Since COVID-19 lockdowns put in motion a new culture of working from home, fund managers, limited partners and alternative asset management practitioners of all types have been more heavily reliant on technology, to bridge the location gap and to facilitate many processes that were previously handled in-person.
Many aspects of the traditional way that asset managers communicate with their investors has arguably been ripe for disruption for a long time, well before 2020, and technology tools that eliminate wasted man hours spent on manual or strictly Excel based processes have been available for many years. Despite this, change and adoption have been slower in the financial services industry all around, with some notable outliers.
These topics (and more) are addressed in this recent interview with Eric Slaim, CEO of Eleven, a multi-faceted centralized GP, LP and service provider engagement platform.
Vailakis: Thank you for agreeing to share your insights with Alternatives Watch readers, Eric.
To start, how would you characterize the current technology environment for general partner/limited partner (GP/LP) engagement?
Slaim: Thank you for having me, Nancy. The technology environment for GP/LP engagement is on the brink of transformation. We work in an industry where the concept of “customer engagement,” especially that powered by technology, still remains foreign and has not caught up with the rest of the world. This is in stark contrast to so many other industries, where businesses are generating revenue at scale because of customer engagement in the digital domain.
In private investments, GPs certainly have technology choices to solve various tasks, such as document security or contact organization, but they have limits, as most of these solutions operate in isolation, and few, if any, work to drive meaningful GP/LP interaction.
For example, a GP may use a data room, CRM software, an email distribution system, databases and a fund administrator portal as part of their marketing, communication and investor servicing toolkit. While a step in the right direction, these systems don’t talk to each other. Instead, they facilitate one-way streets, creating a monologue, where the GP pushes information to investors instead of inviting them to interact and engage.
If we think about how people buy products and services, they want to feel empowered. They buy when information is easy to access and online. They buy from companies where they feel a connection and a two-way dialogue with the brand.
Our industry is one of the last to make the shift online and to empowering the customer. But the change is starting, and the transition will unlock massive opportunities and potential for those GPs and LPs making the move.
Vailakis: How might GPs evolve this picture to a two-way street, migrating all facets of the interaction with LPs online?
Slaim: On one hand, it is pretty simple. It involves the right infrastructure. One that is built specifically to drive those LP interactions.
Think about Amazon. Not long ago, consumers were required to drive to a mall to shop and purchase goods. While it seemed efficient at the time, people could only buy when they could travel to a shopping center. They could also only buy items that were available in the stores at the time they arrived. Retailers were also constrained, forced to carry large operating expenses with maintaining, staffing and stocking physical stores. They were also unable to infinitely scale.
By moving both distribution and purchasing online, Amazon transformed retail as we know it. Consumers now have the world of products at their fingertips with the right information, insights and tools to make fast, confident and more relevant purchases. Retailers now reach millions of buyers around the world, just by maintaining a virtual store.
In a similar way, GPs can make the shift and scale by moving their investor communications online to a place where LPs can access, easily and productively, everything they need to engage with the GP. In addition to having the technology available, GPs also need to make a conscious effort to upgrade from their traditional outbound sales strategies. For some it may feel like a leap, but once they take the first step, they will never look back.
Vailakis: How does Eleven evolve that classic servicing and communications model?
Slaim: This is exactly the technology Eleven provides. We allow GPs to run their own all-in-one, virtual stores, where disparate technology solutions, such as data rooms and CRMs, come together, in addition to the prospects and clients they currently service.
The change is night into day. It is about moving from monologues to dialogues. From outbound in inbound. From selling to empowering. From offline to online. From pushing and hoping to nurturing and advancing.
Vailakis: What are the primary individual features of the Eleven offering that you’ve worked tirelessly, in part with Socium Fund Services, to develop?
Slaim: We are thrilled to have Socium, a leading provider of fund administration services, as a client. Earlier this year, we began working collaboratively with their team to build and deliver straight-through electronic processing technology in private investments. LPs will no longer have to fill out fund subscription documents on paper, scan them, and then submit them to the fund administrator. Fund administrators will no longer have to process those fund subscriptions offline.
What makes this technology even more valuable is it is inside the same virtual environment where GPs and LPs are engaging throughout every other part of the relationship. This technology, combined with the virtual portals, is expected to catapult the alternative investments industry to moving online.
Vailakis: What types of firms could utilize the Eleven offering?
Slaim: We know that creating an industry transformation involves delivering big solutions for all participants across the ecosystem. Currently, we place our audiences in several buckets: GPs; fund administrators; investment marketplaces and LPs.
GPs use Eleven to scale the entire investor-facing side of their business. They run all-in-one, permission-based virtual ‘stores’ to service every investor throughout the entire relationship in one place from engagement to transaction and client service.
Fund administrators use Eleven to scale in multiple ways and join the digital transformation by acting as a gateway between the GPs and the LPs. Fund administrators servicing their clients with Eleven technology can process transactions digitally, which are submitted digitally through the GPs portal. They can deliver all investor reporting information, including NAVs, monthly statements, digital dashboards, capital call notices and tax information, seamlessly to investors in the same portal too, further driving GP/LP engagement. So not only can they reduce costs and scale their back-office routines, but they can also grow their own business by providing the infrastructure that helps their clients grow.
Placement agents, RIAs and wealth managers use Eleven to scale their distribution too. They can build, launch and grow their own online investment marketplace that brings their products and relationships together.
All LPs have their own free, intuitive online environment to access everything on-demand that they have been permissioned to access. This includes information, due diligence, data, communications, transaction ledgers and more, across any GP, investment marketplace, fund administrator or other party servicing them.
Vailakis: Why do you think alternative asset management firms have hesitated to adopt technologies that lessen the workload inherent in manual processes?
Slaim: Marketing to investors and servicing clients has always been done the same old way. It’s human nature to cling onto what feels comfortable. Change can be scary, even if you know it will benefit you in the end. It can even be harder to be one of the first to take the leap and lead the way.
Vailakis: Please speak about security, namely email vs. cloud-based methods.
Slaim: Security and regulatory compliance is of utmost importance in this industry, and a cloud-based solution is the best bet here. GPs using a cloud-based solution simply benefit from better security and oversight. They can also gain valuable, actionable insights and more document control. Those still emailing documents as attachments are missing out on opportunities, from workflow efficiency to relationship building, and face greater security and compliance risks.
Vailakis: Are you seeing a shift now as a result of COVID-19 related communications limitations and what do you envision that shift looking like going forward?
Slaim: Absolutely! The shift has already been well underway before COVID-19. The next generation is rising up in the workforce and shaping the future. And this group only knows the digital, connected world. It is the rest of us that have to keep up.
The pandemic only accelerated the movement. It’s been fascinating to see so many other industries move online, ones that people would have never before imagined could. Doctor visits now happen virtually. Elementary schools now happen over Zoom. Industry conferences now occur in our homes, eliminating the need to spend thousands of dollars on cross-country travel.
These transitions are not just temporary. The world will be using these technological advances long after the virus is under control. In alternative investments, we are going to see that the next batch of industry leaders will be the companies that make the shift toward digital customer engagement today.