Carlyle on why it embraced Canoe Intelligence for data management

In just three years. New York-based fintech company Canoe Intelligence has transformed from an idea born in a family office into a force in private equity back office.

Firms like Carlyle, Blackstone, and Hamilton Lane have helped engineer the transformation. Carlyle and Blackstone are clients of Canoe and co-led and completed an extension of Canoe Intelligence’s Series A financing, with participation from Hamilton Lane, also an existing shareholder.

Having friends in high places helps. Canoe produces what the big firms need: the software that processes data produced in private equity for wealth managers, asset services and capital allocators. But in its short lifespan it has accumulated a client roster of PE heavyweights, which have given it entry into the highest echelons of the industry.

Eric Hanno, co-head of Alpinvest’s Primary Investment Team at Carlyle, who surveyed the landscape of data management offerings for the firm, says Canoe is the best at what it does.

Carlyle, through its Alpinvest affiliate, spent months searching for the right technology to rewire its back office for more efficiency. Hanno said that Carlyle favored emerging technology over some of the larger legacy offerings.

“Being an emerging technology company and as dedicated as they are to alternatives meant that they weren’t encumbered with having to start over again,” Hanno told Private Funds CFO. “We wanted a solution that was tech heavy or tech-centric, not 100 people working offshore.”

Greater efficiency

Already, Hanno reports that the software Canoe offers has transformed the back office, making it possible to do in minutes what used to take hours, even weeks. Now capital calls and distributions that occur at Alpinvest are regularly drawn from data rooms and delivered without the need of manual translation.

“Such increased efficiency allows us to harness our information advantage… [Canoe software] automates back-office document processes and data extraction and reduces manual tasks allowing our team to focus on higher value-added work,” says Hanno, who adds that the firm will be working with Canoe on further product development.

Canoe was founded in 2013 within family office Portage Partners to streamline operations. It spun out as an independent entity in 2017, maintaining its focus on alternatives. Since then, it has developed a client list of PE heavyweights and wealth advisers looking to streamline their back offices.

Carlyle, with $276 billion of assets under management as of June 30, 2021, operates through three segments: global private equity, global credit and investment solutions. Alpinvest falls under the investment solutions segment and is the proving ground at Carlyle for such technological operational enhancements.

Hanno says that he sees plenty more areas where Canoe software could be used to reduce manual procedures. The current system covers capital calls and distributions and feeds the accounting system. But there are thousands of portfolio companies producing information that could easily be fed more quickly through to fund managers. Hanno says that quarterly statements and K1s are also good candidates for automation.