It’s Time to Re-imagine Private Markets

By Alex Robinson, CEO and founder, Juniper Square

Alex Robinson

According to McKinsey, private equity accounted for $9.8 trillion in assets under management globally in 2021, with fundraising reaching dizzying heights of $1.2 trillion up 20% year-on-year. 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 private partnerships that underpin them. Sponsors of private investment funds today face technological and operational challenges that threaten their ability to build lasting private partnerships. Even as investor and employee expectations for access and visibility to data are rising, the processes and tools needed to enable the efficient and effective flow of information between partners in a private partnership have not kept pace. Today, more than ever, general partners (GPs) must modernize their partnerships by leveraging data and systems to maximize outcomes for their investors, their investments and their business.

The Challenge with Private Partnerships

Like any relationship, thriving investment partnerships rely on mutual trust and empowerment — built over the course of many interactions. But GPs and limited partners (LPs) often fall short of fully optimizing their 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 methods of investor communications and reporting that fall short of investor expectations through over-reliance on manual efforts and static documents. ○ Disjointed and Time-consuming Operations for GPs: Teams that struggle to deliver a consistent and high-quality experience for investors because of siloed data, processes and systems. ○ Opaque and Disconnected Administration: Outsourced fund accounting and investor services that add to data silos create unnecessary back-and-forth and limit 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 re-imagine the experience for investors, scale their operations and deliver transparent and trusted administration outcomes.

Re-imagining the LP Experience

Increasingly GPs are realizing that the investor experience is central to growth. In a recent Juniper Square survey, sponsors report that a great investor experience prompts more repeat business (86%), more referrals (83%) and larger investment commitments (62%). Despite this, many GPs today continue to rely on portals that serve only as a repository for static and incomplete PDFs and don’t enable investors to self-manage the basics of their account 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 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.

Building Partnerships that Scale

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 making these investments delivers increasing returns to scale — with sponsors that consistently increase technology investment each year reporting they are more likely to exceed capital raising and acquisition goals than those who do not.

But not all technology is created equally. GPs need purpose-built systems that deliver a consistent and complete view of partnership data to every team that touches investors. For example, customer relationship management (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 prospects enters a data room to the moment where they view their investments in a portal. The tools used to generate notices and statements must connect investment data consistently with the information seen by investors in the portal and fundraisers in their CRM. And finally, the fundraising and investment data you collect should be easily aggregated across these tools to provide insights that fuel business growth.

Transparent, Seamless Administration

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 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. 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.

To save sponsors time without adding to operational overhead in other ways, administration needs to 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, on-demand portal.

Modernizing Private Partnerships

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 re-imagine the partnership experience, for LPs, for their teams and for their administrators. GPs that modernize through a holistic approach to partnership enablement — grounded in universal systems and shared data will lead and succeed, realizing outsized growth and delivering outsized impact for investors.