Private equity managers are faced with the constant evolution of asset classes, the need to launch new products, and the exploration of new distribution channels – all in the face of changing regulations. Though problems with data continue to compound, private equity firms and venture capital investors have been slower to adopt modern data infrastructure solutions. As this year’s winner of Private Equity Wire’s European Award for Best Data Management, Arcesium is uniquely positioned to help private markets investors address the unique, fundamental challenges that this industry is facing while also remaining focused on driving innovation in data management through our technology.
In this video interview, Arcesium’s Private Markets Segment Head, Cesar Estrada, addresses:
- Industry trends corresponding with the growth of Arcesium’s business over the past year
- The most important tenets of Arcesium’s business that best reflect why Arcesium won this year’s Private Equity Wire award for best data management
- Modern data infrastructure impacting the private equity industry
- Business objectives for the year ahead and their value-add to our client base
- Outlook for private equity industry for the upcoming year, and how Arcesium is navigating the environment for its clientele
Private Equity Wire (PEW): How have industry trends corresponded with the growth in your business over the past year?
Cesar Estrada (CE): The private equity industry has been undergoing a period of significant growth. As managers keep on launching new products across different asset classes, whether it is venture or buyout or mezzanine or distressed real estate infrastructure, and add new distribution channels, in particular, as they outgrow solely distributing to institutions and now looking to distribute to individuals, their data problems compound, very meaningfully. And that is what Arcesium is setting out to do – to help with data problems. Our growth is moving alongside that of the industry.
PEW: What would you say is the single most important tenet of your business that best reflects why you have won this year’s award?
CE: I would say core competency. Our core competency at Arcesium is data management and focused on asset management, alternative investments, and private markets – that is what we do for a living and nothing else. So, I would point to that as the industry has grown or evolved from being Excel-heavy and key person-dependent-heavy to one where it has acknowledged the need to outsource what is non-core. It has also adopted a number of point solutions across the different functional areas in the investment management chain, whether it is accounting or portfolio monitoring or a CRM. And this has caused some undesired side effects of having very scattered or inconsistent data siloed into different parts of the organization and with its external providers. This is core to what we do – bringing that as a unified and enriched data set for their analytical and reporting purposes.
PEW: How is modern data infrastructure impacting the PE industry?
CE: Effective data and modern capabilities are now table stakes across many sectors of the economy, particularly those that are consumer-based, but even in business-to-business space. Modern tools for data management are being adopted at a very quick pace. It is very interesting to see that, while private equity and venture capital are probably the most prominent sponsors of that innovation through their investments in portfolio companies in technology, they are a bit of a laggard when it comes to the adoption of these technologies for their own use. And part of the hurdle has been one of no offerings available that are focused on private equity, and that is very quickly changing. Arcesium is certainly enabling that.
PEW: What are your business objectives for the year ahead, and how do they align with the needs of your clients?
CE: Three things. First, we want to drive innovation in private market data management. Second, we want to add value to our clients, particularly in the form of enabling them to be growing at scale. We service and support some of the largest and most complex alternative asset managers globally. There is a very fundamental change in data management. It’s evolving at a very quick and fast pace, and the number of choices that a CTO and a business has to make is quickly proliferating. Arcesium can help the manager untangle those, make those choices, and then maintain and evolve that technology over time.
PEW: What is your outlook for the private equity industry for the coming year, and how is your firm best placed to support clients navigating the environment?
CE: We are expecting that capital will continue to flow into the private market industry for the coming year and the foreseeable future. As long as returns keep on exceeding those in the public markets and uncorrelated returns are found in private markets, that trend is likely to continue. The need for these firms, the successful ones who have grown pretty dramatically, and the upcoming ones is going to be one of scale. How do they keep on growing as fast as they have in a sustainable way, in a data-enabled way? That is what is to come next year.