The innovations technology has brought to investors are countless. Software-as-a-Service, SaaS, allows investors to handle specific aspects of the investment process remotely, with immense freedom, and via dedicated tools. Custom Relationship Management (CRM) software provides an entire suite of investment tools. The list could go on, but while everyone acknowledges the power of technological tools for investors, the impact of those tools on investor relations is perhaps less well-known.
So what is that impact? How does software impact investor relations – more specifically, how does it simplify those relations? We can think of at least three ways in which software has made life simpler and easier for investors.
1. Software empowers investors
Power to the people! The entire gamut of investment software is aimed at providing more information, and therefore more power, to investors. There are two primary ways software accomplishes this:
- Increased efficiency – Software makes people more efficient when used correctly. This becomes particularly important for the team of people supporting an investor. A CRM package like Groundbreaker aids back-office staff in supplying portfolio information to interested investors, processing K-1 distributions, and generally keeping investment information up-to-date. Increased efficiency on the back end supports continued investment.
- Decrease risk – Apps and CRM software, when well-designed, offer increased security over email or even physical documents. Both sponsors and limited partners benefit from increased security and privacy, and the ease of information exchange allows even sensitive documents to be shared freely. This decreases the risk of compromised information or delayed communication.
2. Software improves transparency.
For both sponsors and limited partners, new software increases the transparency of investments. Transparency helps limited partners (passive investors) as much as it empowers the sponsors; with improved software, investors do not have to rely on sponsors or organizations to keep them informed. The right software can provide all the information an investor needs, live and up-to-the-minute. General partners, or sponsors, also see the benefits, gaining access to more information and therefore the ability to make better investments, as well as new ways to pass information down to limited partners. Sponsors stand to gain from elevating their brand and providing their limited partners with better service.
3. Software opens new avenues of investment
LPs also have options to invest directly into companies building software.
In other instances, software provides new ways of making traditional investments. Instead of trusting solely in a human broker, investors can lean on computer programs, mobile apps, and A.I.-powered algorithms. The traditional investor relationship, between general partners and limited partners, is also transformed, as GPs can find LPs from all over the world, rather than rely on a relatively limited pool of contacts.
Software continues to impact the traditional, face-to-face nature of investor relations, as it becomes the standard way to conduct investments. The advantages of software for the modern investor are simply too great to be ignored – flexibility, control, and ease of use, all adding up to a simpler, more streamlined experience for investors. In the meantime, the old relationships of investors and portfolio managers have taken a back seat to an investor’s mobile device. Disruptive? Yes, but ultimately a simpler experience for the investor.