By the end of 2023, an unspent war chest of dry powder greater than $2.5 trillion had amassed. A question on many alternative investors’ minds: will it spark a firestorm of new alternative asset deals in 2024?
While the abundance of capital seems promising, navigating the resulting deal frenzy will be trickier than ever. If dry powder floods the deal-making market this year, investors will need to be prepared on several fronts.
Preparing For an Explosion of Dry Powder-Driven Deals in 2024
Expect fiercer competition. With more investors chasing the same deals, bidding wars and inflated valuations could follow. Finding value amid the froth will be a challenge, demanding detailed due diligence and a keen eye for undervalued assets.
Shorter due diligence windows. A sheer volume of deals will pressure investors to make faster decisions. The traditional, manual due diligence processes of the recent past will no longer suffice. Therefore, this will be a pertinent use case around mobilizing Artificial Intelligence within your investment workflows in order to drive efficiency across a number of key areas by centralizing all investment data. For example, this could include the data collection process and leveraging AI to automatically assigning categories to incoming documents. AI-powered capabilities can also help fuel robust workflow features within FinTech for ALTS. This includes generating automated tasks/reminders to accelerate the due diligence process, while identifying where there may be bottlenecks. Additionally, responsible AI capabilities in a cloud-based Fintech platform will help to increase transparency for all internal stakeholders and investment committee members.
Operational efficiency will be at a premium. Managing a bigger pipeline of more complex deals alongside a portfolio of investments requires a greater investment of time and mental focus. In order to designate their time to the most meaningful, high-return activities, investors will need sophisticated tools that increase efficiency across portfolio reporting, performance tracking, and risk management.
Teams in lockstep are required. Across team members, investors, and portfolio companies, communication and collaboration must remain both organized and protected. Operating within a secure, cloud-based system provides a single source of truth for all deal-related information and keeps teams moving quickly in the same direction.
Decisions must be fast, but calculated. Investors will need to rely more heavily on technology in an environment that is both rich in information, but short on time. Data-heavy tasks and workflows should be automated, while also recruiting technology for more intelligent purposes too. Data from a multitude of sources should be aggregated and synthesized for deeper insights and clearer direction.
If anything, the 2024 alternative asset landscape holds the promise of an exciting ride. While the abundance of dry powder presents immense opportunities, effectively navigating the competitive waters will require agility, efficiency, and an edge from leading-edge technology. For investors equipped with an end-to-end alternative investment management platform, the 2024 dry powder surge could be the wave that propels them to new heights.
Managing Dry Powder with an Award-Winning End-to-End Alternative Investment Platform
Whether the deal environment has your firm managing a constant inflow of deals or focused on value creation, Dynamo Software offers key, award-winning FinTech advantages for ALTS. Built specifically for the alternative asset ecosystem, it is designed to optimize every stage of process, enable better decision-making, and give its users a clear performance edge.
Arie Oustinoff, Chief Revenue Officer, joined Dynamo Software in 2016, following his tenure at SmartBear Software, where he served as the Director of Sales. While at SmartBear, Arie led global sales, growing the business from $2.5M to $25M+ over 4 years. As Dynamo’s CRO, Arie leverages his 10+ years of experience building and leading high performance sales teams.