The private markets have seen incredible growth over the past decade. With that acceleration, fund managers are now flush with data, which is creating both a challenge and an opportunity.
As firms respond to an influx of LP data demands, many find it difficult to digest and synthesize the information they need to report. Technology is helping firms work through the pain points of their data lifecycle to meet the needs of their stakeholders and use this information symmetry for collaboration and decision-making.
At this year’s Private Debt Investor New York Forum, Arcesium’s Private Markets Segment Head, Cesar Estrada joined industry peers for a panel discussion on investment trends, the role of technology, and what’s ahead for the private markets.
Our Five Key Takeaways:
- Treat Your Data As an Asset
One of a private credit firm’s top priorities is to unlock more value from their own data, infrastructure, and ecosystem of vendors. By harmonizing, validating, and unifying information from front to back, firms can put data at the core of their business and confidently make investment decisions.
- Ingest. Standardize. Repeat.
Delivering bespoke vs. plug-and-play capabilities is always a balancing act. Anything that touches the end user will have a fairly high degree of customization. Being able to standardize certain functions, though, can put the end user in a stronger position. Core competencies such as data management and analytics to ingest, validate, harmonize, and visualize the data can help firms create information symmetry, systemize their most complex activities, and refocus on unlocking growth opportunities.
- Learn from Past Experiences to Create Greater Transparency
Investors are data hungry. As GPs grow, their success adds to business complexity and compounds their data challenge. As firms respond to LP demands and set new growth goals, they need to draw from what they’re already doing. Start with something tangible and bite-size, learn along the way, and build on the data journey over time.
- Prepare for the Convergence of New Technology
Technology’s role in private credit will only expand and become more complicated over the next decade. Between the war for talent and digital transformation, adopting cloud-based technology will no longer be optional. What’s more, the increasing use of machine learning and artificial intelligence, along with blockchain, smart contracts, and digital assets, are already taking hold. While advanced technologies may still seem nebulous, what is clear is that they will disrupt traditional ways of doing business.
- Know that Technology Will Not Replace Trusted Partnerships
As technology advances, it will produce outcomes that we could have only dreamed of. That said, tech tools are only as effective as the people who use them. The importance of relationships won’t change with any technological advancement. Managers who balance investments in their team with adopting advanced technologies will be in a stronger position to create transformative outcomes for their clients.
While the outlook for private credit remains strong, only time will tell the impact of macroeconomic factors. One thing for sure is that technology will play an increasing role in helping firms better understand their business and deliver greater transparency to their investors.
As you seek to clarify the complexity of the private markets, a partnership with Arcesium empowers you to make critical decisions from a stronger data management foundation. Arcesium’s capabilities and experienced professionals help harmonize data, streamline business workflows, and discover data-driven insights to drive revenue and scale.