What was the venture capital deal value in Europe in 2023? PitchBook Q3 2023 European Venture Report shows it was €43.6B during the first nine months of this year.
The report further reveals that the deal value in Q3 grew 5.9 per cent compared to Q2 even though the overall deal value declined over the same period last year.
While we talk about funding rounds of startups and VC firms funding those rounds, there are investment managers who often have to mitigate various technical challenges to make these funding possible.
While working with a European private equity firm, Anup Kumar Adlakha and Ankur Agarwal had a chance to closely understand the challenges and pain points faced by investment managers.
They realized that the alternative investment management industry has been underserved due to very few IT solutions focused on investment management and investor relations management.
“There was a need for a simple, cost-effective, and complete industry-specific technology solution with an intuitive UI,” says Adlakha.
The two Indian entrepreneurs then joined hands to start PE Front Office, a SaaS startup offering a simple and seamless technological solution for the alternative investment management industry requirements.
PE Front Office
While Adlakha and Agarwal started PE Front Office in 2013, the inception of the startup aimed to help investment managers began more than a decade before that.
The two co-founders of PE Front Office first met at Actis and have now worked together for over 12 years. Adlakha says each step on this 12-year journey together has been a new challenge for them.
Right from their Actis days together, they had to work on a solution that could cater to the front and middle office teams, vis-a-vis, investment management and investor relations management.
“We had to design, develop, and roll out an integrated solution that changed the way data capture, reporting, and analytics was performed,” says Adlakha about their early career.
He says Agarwal with his experience as an IT architect and exposure to the private equity domain had a vision for how IT enterprise technology can be used in the alternative investment management industry.
Agarwal also wrote a book titled “Enterprise Technology in Private Equity” in 2013, which Adlakha calls the definitive book on the subject even today.
After working on solving the lack of compelling end-to-end software for investment management and investor relations management teams, they began to create a new product offering in the form of PE Front Office and take it to customers worldwide. There is so much synergy in their vision that their paths were meant to cross.
The upper echelon of PE Front Office is made up of Adlakha as the Chief Executive Officer, Agarwal as the Chief Technology Officer, and Raghav Gupta serving in a Senior Director role.
This management team combines IT expertise, private equity domain knowledge, and global operation experience.
Alternative Investment Management Industry
Adlakha says different asset classes in the alternative investment management industry, specifically private debt, private equity, and venture capital operate differently but they do share a lot of common challenges including instant and easy access to information, data security, compliance, advanced reporting, analytics, etc.
He says PE Front Office differs from its competitors by offering an integrated solution that addresses these common challenges and requirements of all the teams specifically, investment management, investor relations, and finance/fund admin teams in an alternative investment management firm.
Adlakha’s journey as an entrepreneur began as part of the research and development team at NIIT, where he first launched an automated testing tool in 1995, the same year Microsoft launched Windows 95 with Internet Explorer 1.0.
Later, he developed a full-fledged learning management solution (LMS) in 1997, a pioneering solution in the edtech domain at that time.
After working at NIIT, Adlakha held the role of delivery head at Lionbridge Technologies, where he led a CMM Level 5 Product Development and Support Centre. He was also responsible for the P&L for the development centre and provided pre-sales support to the sales teams.
Later, as Chief Technology Officer at Actis, Adlakha set group technology standards and ensured that the technology strategy underpins business objectives and meets user requirements.
While at Actis, Adlakha and Agarwal noticed how all the end-to-end solutions available in the alternative investment management domain were primarily meant for the finance and fund admin teams. They also observed how investment management and investor relations teams would either rely on Excel or end up using multiple solutions and be dependent on the CFO or COO for all data points.
All these experiences, he says, played a pivotal role in shaping the strategies for growth at PE Front Office.
While setting up the PE Front Office, they then designed a comprehensive SaaS-based solution aimed at all the stakeholders especially catering to investment management and investor relations teams.
PE Front Office’s current solution includes Deal Flow, Investment Management, Portfolio Monitoring, Fundraising, Investor Relations Management and reporting, and Investor Portal.
“As the only integrated and comprehensive SaaS-based solution, these teams can manage their complete workflow and report via an intuitive user interface,” says Adlakha.
As a common platform for all stakeholders, he says their solution serves as a single source of truth for all data points and reduces dependence on Excel and email traffic between various teams and leads.
For PE Front Office, Adlakha says the initial challenge was to create software that was easy to use, quick to deploy, easy to configure and customise, and could be accessed via multiple platforms.
“This meant that the solution should feature an intuitive interface to eliminate the necessity for intensive training for the investment management and investor relations teams,” he adds.
