Transparency. It is a word we often hear in the alternative investment industry. Whether it is from General Partners (“GPs”) looking for more insight into the NAV, or an investor (“LPs”) seeking more visibility into the portfolio holdings, everyone wants/needs/demands (pick one) transparency.
But what is transparency in the alternative investments industry, and what does it cost?
The Securities and Exchange Commission (SEC) defines financial transparency as “Meaningful and reliable disclosures about a company’s financial performance. Companies need to provide transparent financials to raise capital. Investors need transparent financials to make informed investment decisions.”
At Socium, we are firm believers that Transparency is Credibility™. As fund administrators, we must provide both GPs and LPs with transparency so both parties can make informed decisions. For this reason, we have invested heavily in tech-enabled solutions so our clients and their investors can gain visibility into the entire process, from fundraising to the issuance of financial reports.
We see ourselves as the investors’ user experience. Our tech and reporting are what investors see. So, we aim to provide a tech-enabled solution that is secure, intuitive, and scalable. As we like to say, our tech is your tech.
It Begins in the Back Office
The private equity industry is predicated on discovering and investing in new technology to drive innovation, streamline processes and create scalable businesses. In addition, fund managers place a high priority on making the investor experience seamless. And this starts in the back office.
Just as a MICHELIN starred restaurant provides diners with a memorable experience from the moment their car pulls into the parking lot, a fund administrator’s tech and processes should create a seamless experience for investors from the first moment of contact.
The fund administrator is the investors’ user experience. Think about it. The fund administrator has more frequent touchpoints with investors than most fund managers. They onboard the investor, provide regular reporting, host an LP portal, and are on standby to answer the vast array of investor questions. Therefore, choosing the proper administrator from the start is paramount to a fund manager’s reputation. A fund administrator with an institutional back office equipped with tech and experienced professionals makes it easy for investors to be an investor in your fund.
Increased focus on operational due diligence
A fund manager’s performance and the principals’ pedigrees will secure an investor meeting. However, today, institutional investors want to know more about the fund operations before investing. What does the technology stack look like, who the fund service providers are, and assurance on compliance and oversight are common questions during operational due diligence reviews. Transparency is credibility. Investors want to see that not only are fund managers providing information during the due diligence meetings but that their back-office and their fund administrator can provide the level of transparency they require.
Technology and people are expensive. As industry regulation and oversight continue to burden fund managers from both a personnel and technology perspective, reputable and experienced service providers will be critical to a fund manager’s operations as they scale. Fund managers should engage a fund administrator that has an institutional quality back office with the right tools to get the job done and the sizzle to deliver the information and reporting investors demand. More importantly, the fund administrator’s professionals should know the fund strategy and have a reputation for providing excellent client service.
Service providers and operational processes can directly impact fund investments. Investors want to feel confident in a fund manager’s team, including the chosen service providers. Fund administrators are critical partners. They can help secure capital and help fund managers breeze through due diligence meetings by presenting their best people and investor-facing technology.
At Socium, our tech is your tech.
At Socium, we provide transparent, technology-driven solutions for private equity, venture capital, real estate, and private credit funds. Our tech is unmatched. It streamlines fund operations and delivers fund managers and investors with actionable insights. Our tech-enabled solution focuses on both the front office and back office so that every touchpoint investors have with a fund manager is provided through a streamlined user experience.
- Investor relations teams gain insight into investor engagement through a customizable Virtual Data Room and an electronic subscription processing module that streamlines investor onboarding.
- Dynamic software reduces the accounting complexity of bespoke partner allocations.
- Sophisticated waterfall distribution and carried interest tools eliminate reliance on disparate and error-prone spreadsheets.
- A secure and customizable LP portal delivers transparency through data visualizations and an easy-to-navigate folder structure.
We place information at our clients’ fingertips, and we protect that information utilizing SOC 1 and SOC 2 tested cybersecurity protocols.
Choose the right partner from the start.
When choosing a fund administrator, choose one that leads with client service and utilizes innovative technology. After all, the fund administrator is your investors’ user experience. So, invest your time selecting a fund administrator with the tech and expertise to administer your fund and provide investors with an excellent experience. The correct fund administration partner creates a return on your investment and provides value well beyond the annual fees paid.