Telltale Signs Your GP Firm’s Growth is Inefficient

For most GP investors, scaling is the goal. Adding weight to your track record attracts more investors and generates better deal flow, perpetuating the cycle of growth.

The challenge is that scaling alternatives assets adds complexity quickly, and exponentially. More investors mean more relationships and strategies to manage. More funds mean more regulation, due diligence, and volumes of unstructured data to govern. And, to add another layer, many GPs are trying to oversee all of this with a decentralized team that may be spread across the globe.

At Dynamo, we call this “Growth Complexity Chaos.”

Is your team stuck in Growth Complexity Chaos? Let’s examine the symptoms and light the path out of it.

Symptoms of Inefficient Operations at GP Firms

Feeling stuck in “reaction mode” is one the hallmark signs that Growth Complexity Chaos is driving your actions, and not strategy or insights. Does your firm:

  • Make decisions based on feelings and not facts?
  • Feel unclear about the best sources?
  • Have low conversion rates on capital campaigns?
  • Feel that outreach across your LPs is difficult or dysfunctional?
  • Have a due diligence process that feels cumbersome?
  • Lack good visibility into key KPIs across your portfolio?
  • Spend too much time producing fund-level reports?
  • Lack a clear understanding of how investments are performing over time?

Most growing GP firms are experiencing not just one ­­– but often many – of these issues simultaneously. The natural instinct is to “throw bodies” at the problems to try and attack them quickly. But, the reality is, rapidly increasing staff doesn’t address the root causes of the problems — and even worse, often exacerbates it. Ultimately, to gain a performance edge, GPs need to run a more tightly integrated firm.

Five Principles of Gaining a Performance Edge

When the right foundation is laid, GPs will find that scaling quickly and efficiently is greatly simplified. Some “growing pains” may be inevitable, but Growth Complexity Chaos doesn’t need to run the show in a firm that functions in an integrated manner, with full front, middle, and backend processes in place. Overcome growth challenges with the following five important principles.

A clear Go To Market strategy. Define your firm’s value proposition and differentiators, and use this to accelerate your deal flow. Optimize workflows to unleash the ability to handle increased deal velocity. Track communications, research, opportunities, relationships, and progress in one central place for transparency, real-time insights, and increased collaboration.

Operate from the “golden copy.” The most successful GP firms work from a central source of institutional knowledge.  Get your team on the same page and drive transparency and insights by ensuring a single source of truth that flows through your entire firm by unifying and integrating data sources.

Focus your team on high-impact activities. Hiring the best talent is an investment, and one that pays off when their skills can be applied in the most meaningful ways. Automation is a powerful tool for unleashing the true potential of your team by relieving the burdens of time-consuming manual tasks. They can redirect their energy toward high-value activities.

Make technology adoption effortless. It’s impossible to achieve a high level of operational efficiency without fully integrating technology into all of your firm’s processes. But, this will only happen if it’s nearly effortless for your team. A FinTech software platform designed for the unique needs of alternative asset investors should fit seamlessly into your teams’ daily routines and cyclical cadences, becoming the non-disruptive performance enabler they don’t want to work without.

Make the big picture bigger. Firm leaders need a big picture view that is multi-dimensional. New information can’t be siloed in reports or communications among team members; it should be visible a dynamic dashboard able to provide a 360-degree view of your investments and important trends. This makes the strategic information your firm needs not only easily discernable, but actionable.

Increase Operational Efficiency and Gain a Performance Edge

Learn how industry experts from Dynamo, Dakota, ProFundCom, and Equinox Partners help GPs run a tightly integrated firm and align data, workflows, and people to drive deep insights and take efficient action.

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Donna Parent is the Chief Marketing Officer (CMO) at Dynamo Software. Donna is responsible for the corporate brand, demand generation strategies, and go-to-market initiatives for promoting Dynamo’s end-to-end cloud-based platform to the alternatives ecosystem. She is focused on fueling lifelong relationships with consumers, businesses, and strategic partners. Connect with Donna on LinkedIn.