Fund leaders gear up for 2024

What are your top priorities for 2024?

Rufina Adams: We are placing a paramount emphasis on nurturing healthy balance sheets and fostering the growth of our portfolio companies. We have also intensified our focus on sourcing and business development efforts, zeroing in on specific sectors of technology and technology-enabled businesses where we see opportunity and have a competitive advantage. Concurrently, we are strengthening our fund operations to align with new regulations.

Rufina Adams,
Chief financial officer, True Wind Capital

Rufina Adams is the chief financial officer of San Francisco-headquartered investment firm True Wind Capital, which focuses on mid-market technology companies. Adams oversees financial reporting, tax compliance and accounting matters and is responsible for structuring, forecasting and various regulatory filings. She also provides strategic and operational support for corporate initiatives.

Katie Collins: In anticipation of the US Securities and Exchange Commission’s private funds rule, we have begun reviewing and, where appropriate, amending our current procedures to ensure compliance with the new regulations. I’m so glad we work with a fund administrator so they can help us automate reporting with best practices. We also are developing training programs in place to equip the team with the necessary knowledge to navigate the regulatory landscape. Everyone needs to be rowing in the same direction with these.

Katie Collins,
Director, Manna Tree

As Manna Tree’s director of finance and accounting, Katie Collins provides strategic direction to help maximize the health-focused investment firm’s growth and enhance its financial position. Prior to joining Manna Tree, Collins was part of the private equity team at fund administrator MG Stover and worked at Equity Group Investments.

Chris Iorillo: Like most CFOs, I am highly focused on developing and implementing an efficient and effective process for incorporating the new SEC rules into our operations and investor reporting. As we focus on the use of data for that project, I am also trying to find ways to better deliver and utilize the data we have from our portfolio companies and our funds.

Chris Iorillo,
Chief financial officer, Freeman Spogli

Chris Iorillo joined Los Angeles-headquartered mid-market private equity firm Freeman Spogli in 2021 as chief legal and compliance officer and assumed the role of CFO shortly thereafter. He previously served as general counsel and CCO at Variant Equity.

 

Chase Paxton: In 2024, our primary focus is execution and efficiency. Top priorities include preparing for the SEC’s private funds rules, exploring AI applications and testing, innovating ways to streamline data gathering and valuation processes for our investments, and optimizing our response process to investor due diligence requests.

Chase Paxton,
Director of finance and valuations, NGP Energy Capital

Chase Paxton is the director of finance and valuations at NGP Energy Capital and is involved in several areas of the firm’s operations, including investor and financial reporting, investment valuation and analysis, and technology implementations. Before joining NGP in 2013, Paxton was a director at Duff & Phelps.

Shanna Otto: Our priorities are to finding technology to handle our customized, quarterly reporting for more than 25 SPVs; to find opportunities for both selling current investments and finding new investments; to implement the SEC private fund reporting across eight fund of funds and more than 25 SPVs; and to partner with an HR consulting group to ensure compliance with the changing employment laws.

Shanna Otto,
Chief financial officer, Promus Holdings

Shanna Otto is CFO at multifamily office Promus Holdings.
She leads the accounting team and oversees financial reporting, tax, fund administration, risk management, investor relations and HR functions. Otto previously worked for two firms focusing on tax, estate and legacy planning for high-net-worth individuals.

Maryna Higgins: It’s crucial to stay ahead of the curve in the dynamic world of venture capital. I see a few topics that will be front and center for us in 2024. We will continue to foster strategic partnerships with existing and prospective LPs, other venture capital firms and industry players as we support our portfolio to accelerate profitable growth [after] several challenging years. Collaborating on co-investment opportunities and sharing best practices to enhance overall portfolio performance will be important while we evaluate exit strategies and focus on providing liquidity to our LPs.

Maryna Higgins,
Director of finance, Quona Capital

Maryna Higgins has led venture capital firm Quona’s finance department since 2016. As director of finance, she manages all aspects of Quona’s corporate finances and fund operations and reporting, working closely with the firm’s outside advisers.