Digitisation
Like every other industry, Adlakha says even the alternative investment management industry is seeing a big shift because of digitization and tech infusion.
He explains that earlier the industry focused only on basic automation and efficiency, which involved transitioning from paper-based systems to digital solutions, including CRM, and the storage of important documents in digital formats.
But now there has been relentless progress with processes becoming more efficient through the automation of tasks and workflows, improved communication tools, real-time collaboration, and document sharing.
As part of this digitisation drive, he says the industry has also witnessed a significant shift towards leveraging big data and advanced analytics that allow investment professionals to make more informed decisions.
However, he says the biggest change has come in the form of critical data being no longer limited to a few executives and technology allowing intuitive access to data.
“Technology allows intuitive access to data through multiple devices and platforms, ensuring that teams stay connected and informed, whether they are in the office, on the go, or working remotely,” explains Adlakha.
Additionally, customers are now looking for a SaaS-based platform that is able to communicate in the customer’s specific terminology and promises the shortest implementation cycle in the industry.
PE Front Office has built a software solution for all the stakeholders in the alternative investment management industry that has a flexible framework to allow customizations as per the customer’s specific functionality, with an intuitive UI, and available across devices.
What’s the current state of digitisation? Adlakha says they are witnessing a shift towards AI-driven algorithms capable of analysing massive datasets, predicting market trends, and automating investment strategies.
“This technology offers the potential for more accurate decision-making and improved portfolio performance,” he adds.
Expansion to Europe
PE Front Office operates in 15 countries, including the US, the UK, Europe, Africa, and APAC serving more than 100 customers.
While the platform was initially used by private equity and venture capital market segments, it has now evolved to meet the needs of other segments such as Private Debt, Fund of Funds, Limited Partners, and Fund Admins.
Now, PE Front Office has decided to further expand its reach in the European market as it stands as one of the world’s major financial hubs.
Adlakha says the European market with its diverse economies, established financial institutions, and lots of investment opportunities has led to the growth of the alternative investment management industry, which is a compelling prospect for their expansion.
He adds that 80 per cent of private debt, private equity, and venture capital firms, particularly their investment management and investor relations management teams, rely on Microsoft Excel or some standalone software.
“It is within this context that our opportunity arises,” he says.
To expand in Europe, PE Front Office is looking at a multi-faceted approach that aims to address various aspects of growth and development.
Adlakha says they are looking at everything from outreach to potential customers and fostering connections, to raising brand visibility.
While they plan to rely on marketing campaigns, leveraging digital platforms, and participating in industry conferences, PE Front Office will also establish a physical presence with dedicated teams in key regions.
For PE Front Office, the target audience is private debt, private equity, venture capital, fund of funds, limited partners, and fund administrators.
Regulation and an eye on the future
Europe has come to be known as the standard for regulation and it has often restricted businesses from expanding to the market.
Adlakha says, “PE Front Office sees adherence to legal and regulatory standards as paramount to its operations and GDPR already holds importance within its framework”.
He further adds, “Our adherence to GDPR compliance ensures that the personal data and information of our clients and stakeholders are handled with the highest levels of care and security.”
PE Front Office is also proactively following the standards set forth by the Institutional Limited Partners Association (ILPA), which are widely recognized as best practices in the industry and PE Front Office’s reports are ILPA compliant.
As big investors have shifted their focus towards profitability over growth, a number of small and medium-sized investors have filled the void.
For PE Front Office, these investors are potential customers in Europe and Adlakha sees their platform as an opportunity for GPs, LPs, and family offices to finally adopt software for managing and monitoring their investments.
As a platform designed for multiple stakeholders within the alternative investment management industry, PE Front Office is uniquely positioned with its solution and value-added services vis a vis data management, custom reporting, and implementation led by a dedicated account manager “to address the specific requirements of mid-sized and larger GPs, LPs, and family offices.”
Adlakha says their primary source of revenue is software subscriptions while additional revenue comes from customization and data migration services.
He adds that PE Front Office is poised to generate a revenue of between €7.5 and €9.5M in the next three years.
The company is currently expanding its teams across various functions, including technology, marketing, sales, and account management with plans to have team members based in Europe by next year.
Amidst software businesses trying to grow at all costs, PE Front Office stands out with its approach to ensure its software fulfils at least 80 per cent of customer requirements out of the box and customising further to deliver on all fronts.
This ability to customise and tailor a singular product while also gathering further insights sets up PE Front Office to succeed in a rather underserved market of alternative investment management.
Published In: Silicon Canals