Article

The problem with investor portals

Data rooms and portals are widely used by private equity firms to exchange data securely between GPs and LPs. That’s great for security reasons, security is important and it should be a top priority — but there’s a problem with using them, and we’ve seen our clients struggle with this problem: it gets really messy very quickly once the number of funds you’re invested in grows.

While one data room is fine, three is a chore, and ten is a nightmare. What should be a way of quickly and securely getting the information you need becomes a fragmented and time-consuming process. This will not only slow you down, but it adds complexity and frustrates your ability to keep track of what data has or has not been received for certain funds or groups of funds.

Let’s say you grow your investments from one to twenty funds. Suddenly you may be dealing with ten or twenty different data rooms, each with its own username and password combination and its own multi-factor authentication mechanism. You might have an Excel sheet with all the account details, or you may have one colleague who knows everything and does all the downloading and happens to be on vacation this week. But let’s imagine you figured out how to login with the right username and password. Then, for extra multi-factor security, one portal will email you a login token, while another will send you a code via SMS on your colleague’s phone (she’s still on vacation, though). Each of these individual steps may not seem like a big deal, but it quickly adds up, and if you have multiple portals to deal with we’re talking about a substantial amount of time just spent finding the right credentials and logging in. You’ve got better things to do with that time.

Once you’ve managed to successfully log into the data room, the next challenge is finding the right documents. Each portal or data room has its own way of organizing data: some may simply be a Windows Explorer-like view of the latest files, while others organize documents based on funds, clients, or in folders grouped by portfolio. This “finding the documents” becomes an implicitly learned skill, and forms a barrier to sharing responsibilities among team members.

Fortunately, you somehow find and download the right documents. You think you’re out of the woods now, but it gets worse: while you may have managed to collect all the required documents, they rarely share the same layout. Some documents (they are often, if not always, PDFs) will have neatly formatted tables, while others will bury the information you need in paragraph 5 on page 73. Sometimes, whoever is providing you this data, likes to mix it up, just to keep you on your toes, and gives you a differently formatted report each quarter. This means that gathering all the data points you need from them is a herculean task. Again: for 1 or 2 investments this works fine, but the process breaks down soon enough. Manual data entry errors are common, as are having to perform recalculations or double checking the work. In this kind of manual process, the maker-checker or four eyes principle is intended to mitigate risks, but even organizing that kind of process becomes cumbersome without some kind of structured solution.

Maybe you only have to do this once or twice a year — lucky you. But if you have to collect documents on a quarterly, monthly, or, heaven forbid, a weekly schedule, you will run into these problems. Exchanging data securely should not be this laborious and cumbersome. It should be easy. I mean, it’s 2024, after all.

Curious how Mesoica can help you address your document processing challenges, contact us or schedule a demo today.