What are the biggest risks you anticipate in 2024 and how do you plan to mitigate them?

RA: As we head into 2024, we continue to navigate through a tough macroeconomic environment. The biggest risks, and at the same time the biggest opportunities, remain with the portfolio. Strengthening the financial resilience of our companies, while leveraging distinctive opportunities amid this downturn, will inherently enable us to weather future storms and create a more adaptable and attractive portfolio.

KC: I believe the biggest risks for 2024 stem from the economic and geopolitical uncertainties going on right now. These factors can affect company valuations across the industry which can make exits more difficult and reduce investor liquidity. This in turn can complicate fundraising. As we consider when to re-enter the market, we’ll need to tailor our strategies to mitigate these risks.

CI: The biggest risk I think would be not getting ahead of the new SEC rules, but apart from that we seem to be at an inflection point for transitioning from purely [Microsoft] Excel-based practices to better and more reliable technology options, so I think there is a risk of not embracing these solutions and being stuck with legacy practices.

CP: Significant risks in 2024 encompass managing cybersecurity threats, coping with escalating reporting demands and complexity and preserving firm culture within a hybrid work structure. To address these challenges, we employ a proactive risk strategy against cyber threats, forge strategic partnerships at both the fund and the portfolio company level, tackle reporting demands through efficient technology and upskilling and mitigate culture risks by fostering collaboration, open communication and maintaining in-person interactions and social events.

SO: Compliance with SEC private fund reporting – we’ll work closely with our compliance team and provide solid training for those involved with the reporting process. On cybersecurity, we have hired a cybersecurity firm to work with us on policies, training and diligence. We have a tech committee who meets regularly in an effort to remain proactive around all cybersecurity issues.

MH: One of the biggest risks is shifting geopolitical landscapes, which can impact investment climates and cross-border transactions. Staying informed about geopolitical developments and maintaining a flexible investment strategy allows us to adapt to changing conditions. Increasing cyber threats pose a risk to sensitive financial and client data. Continuous investment in various cybersecurity measures, including encryption technologies and employee training programs, play a crucial role in preventing cyber incidents. As we saw in 2022 and 2023, economic downturns or unforeseen circumstances can create liquidity challenges for portfolio companies. Stress testing our portfolio for various economic scenarios and maintaining sufficient liquidity reserves allow us to support portfolio companies during challenging times.

Are there specific areas where you see room for growth in 2024?

RA: The industry is forced to reassess the fundamentals of value creation, aspects of which were somewhat lost over the unprecedented period of growth and cheap debt. Today, the industry stands to benefit from revisiting the basics and redefining what it means to create robust and enduring companies for the future.

KC: I’m an optimist at my core and I view the SEC’s regulatory updates as a chance to standardize our reporting practices, enhancing transparency for our LPs. In addition to aligning with these new rules, what other measures can we implement to instil confidence and comfort among LPs?

CI: I think the role of the private equity CFO has broadened dramatically in recent years and few decisions, from payroll and expenses to fund performance and fundraising, can be made without the CFO’s involvement, so I am looking forward to finding new ways to provide more value to the firm and its investors.

CP: Key opportunities in 2024 lie in exploring artificial intelligence applications, enhancing efficiency with existing systems and technology and responding to increased disclosure requirements in the SEC’s private funds rules. This naturally leads us toward streamlined reporting, transparency and technology integration. As a finance team, the evolving technological landscape presents growth opportunities to move beyond Excel, focusing on developing foundational data management, analytics and strategy skills.

SO: To continue to create efficiencies through technology, and launching our fifth private equity fund of funds.

MH: All challenges present opportunities. From an investment point of view, accelerated digital transformation across industries creates opportunities for disruptive technologies and solutions. We anticipate seeing many interesting offerings in digital payments, e-commerce and logistics, among others. Operationally, I expect to take advantage of growing penetration of technology, specifically AI, into the finance function.