What is something that you wish you knew when you first started working in the private funds industry?
Chief investment officer,
Chief operating officer,
AB: One thing I wish I knew when starting in the private funds industry is the importance of establishing a robust network early on. Building strong relationships with key stakeholders, investors, industry professionals and regulatory bodies is crucial for success in navigating this complex and interconnected landscape.
MA: When you are partnering with mainly private companies, it is rare that you are going to have 100 percent clean data and access to perfect information. To be an effective partner to management teams, you need to develop the skills and instincts to quickly synthesize disparate forms of information and provide actionable insights. Knowing that information is imperfect, it’s critical to architect processes and visibility that enable you to learn quickly and adjust course if the results turn out differently than expected.
KD: When I initially entered the private funds industry, I wish I knew how much of an impact technology was going to have on the entire landscape. Obviously, I understood that there was a ton of room for improvement and the private funds back-office industry was prime for disruption, but I did not realize just how much was going to change and how that would impact the expectations out of service providers. This is truly still a relationship-driven industry, and no matter how much we can automate, there will still always be a need for human touch and interaction in this type of service. However, some of the technological transformations have allowed us to focus more on things that don’t scale, such as relationship equity and the human element.
If you could change one thing about the way the private funds industry operates, what would it be?
AB: If given the chance, I’d aim to enhance transparency across the board. Increased transparency could benefit both investors and fund managers by fostering greater trust, improving decision-making processes and reducing the information asymmetry that sometimes exists within the industry.
MA: I would like to see a more aggressive push by private funds to extend ownership stakes in private companies to a great pool of the employees who ultimately drive the business value. Organizations like Ownership Works are leading the charge in this regard.
KD: If given the opportunity to effect change, I would advocate for more service providers to embrace technology-driven solutions for operational streamlining and enhanced efficiencies. There is still a long way to go in automating workflows, but in order to keep up with the constant demand and growing industry, adopting a technologically-forward mindset is paramount to be able to keep up with the changing environment and complexities in the industry today. I would encourage people to embrace technology as opposed to being afraid of it.
How is your own role changing as investor and regulatory demands continue to evolve?
AB: My role is adapting to focus more on compliance, risk management and staying abreast of regulatory changes. There’s an increased emphasis on demonstrating alignment with ESG principles and integrating these factors into investment strategies.
MA: As business leaders, it is always incumbent on us to make sure that we, and the companies we partner with, are conducting ourselves with the utmost integrity and are always abiding by the relevant regulatory frameworks. In the past 18 months, investor appetites have shifted away from “growth at all costs” and more toward profitable, sustainable growth. At Turn/River, we have always focused on sustainable growth, and so the current mean reversion represents a fantastic opportunity for us to partner with companies to achieve these goals.
KD: My role as the chief operating officer at Vector is constantly changing with or without taking into consideration technological advancements. That’s just the nature of the role. If I’m not changing or my role isn’t changing, I am not doing my job correctly. However, embracing technology has allowed me to shift gears quicker and focus on identifying workflow bottlenecks, non-value add activities and identify what can be solved with technology and what needs to be solved by throwing more bodies at the problem. At Vector, we are increasingly leveraging automation, analytics and more sophisticated tools to adapt to the changing industry landscape and expectations of fund managers and their investors. Keeping our focus on technological innovation will keep us ahead of the game to meet the evolving needs of our clients.
What business issues keep you awake at night?
AB: The constantly shifting regulatory landscape, geopolitical uncertainties and market volatility are significant concerns. Additionally, ensuring the security of sensitive data, managing cyber threats and maintaining resilience in the face of unforeseen disruptions are all critical issues that demand continuous attention.
MA: When we think about existential risks, leverage and liquidity shocks are the things that can kill an otherwise good business overnight. We saw examples of how scary this can be during the Signature and Silicon Valley banks crisis earlier in the year. It’s critical to make sure that our companies always have access to plenty of cash and are not over-leveraged.
KD: When I’m lying awake at night (and thinking about work), finding ways to continue and consistently deliver high-quality service is on my mind. Ensuring I’m making the right decisions as a leader in the company to take care of our staff and our clients is key, especially in uncertain market conditions. This involves thinking about how to improve our technology and leverage new innovations but it also includes how we scale our institutional knowledge internally to ensure that we are offering the highest level of service and tech on the market.
How do you think the development of artificial intelligence will change your role over the next decade?
AB: The development of artificial intelligence is poised to significantly impact the private funds industry. AI and machine learning can streamline data analysis, automate routine tasks and enhance investment decision-making processes. My role may involve leveraging AI tools for more efficient risk assessment, portfolio optimization and compliance monitoring. However, it’s crucial to balance AI’s capabilities with ethical considerations and ensure that human judgment remains integral to decision-making.
MA: AI should allow us to gather and synthesize information faster and hopefully enable us to make decisions with more certainty and speed. I think there are also exciting opportunities to utilize AI tools to help with deal origination, by helping us analyze companies more thoroughly before we meet with them.
KD: AI will undoubtedly start to play a transformative role in my responsibilities, or at least in the way I think about Vector’s future. Time will tell exactly what the changes will be, but AI’s capacity to automate routine tasks and facilitate more informed decision-making will be instrumental for anyone with a growth mindset. AI can help our team devote greater attention to strategic decisions for the company to stay ahead of the ever-evolving technological and market landscape. I’m excited to see what AI can do and how we can leverage it to the best of our abilities but the exact role it will play is yet to be determined.