It's time to reimagine private markets

According to McKinsey, in 2021 private equity accounted for $9.8 trillion in AUM globally, with fundraising reaching dizzying heights of $1.2 trillion, up 20% year over year. And yet, despite blistering growth, private markets still represent a small fraction of the $100 trillion in professionally managed assets worldwide.

What stands in the way of broader participation in private markets? The problem isn’t markets themselves—it's the very nature of the private partnerships that underpin them.

Today, general partners face technological and operational challenges that threaten their ability to build lasting private partnerships with their investors. Even as investor and employee expectations for access and visibility to data continue to increase, the processes and tools needed to enable the efficient and effective flow of information between partners in a private partnership have not kept pace. More than ever, GPs need to modernize their partnerships by leveraging data and systems to maximize outcomes for their investors, their investments, and their business.

Like any relationship, thriving investment partnerships rely on mutual trust and empowerment built over the course of many interactions. But GPs and LPs often fall short of fully optimizing these exchanges because they lack systems for shared visibility and workflow. The lack of modern systems manifests itself across three key areas of the partnership:

• Inadequate experiences for LPs: Traditional investor communications and reporting methods often fall short of investor expectations due to overreliance on manual efforts and static documents.

• Disjointed and time-consuming operations for GPs: Siloed data, processes, and systems mean teams struggle to consistently deliver a high-quality experience to their investors and get bogged down in operational activities.

• Opaque and disconnected administration: Traditional outsourced fund accounting and investor services only add to data silos, creating unnecessary back-and-forth, and limiting the flow of information to investors.

Addressing each of these areas requires a new approach—one that puts a single, shared view of the partnership at the heart of digital processes and tools. By creating a universal system for partnership enablement, GPs can reimagine the experience for investors, scale their operations, and deliver more transparent and trusted administration outcomes.

Increasingly GPs are realizing that the investor experience is central to growth. In our recent Investment Operations and Administration Survey, GPs report that a great investor experience prompts more repeat business (86%), more referrals (83%), and larger investment commitments (62%). Despite this, many GPs continue to rely on basic portals that serve only as a repository for static and incomplete PDFs, and that fail to enable investors to self-manage their accounts or payment details.

As investors are increasingly exposed to interfacing with the public markets and their brokers through digital applications, their expectations for accessibility, communication and transparency continue to rise. Delivering this type of experience in private markets requires shared visibility and workflow around partnership details, enabled through an interactive, on-demand portal. Investors should be able to easily view account-wide returns, drill in and view the performance of specific funds or assets, and update subscription or payment details, all with the click of a button.

Forward-thinking GPs understand that delivering an exceptional investor experience requires more than a portal. It requires enabling teams with the data, systems, and processes to manage that experience across the lifecycle of a partnership. And, according to our survey, making these investments delivers increasing returns to scale—with sponsors who consistently increase technology investment each year reporting that they are more likely to exceed capital raising and acquisition goals than those who do not.

But not all technology platforms are created equal. That’s why GPs need purpose-built systems that deliver a consistent and complete view of partnership data to every team that interacts with investors. For example, a CRM that supports fundraising efforts should incorporate details on investor positions, returns, and preferences. The investor onboarding experience should flow seamlessly and digitally from the moment a prospect enters a data room to the moment where they view their investments in a portal. The tools GPs use to generate notices and statements must seamlessly connect the investment data that fundraisers see in their CRM with the information that investors see in the portal. And finally, it should be easy to aggregate the fundraising and investment data across these tools to provide insights that fuel business growth.

The use of technology shouldn’t be constrained to the four walls of a GP’s office. Third-party administration providers must be connected through technology to deliver exceptional experiences for investors. Yet our Investment Operations and Administration research reports that only 24% of GPs report that the investor experience is a focal point of their administrators’ offerings—and 43% say their administrators are not focused on it at all. And the concern doesn’t end with the LP experience—administrators can often create data silos of their own, limiting information sharing within the GP organization and stifling growth.

In order to save sponsors' time without adding to operational overhead in other ways, administration must be modernized. Accounting workflows must be seamlessly integrated with the GP’s operations to support a single view of the partnership across fundraising, investor on-boarding, and investor relations. More importantly, accounting outcomes need to be delivered in more innovative formats, offering full transparency into the capital balance as well as the ability for LPs to view and understand the details in an intuitive, interactive, on-demand portal.

The potential for capital flows into private equity is many times greater than the market today, but digital evolution will be necessary to reach that potential. In the face of technological and operational challenges, GPs need to reimagine the partnership experience, for LPs, for their teams, and for their Administrators.

GPs that modernize through a holistic approach to Partnership Enablement—grounded in shared systems, scalable solutions, seamless experience, serviced success, and secure infrastructure—will lead and succeed, realizing outsized growth and delivering outsized impact for investors.

Watch our two-minute video to discover the power of partnership enablement:

Unlock the potential of every investment partnership.

Ready to build more successful private investment partnerships? Talk to us about how we can reimagine them, together.