During the past seven months, Dynamo has surveyed three key segments of alternatives investors for a view into their overall mindset. We polled LPs in September 2022, GPs in February 2023, and the full results of our Emerging Manager survey during April 2023 are publishing May 9th, 2023.
Economic uncertainty was on the minds of all investors, which almost always sends business budgets shrinking. But when it came to their technology spend, there was resounding agreement among all groups: tech budgets are untouchable. Greater than 94% of LPs, GPs, and Emerging Managers said they expected their technology budget to either increase or stay the same.
Based on our synthesis of the survey data, following is what our investor audiences indicated are key tech priorities in 2023.
Investors today are confronting reduced deal activity and more challenges to creating value. With an economy on the precipice, they are thinking about how to work smarter, be more productive, and do more with less.
When implementing new technology, alternative investors see efficiency and optimized workflows as high priority outcomes. In a difficult investing environment, investors are looking for all available avenues to improve the bottom line and remain competitive. There is a renewed focus on driving fierce efficiency through technology that centralizes, standardizes, and automates necessary tasks.
All alternative investors swim in a sea of documents and data. Unlike traditional investments, much of it is unstandardized and unstructured, increasing the complexity and time burdens of data collection, extraction, and insight-generation.
Against the current economic backdrop, alternative investors are evaluating opportunities more shrewdly and tracking performance intensely. Data looms large in an effective decision-making process and as such, investors must make meaningful data available more quickly. Time spent manually sourcing documents from portals and emails, and extracting and organization the essential information leaves precious little to analyze and act on it. As alternatives becomes increasingly data-intensive, introducing automation into data processes is a near-mandate.
Fundraising in current market conditions and deal activity are two challenges occupying a lot of mindshare for investment managers. As a result, these deal-hunters are looking to deal management and CRM tools to help them in the current economic cycle – and long after.
As deal activity slows, deal management software can help investors optimize processes from deal sourcing to closing. Potential opportunities can be identified and evaluated more quickly and efficiently, and the most attractive deals seized upon. And, if economic conditions rapidly change, deal management software can help manage due diligence processes more effectively and track the performance of their portfolio more closely.
Managing the flow of information and communication among investment partners is top-of-mind for all parties. Each has a web of contacts, commitments, questions, and performance data to track, and the rise of remote work, coupled with fast-evolving investor expectations, has reshaped the investor relations landscape.
Centralized, secure, integrated, and simplified are must-haves for sought-after investor communication portals today. Managers must show investors they have the right digital capabilities to govern communications effectively and operate efficiently. Without the right tools to offer a streamlined digital experience, managers are well aware it will only make fundraising in the current environment more difficult.
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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.