Whether you are working from home or the office, the simplest equation in private markets will always hold true: time equals money.
Tom Vogt, Head of Customer Success at Mercatus, explains that private market investors are leaving money on the table by putting off improving the speed and efficiency of their decision-making processes. Every day that a private investor considers for a little longer whether the organization should launch its first infrastructure fund, money they could eventually capitalize on goes down the drain.
“It costs money every day that you don’t make a decision,” Vogt says. “The slower you think it will take to implement a new business process, the longer you will drag your feet on even making the decision to do it.”
According to Vogt, the main risk portfolio managers take by not improving their organization’s time-to-value - the speed and efficiency of running their business – is easy to see.
“If it takes a long time to make a decision about how to solve a problem, you are continuously losing money,” he explains. “The reason you’re making a decision in the first place is to save money.”
But that is not all portfolio managers could be losing, Vogt says. A hidden or secondary cost of inefficiency is how a company is perceived by its investors and responding quickly to a limited partners’ inquiries could “help differentiate yourself from other organizations.”
The data management platform Mercatus offers private investors provides a “flexible toolkit” for quick decision-making and implementing new business strategies, he adds. On average, Vogt says Mercatus can launch a client on its platform in less than 90 days, around 50-75 percent faster than other vendors.
“From a GP to a LP, speed is a credibility boost. You assert confidence by being able to run analyses and report to them quickly and efficiently,” Vogt says.
He describes a recent example of how speed of operation underscores credibility, when a Mercatus client recently asked to run three new reports in the Mercatus platform. The reports were based on key performance indicators of managed assets, quarterly fund performance and an investment case versus variance report, and can be exported in multiple formats.
The client approached Mercatus, according to Vogt, complaining that a competitor platform would take at least six weeks to return the analyses. Mercatus returned the reports in three days, he says, adding that it is likely the reports would have been a “total mess” had the competitor completed them in that short amount of time.
“If an investor asks you to run a portfolio scenario case, and it takes a matter of weeks to report back, that’s not good,” Vogt explains.
Another example came last year when Mercatus set up a new client raising an infrastructure fund on its platform. A year later, the same client was back in the fundraising market but with a cross-asset class vehicle.
“It took less than a week to configure the necessary adjustments to add their new fund, its business requirements, and all of its key performance indicators into our system,” he says. “If your analysis is faster, so too will be your decision-making.”