June 7, 2023
Chief Product Officer & Co-Founder
qashqade advisor Uwe Hermann joined a panel today at SuperReturn 2023 in Berlin with the topic “Bringing private equity into the digital age: how far have we really come?”. He made the point that there is much potential still waiting to be exploited. Uwe stated it crystal clear:
“It is still low-tech”.
The panelists agreed that private equity is not at the peak of technological advancement. Despite a massive embracing of technology in the last 10 years and a substantial step forward, private equity is still not high-tech and there remains a lot to do.
Especially, in the back-office. There is a lot of focus on the investment process, but the actual value-add for a fund manager is in the 6 to 10 years after the investment. When the back-office must provide regular reports, maintain the relationship with the LP by providing accurate and fast information and provide the numbers for the deal team to make the right decisions.
The panelists agreed that the potential of tech is massive. Not only the increase of efficiency and effectiveness across the organization, but even the ability to rewrite business models and enhance the data journey across the stakeholders from the portfolio companies to the LPs.
The pressure from LPs is increasing. Uwe Hermann highlighted the fact that:
“LPs request transparency, but they do not drive disruption. Regulation drives to some extent the needs of the LP”.
This pressure might not be industry-wide and have immediate impact, but it could trigger a chain reaction to more adoption among the fund managers over time, as an LP who receives a better experience with one fund manager, might ask the other to be as fast and accurate as well. In addition, the next generation of fund managers’ back-office professionals have grown up with technology, enhancing their view on the world. And this will drive their requirements on a working environment which doesn’t reflect the dark ages.
The fund managers and as such all participants in private markets must move forward. There are many options available in the market. There is no need for the self-development of tools. Uwe Hermann pointed out to the panel:
“A whole ecosystem of providers exists to cover every aspect of the value chain with best-of-breed products”
