Is Excel a Solution?

Is Excel a Solution?
Daniel Rheault

I spoke on a panel a few weeks ago at IMN’s West Coast PERE CFO forum with several of my peers in financial technology. As the discussion evolved in response to questions regarding data management, aggregation, and data purposing, one of my co-panelists, Rich Waldis, succinctly described Microsoft Excel echoing that which we hear so often from our soon to be clients.

Excel is a tool – Excel is not a solution.

How often does a general or limited partner rely on Excel to organize their investment portfolio, performance, and generate reporting? How often for capital calls and distributions? What about tracking investor portfolio percentage ownership?

Provided an industry-specific solution has not been applied for portfolio management, the answer is always. Key operations start in Excel, and end in Excel. Excel is great for data transmission and conducting statistical analysis on a data sheet, but it is a poor solution for consolidating data for reporting purposes.

Have you ever made a small mistake on the keyboard and quickly moved along, not noticing your mistake? Yes? Well, you’re only lying to yourself. And if you’re spread across multiple sheets that are pulling data from one another, it gets even worse when you’re trying to remember which fields you had adjusted.

Manual error is intrinsic to human nature, whether it be in writing, speaking, or forgetting that decimal in Excel. All of a sudden, those two extra digits create hundreds of millions/billions of financial discrepancies, and that thousand-celled Excel spreadsheet has one very minor flaw with significant ramifications including a poor reflection on the user and the firm.

Excel is a great tool for capturing and sharing data sets, but it’s a poor solution to rely upon for organizing, analyzing, and reporting on data. The value of our, and other industry-specific providers, comes to play when those two zeros are forgotten during a momentary lapse the review process and alerts can be triggered, values can be denied from saving – there are safeguards against the commonalities in error among all humans. The unfortunate issue for the end users is that at even when the problem has been identified, an applicable solution is still months away after a budget allocation, and contingent upon approval, a purchasing process.

A few months ago I produced a webinar that utilized all of Netage’s sales data (stored rather meticulously in Dynamo) and conducted an analysis to determine the points at which private equity real estate funds look at investor portals, and the point at which they buy a commercial solution. The data was evaluated from a needs perspective: the characteristics associated with identifying the problem (the point at which those additional zeros become traumatic for example), and the characteristics of when they acquire an investor portal.

The webinar went well, and if you’d like to view the presentation you can contact me for access (daniel(at), and the conclusions were very interesting. I’ll articulate the private equity and private equity real estate fund manager’s results for brevity’s sake, and revisit the other verticals at a later time.

If you are a private equity real estate fund manager, trouble occurs when you hit 100 investors (or 100 individual investments across multiple funds from the same investor), and are responsible for $500 million in assets under management. Comparatively, their private equity fund manager peers start to review solutions with 150 investors, and just over $375 million in assets under management. 82% of all private equity real estate fund managers purchase a commercial investor portal at the point of initial inquiry – that’s a 13% higher acquisition rate than their colleagues in private equity.

If you are a private equity real estate fund manager looking to anticipate when those zeros start to unexpectedly occur in Excel, I would suggest preparing your team and your firm for an investor portal adoption prior to having over 100 individual committed investor accounts, and $500 million in assets under management.

Excel is a tool, but a dedicated, intelligently automated reporting platform is your solution.