Who runs the world? Spreadsheets. While this is a reality across a number of industries, the alternative investment industry is not distant from the world of spreadsheets. Ankur Agarwal, co-founder and CTO of PE Front Office says before software and technology became ubiquitous, investment professionals depended on spreadsheets, isolated shared drivers, and in-house developed systems to manage investments.

“Back then, managing investments was a real grind,” he says before adding, “This made due diligence and reporting very time-consuming.”

This reliance on spreadsheets meant data was often siloed across various sources and getting a unified view of the portfolio became a chore. It also led to an increase in operational costs due to the manual work involved in data entry, reconciliation, and reporting. While VCs, PEs, and LPs worked with this outdated system, Agarwal says this crippled decision-making with decisions being reactive rather than proactive.

Even today, VCs and PEs with small teams begin with spreadsheets but they soon reach a ceiling where regulatory compliance becomes challenging, communication with external partners is cumbersome, and research and due diligence are labour-intensive. This paved the way for systematic tools like PE Front Office that transformed the way the alternative investment industry managed its assets.

Transformed with tech

Agarwal, who has more than two decades of experience in implementing large and complex business IT systems across industries, has seen firsthand how challenging it is to manage an investment portfolio. He says data management involved a lot of manual entry and reconciliation in spreadsheets, which wasn’t just repetitive but also error-prone. It meant due diligence was slow since investors had to rely on physical documents and manual checks.

This led Ankur to join hands with Anup Kumar Adlakha and start PE Front Office, a comprehensive and integrated suite of products designed to help alternative investment management. Software platforms like PE Front Office automate a lot of manual work and streamline data management, reporting, and compliance tasks, drastically reducing the time and effort required.

“This allows professionals to focus more on strategy and less on repetitive tasks. They can now concentrate on making informed decisions, optimising portfolios, and driving growth,” he explains.

While it may seem like software and technology now run the alternative investment industry, the reality is that technology only transformed the way investors invest in alternative asset classes only in the past decade. The investment as a process was always complex but what technology has done is significantly improved both scale and efficiency.

Agarwal adds, “With advanced platforms and tools, the landscape is revolutionised, and we can process and analyse massive amounts of data in real-time. This means more efficient due diligence, faster decision-making, and better risk management.”

Impact of technology

A combination of technological advancements, increased competition, and evolving investor expectations is leading to significant transformation in the alternative investment landscape. It all begins with automation, which has streamlined everything from data entry to compliance checks. Technology not only reduces errors but also frees up time for more strategic work.

Today, investment decisions are no longer based only on intuition and experience. Investors are increasingly leveraging advanced analytics and AI to gain deeper insights and make data-driven decisions. With technology, there is also growing emphasis on transparency and reporting leading to investors seeking more detailed and real-time information about their investments. This, Agarwal tells me, pushes firms to adopt more advanced tech solutions.

“Technology is driving more informed decisions, improving transparency, and fostering innovation in the alternative investment space,” he adds.

For private credit/debt, private equity, venture capital, fund of funds, real estate funds, LPs, and fund admins, AI is an indisputable force helping them sift through massive amounts of information quickly, uncovering patterns and insights that were previously difficult to find.

AI is, of course, helping them streamline operations by automating many of the repetitive tasks and now plays a crucial role in the due diligence process. “AI is a powerful tool that’s reshaping how we approach alternative investment management and driving the industry forward,” Agarwal quips.

Future of Alternative Investing

If technology is the first act in the transformation of the alternative investment industry then AI will be the second act. The use of AI is also drawing positive sentiment from private investors who see it as a tool able to deliver tangible benefits like faster analysis, more accurate forecasts, and improved operational efficiencies.

They also see the adoption of AI to be crucial to gain a competitive edge even if its use right now is limited to tasks such as data entry, reconciliation, and compliance checks. The use of AI to analyse large datasets and get more accurate forecasts is seen as table stakes but private investors are already preparing for a future where AI can do a lot more.

Agarwal sees AI’s role evolving to perform more strategic functions in the next five years. “The evolution will likely bring more sophisticated AI tools that can handle complex scenarios, support personalised investment strategies, and enhance overall portfolio management,” he predicts.

He sees AI becoming an integral part of investment strategies, driving innovation and providing even more value. For the past decade, the private investment industry has been a quest to deeply integrate advanced technologies and it will reach a crescendo when AI becomes fully integrated across the whole decision-making process.

The future of alternative investing, according to Agarwal, is one where tools become more sophisticated, predictive analysis and automated decision-making help investors stay ahead of trends and manage risks more effectively.

He adds that a big change will come in the form of a greater push towards personalisation with highly tailored investment strategies based on individual preferences while blockchain and other emerging technologies play a role in enhancing transparency and security.

“The future will likely be characterised by more advanced, intuitive tools that provide deeper insights, greater efficiency, and more personalised investment experiences,” Agarwal observes.

Published In: Silicon Canals