How To Choose Software for Managing Private Equity Funds
As modern operations become more complex due to growing investor expectations, increased regulatory scrutiny, and data overload, firms have had to rely on private equity software to meet investor needs and maintain efficiency. One such solution is investment management software. It streamlines investor relations, promotes compliance, centralizes data, and provides real-time insights, optimizing private equity firm operations.
However, this is contingent on the software you choose. Given the complexities of private equity investment management, you can't afford to settle for any software without doing your due diligence.
Here, we look at the must-have features of effective investment management software and guide you through the process of selecting the right solution for your firm.
What is private equity investment management software?
Private equity investment management software is a specialized tool designed to handle the complexities of private equity operations. It supports firms throughout the investment lifecycle — from capital raising to fund closing — streamlining fund operations, improving transparency, and ensuring regulatory compliance.
This technology solves challenges resulting from outdated solutions, such as inefficiencies, manual errors, and a lack of transparency, by supporting tasks like:
- Investor Onboarding: It provides efficiencies throughout the process by digitizing data rooms and subscriptions.
- Investor CRM: It provides investor relations teams with complete transparency into investor portfolios and positions, in a single location.
- Report generation: It provides real-time fund performance insights and generates vital documents like account statements to promote transparency.
- Regulatory compliance: It helps with investor verification by automating Know Your Customer (KYC) and Anti-Money Laundering (AML) checks, minimizing funds' regulatory risks.
WealthBlock is one of the best private equity investment management solutions. Our services go far beyond offering basic support:
- Automates the investor onboarding process from invitation to close
- Summarizes performance on an individual investor basis across multiple funds
- Provides document access controls based on roles — you can determine which documents limited partners (LPs), general partners (GPs), legal professionals, advisors, or even spouses have access to
- Supports various payment processing methods, including wire, check, and automated clearing house (ACH), to meet disparate investor requirements
What features should private equity investment management software have?
Some must-have features for fund operational efficiency include:
Automated fundraising tools
Investor onboarding is one of the most time-consuming aspects of fundraising. Without automation, it can take your attention away from higher-value tasks like managing the investor relationship.
Before settling on any software, make sure it can automate tasks like investor attestation, NDA acceptance, digital subscriptions, KYC/AML, capital calls and payments.
WealthBlock helps eliminate tedious manual processes. Our tool offers robust automation features purpose-built for private equity workflows to promote operational efficiency. It can automate everything from investor onboarding and capital raising to investor management, allowing you to focus on critical tasks.
Real-time portfolio insights
Real-time data is a must-have for private equity funds. The ability to provide investors with transparency into portfolio performance, helps to engender trust
So, prioritize this feature when choosing your software. Invest in a solution like WealthBlock that offers live dashboards with insights into investor commitments, fund performance, and cash flow.
WealthBlock aggregates data from different sources and provides real-time reports to promote optimal decisions and transparency. You can also tailor investor reporting by segment and type.
For example, you can give entitled institutional investors more and different kinds of reports than individual investors. You can tailor these reports even further for institutional investors by providing different access for partners, analysts, and consultants or for individual investors by offering custom views for the individual and their wealth advisor.
Integration with other software tools
Private equity firms rely on multiple tools in their daily activities, such as customer relationship management (CRM) platforms and accounting systems. Private equity investment management software should integrate seamlessly with these systems. If not, it may cause data silos and force you to revert to an error-prone, manual data entry process.
WealthBlock supports integration via API and webhooks for a more connected workflow. This streamlines private equity professionals' decision-making processes and promotes optimal investor experiences.
Steps to choose the ideal software for private equity fund management
Identifying must-have features for private equity fund management software is just one piece of the puzzle when choosing your firm's solution. You also need to consider your unique needs to find the right fit for your fund. Here's a step-by-step guide to help you choose the perfect solution:
Consider what your firm needs
First, determine your firm's unique needs by evaluating specific challenges, such as compliance reporting, investor communication, and scalability needs. From these challenges, you can figure out which features to prioritize when choosing private equity investment management software.
For example, if handling your firm's growing number of investors and managing complex portfolios is challenging, you'll know to focus on a scalable solution that can interoperate with your fund administrator.
WealthBlock can be configured to meet your firm's needs and deployed in hours using AI to ingest documents. It has over 20 integrations and can be deployed end-to-end or modularly, making it suitable for tackling most fund management challenges.
Prioritize essential features
Plenty of software options promise to enhance private equity investment management. However, not all of them can.
Make a checklist of all must-have elements — automation, security, seamless investor experiences, and real-time insights — and assess each option based on availability.
These features are non-negotiables because they determine how efficiently your fund runs and also how easy it is to find private equity investors. After all, no investor would be willing to sign up to work with a firm with a reputation for compromised security, poor investor experiences, and a lack of transparency.
Think about scalability and customization options
Private investments are expected to reach $21.08 trillion by 2030, an $8 trillion increase from 2024's valuation. This is because more investors want to incorporate private assets into their portfolios. To meet this demand, you'll need software that grows with your firm and allows for customizable workflows.
Scalable and customizable solutions are essential regardless of firm size. Small firms can start with basic features and functionalities and scale as their assets under management (AUM) grow, and large firms can scale their features as they expand across funds, asset classes, borders, and currencies.
When assessing a solution's scalability, it's also important to consider its extensibility and ease of deployment. Confirm whether it handles end-to-end workflows or only point solutions, whether it integrates with existing systems, and whether it's easy for users to set up new funds independently. The last thing you want is a hodgepodge of solutions that require lengthy and costly professional services to deploy.
Test usability and support
A tool's user-friendliness has a direct impact on the implementation process. The more intuitive it is, the faster you can deploy it and onboard stakeholders like investors, fund managers, and legal teams. So, test any potential option's usability and support before committing, and be sure your choice has a user-friendly interface and reliable customer support.
One of the best ways to test a tool is to participate in live demo sessions. Alternatively, you can request a free trial (if the provider offers it) to get a feel for the solution and test its efficiency in meeting your needs.
Consider pricing and ROI
Different tools have varying pricing models: Some are flat-rate, others are AUM-based, and others are per-user. Compare options to find the most cost-effective one for your needs. For example, if you run a small firm, you could pick a tool with an AUM or per-user-based pricing model to minimize initial costs.
However, saving money shouldn't be your only goal. Assess a tool's potential return on investment (ROI) to balance affordability with long-term value. Factor in the total cost of ownership (customization, implementation, and training fees) and the value of potential gains (better investor relationships, automation, and optimal portfolio management), and choose the solution with the highest ROI.
Simplify your private equity fund management today
Investment management software can streamline operations, ensure compliance, and provide transparency. When choosing your solution, consider your firm's growth potential, look at the current challenges with existing systems, and prioritize must-have features like automation. Also, think about extensibility, integrations, and end-to-end workflows to future-proof your purchase.
WealthBlock is a leading solution for private equity firms. With us, you don't just get a tool that helps you manage today's fund — you get a solution that can help you scale from less than a billion in AUM to tens of billions. Our software is configurable and scalable, so you can rest assured that it'll meet your firm's unique needs even as you grow.
Schedule a demo today to see how WealthBlock can streamline private equity fund management!
