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3 ways to use technology as a value driver for LPs

08 Nov 2023

By Susan Kil, Client Relationship Director, Funds

In today’s challenging financial landscape, fundraising has become intensely competitive. According to recent data from Preqin, private equity firms face stiffer competition for investor capital than they have in decades.

Against this backdrop, limited partner (LP) onboarding and reporting have emerged as invaluable differentiators to set general partners (GPs) apart when attracting investors to a fund. Leveraging technology to facilitate both processes provides a distinct edge for GPs who can integrate it into their operations.

In this post, we’ll explore three ways funds can use technology to stand apart from their competitors and drive value for investors.

#1: Make a lasting impression

The journey for investors must be smooth and professional from onboarding to exit. Securing capital is just one stage in the investment lifecycle; fostering trust is essential to encourage repeat investments. Technology can completely transform how firms onboard new investors, leaving a lasting impression of a fund as organised, professional and forward-thinking.

Onboarding technology can analyse and learn from large quantities of data without manual work from an analyst, saving time and mitigating risk during the AML/KYC process. GPs should look for a platform that will proactively flag compliance gaps, reducing the administrative burden on compliance officers, fund managers and investors.

Onboarding technology both streamlines the process and improves overall outcomes, making it an easy choice for firms looking to bolster compliance and maximise efficiency.

#2: Unlock key insights

Between the moving target of ever-evolving regulations and ILPA reporting standards, reporting has grown significantly more cumbersome in recent years. And yet, robust reporting is key to building trust and maintaining strong relationships with investors.

GPs must also contend with the sheer volume of systems they engage with. It’s not uncommon for reporting for one investment to live in Excel, while another uses Exact Online and a third uses SAP. With so much data fragmented across platforms, the work of pulling together reports is substantial, and GPs tend to lack a streamlined look at the big picture.

Technology can dramatically improve the process of creating and sharing reports with LPs. You can access your investment and accounting books of record across your entire portfolio, presented simply and intuitively on any device.

With the right data platform, you can access data at the asset level, configure customised reporting dashboards, and manage documents. If you choose, you can even grant LPs direct access to the platform, putting real-time access to relevant data into their hands. It is also keyto find a data platform that feeds LP and fund cashflows or transactions from the depository participant to the GP’s systems, whether they be a portfolio monitoring solution, data warehouse, or LP portal.

#3: Maximise ESG opportunities

With SFDR intensifying the focus on ESG criteria, investors are increasingly looking for detailed reporting that clarifies the role of ESG factors in a fund’s overall strategy and performance. Leading-edge technology makes it easy to mine, analyse and report on ESG data to meet regulatory requirements and appeal to investors.

With the right portfolio monitoring solution, you can monitor critical variables like energy efficiency, greenhouse gas emissions, climate change, and pollution and waste. Such a platform should serve as a single source of truth, accessible anywhere and at any time, giving LPs and GPs alike access to a powerful online dashboard and portfolio analytics tool.

Conclusion

In a pressured and increasingly competitive market, funds can no longer afford to risk inefficient investor workflows or lacklustre reporting. As technology continues to reshape the landscape of the financial industry, GPs who adopt it will stay ahead of the pack in attracting capital and nurturing enduring relationships.

Learn more about IQ-EQ’s industry-leading investor onboarding software MaxComplyTM, our robust data platform, our innovative portfolio monitoring tool IQ-EQ Cosmos, and our portfolio company ESG data collection partnership with Novata.

Working with IQ-EQ has been seamless – you and your team understand our business, advise us appropriately, and handle your side of our collective partnership so that we can focus on making good investment decisions. Evan Gibson SVP, Merchants Capital

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