What kinds of software do limited partners need? Best-in-class limited partners and institutional investors watch the market diligently and manage relationships with general partners (GPs) expertly, and have long demanded greater transparency and accountability from private equity investors. Many LPs have placed an increased emphasis on environmental social good (ESG) and corporate social responsibility (CSR) initiatives.
For most limited partners, the question isn’t what to track, but how to track it efficiently. Given that most limited partners have capital allocations in funds all over the world, and that each of those funds have different reporting schedules and practices, it can be extremely hard for modern-day LPs to keep up. In this article, we explore the “must-have” dashboards limited partners need in order to both maintain strong relationships with GPs and maintain clean and accurate data on their investments.
No matter if your firm has a zeroed in investment thesis or a complex, multi-strategy history of fund investments, direct/co-investments, real assets, or other investments, it’s important that technology support, not hinder, your firm’s ability to execute. Below, you’ll find some of the key ways that purpose-built solutions enable best-in-class limited partners to cover fund managers, track deals and allocations, stay abreast of industry trends, and much more.
Limited partner software needs to provide transparent coverage on fund managers
Among the many requirements that limited partners have for the software they use is transparency. Often, when a limited partner seeks information, they need it quickly. Software built for limited partners must collect key data, such as capital allocations towards different fund managers, as seen below.
Limited partners also require the ability to drill down into one specific allocation and see a fuller picture of the health and status of their investment. Details such as which fund that capital allocation came out of, and which investment strategies the fund manager specializes in are key pieces of data for LPs.
Relationships are extremely important to limited partners, so having a software that comes equipped with relationship management capabilities are key. By categorizing or “tiering” fund managers, limited partners can more easily track which need further engagement, and which are in constant communication with your firm. Some LP firms choose to delegate “relationship owners” within the firm, so it’s critical that limited partner software allow firms to assign ownership and accountability for that GP-LP relationship.
Limited partner software needs to have great reporting capabilities
Limited partners, in order to compete, need to maintain visibility on every corner of the market. By leveraging the powerful combination of proprietary and third-party data in one unified platform, limited partners can use software to transform that data into institutional knowledge. For example, they might like to double-check their contact, revenue, or EBITDA data for certain private-held businesses that they’ve invested into. By leveraging software, they can pull in verified data from providers like PitchBook, Preqin, SourceScrub, and Sutton Place Strategies. They could even choose to reduce or eliminate the need to manually enter these data points by having them be auto-populated with third-party data.
By equipping limited partners with the ability to report on geographic disbursement of their investments, deal volume year over year, industry deal flow over time, and much more.
Limited partner software should allow LPs to track events, deadlines, and IC votes
For limited partners, keeping a diligent record of all past investment committee votes, relationship development activities, marketing events, board meetings, GP meetings, and other critical activities. With this kind of visibility into deadlines and other important dates, limited partners are well-positioned to ensure that their investments receive the attention and care they deserve.
DealCloud, a solution that was built by investors, for investors, has been deployed at dozens of limited partnership firms across the globe. The software comes equipped with all of the must-have features and functions mentioned above, and is fully configurable to meet the unique needs of complex LP investors and firms. To learn more, and to see a product demo, click here.