May 8, 2023
With an increasing amount of smaller investors having access to illiquid alternative investments, including private equity, private credit and venture capital, and with growing regulation in the sector, there has never been a more pressing demand to improve transparency and communication between GPs and LPs. A recent Oliver Wyman study predicts that individual investors will bring an additional USD $1.5tn to private markets by 2025, and the total AUM of private markets funds is expected to reach up to USD $13TN.
I recently had the pleasure of presenting at the 2023 BAI Alternative Investments Conference in Frankfurt, to talk about how technology can help in improving the risk management and performance of illiquid alternatives for GPs and LPs.
We believe the main objectives in improving in the alternative investment space are really no different to other areas in private markets. To highlight the complexity involved between parties, this illustrates an example waterfall scenario within a contract:
Common challenges we see in the market:
Limited partners often do not understand all the risks involved in contracts, and processes are not clearly communicated, leading to frustration and dissatisfaction. Additionally, objectives and goals are often not clear.
Suggested path to improvement:
Common challenges we see in the market:
Partners cannot contribute their knowledge and signs of error are recognized, but not announced. Performance is measured in silos, without the big picture and there is key-person risk.
Suggested path to improvement:
Common challenges we see in the market:
There are challenges with data security, lack of availability, reliance on manual spreadsheets and a lack of skills and expertise.
Suggested path to improvement:
We look forward to seeing many of you at future events in 2023, such as SuperReturn International in Berlin (June) and SuperInvestor in Zurich (November).
qashqade provides private market organizations an enterprise product suite for streamlining their calculation, allocation, tracking and reporting processes. Waterfall and carried interest calculations can be automated, replacing manual, error-prone spreadsheets and improving communications between GPs and LPs through enhanced reporting. Built by private markets experts, for private markets experts, the qashqade platform offers a flexible, modular based solution for fund managers, fund administrators and investors alike, and is asset-class agnostic. Contact us for a demo today.