most technology adopters in the investment space have tried to customize existing CRM or ERP solutions for their needs, which have been limited to small parts or segments of the overall deal process. Whether it’s a fear of technology implementation failure or a fear of losing control over information – if the technology takes over – the fact remains that specialized software vendors like Equipped often see large non-investment grade software players in the market.
As an example, Equipped’s solution has eight modules that cover all aspects of fund, asset management and pre-deal, post-deal and deal stage performance visualization along with AI enabled trend analysis. In comparison, generic or point solutions often focus primarily on the CRM and repository aspects.
- What are the advantages or benefits of investing in advanced technology tools for these businesses?
In addition to the significantly high levels of transparency that specialized software can bring to the deal management process, there are several other benefits of using well-designed software – including mitigating margin erosion at management companies. This is an increasingly serious problem among venture capital firms and individuals.
A good software solution will then help improve fund accounting and reporting through improved analysis of a wide range of data sets. It will also help improve deal sourcing and generally allow asset managers to exercise tighter control over portfolio performance.
- What are the biggest obstacles to greater adoption of technology tools by these companies?
It is widely believed that private market investing is more of an art than a science, and this phenomenon alone has hindered the wider adoption of the technology unlike other industries.
The inertia associated with technology adoption can also be attributed to the reluctance of firm partners and analysts to trust technology to replace human connections. One of the most critical aspects of dealmaking that is believed to not lend itself easily to technology is relationship management. However, with the arrival of specialized platform solutions like Minerva from Equipped AI, there is no reason to believe that basic tools like Excel sheets are the only option for successful relationship management and tracking.
- How does Equipped AI help investment professionals or firms take full advantage of today’s technology?
Equipped AI is a B2B financial technology (Fintech) company that provides solutions for alternative investment managers to improve their deal flow management and data management. The company has its headquarters and sales office in the United Kingdom and its operations in India. The three-year-old company is backed by AnaCap Financial Partners, a leading UK investment house.
Equipped offers three different solutions for investment professionals. The leading solution is Minerva, which is the industry’s first comprehensive deal flow management system that meets all the investment management industry’s requirements.
Second, our data management solution and services range from data ingestion to visualization. We use the Microsoft Azure cloud to provide investment managers with a more detailed view of their investments.
Third, our professional service offerings to buyers include analysis, investment research and business research services; which are designed to support asset managers who want greater analytical rigor in analysis and a deeper understanding of the markets.
- How can tools like Minerva help increase the value of portfolios or assets under management?
For starters, Minerva can help organize your entire contact base while maintaining confidentiality and privacy. Once Minerva is put into action, when an investment professional talks to or exchanges emails with a prospect, the AI in the system automatically catalogs and builds a profile of the prospect over time. Lessons from the past are then useful once they become an asset in the portfolio.
In addition, Minerva enables detailed analysis of the variance and determination of the ESG score of the portfolio and its individual assets. In addition to tracking investment returns against the investment case, Minerva’s variance analysis can then provide portfolio rebalancing suggestions: including which assets to sell and which to buy among the potential in the database.
Overall, the Minerva portfolio module can act as an advanced assistant to the deal manager, taking care of all the mundane tasks with the added value of the ability to provide intelligence.
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