After so long without face-to-face connections, Dynamo Software’s recent participation at the 2022 SuperReturn Conference was a breath of fresh air. The ideal setting for exchanging insights with clients and partners on the future of private equity, the conference emboldened our team’s resolve to drive more deals to the finish line faster.
Among the generous amount of insight and shared best practices, there were five that really stood out to me. Each is a significant force with the potential to reimagine not only how private markets function, but how the people leading GP and LP firms innovate on top of that change.
1. Investment as a Catalyst for Good
Not surprisingly, five minutes did not pass between mentions of environmental, social, and governance (ESG), nor diversity, equity, and inclusion (DEI) issues at the conference. It was clear both are needed now and will only increase in demand as new generations of investors place their bets on social impact.
Both ESG and DEI movements call for cultural shifts. And not just in mindset, but in measurement.
As firms work to become better stewards of capital, they will need good tools for easily articulating their success, on-demand and in highly transparent ways. Good investment management technology will be crucial to not only showing progress on ESG and DEI journeys but also in standing apart from practitioners of greenwashing and tokenism.
Overheard at SuperReturn: “We have a moral obligation to make the world a better place. The younger generation will demand to know their capital is making a difference.”
2. Path to Productivity
Inflation was on everyone’s mind, as were strategies for combatting it. The consensus among attendees and thought leaders was that efficiency was the most promising option for doing so. The best efficiency play? Technology automation.
Today’s most successful GPs and LPs are tenacious about migrating bright minds away from manual tasks and toward more imaginative pursuits. Of course, technology has a role to play in strategic endeavors, as well. Especially in a volatile environment, firms need enhanced risk monitoring, analytics, and reporting capabilities to get arms around trends faster.
Overheard at SuperReturn: “We will break the back of inflation by producing more efficiently, and technology is the path to productivity.”
3. Benefitting from Volatility
No one at the conference was hiding from the slowdown of private equity allocations. In fact, several speakers hit the topic very directly, yet with eagerness and optimism.
The simple math of it is that alternatives have outperformed public equity for 20+ years. There’s no reason that trend should not endure. GPs that continue to deliver excess returns consistently will prove that expectation, solidifying LP appetite for the private sector.
According to a recent Wall Street Journal article, corporate investors may be bellwethers of that steady appetite. Corporations are stepping up funding, particularly for enterprise-technology startups, even amid the slowdown in venture-capital deals.
Overheard at SuperReturn: “Alternatives are still doing exactly what they are supposed to do—benefiting from market volatility.”
4. Combining Two Traditional Tropes
A couple of the thought leaders on stage at the show in Germany enhanced two traditional tropes by combining them. By layering “A rising tide lifts all boats” over “Play the long game,” they expanded minds beyond the growth of their singular organizations. Rather, they insisted, GPs and LPs should be collaborating to make the overall aggregation of wealth bigger.
It’s a mindset that really resonates with me as a fan of John Doerr’s work. An American venture capitalist and the author of “Measure What Matters,” Doerr advises leaders to stretch far beyond key performance indicators (KPIs) to build something special through the mechanism of objectives and key results (OKRs). Designing OKRs can feel unnatural because it forces a team to dream big. Yet, in my experience, it’s the best way to help employees see themselves as change agents.
Overheard at SuperReturn: “It’s not about getting the biggest piece of the pie, but making the whole pie bigger.”
5. No Substitute for Humanity
The pent-up demand for personal engagement was palpable at the SuperReturn conference. Client visits to the Dynamo booth were such a pleasure, as old friends and colleagues reconnected, and new ones formed early bonds.
The trip solidified the emerging truth of our time—that technology is only as meaningful as the humanity it surrounds. Although our teams have built an incredible end-to-end platform, the technology alone doesn’t enable firms to tap into the digital revolution. It’s the exchange of ideas that makes the confluence of humans and machines such an incredible force for change.