The ability to export the data is essential for any SaaS platform, otherwise the data gets buried in it forever. A well thought-out API makes it easy for the customers to integrate with other applications they use. However, when it comes to PE/VC software, the best one can usually get is the old-school “Download to Excel” button, which creates a static non-updatable file that isn’t refreshed when the source data changes.
The way it should be organised is a set of dynamic dashboards, or even a simple mobile app, that presents all the fund KPIs to the end user. These dashboards can be easily created in any BI platform of your choice, dependent upon your UI design preferences.
Metrics calculation vs presentation layer
The problem arises when the BI platform itself becomes the point where the information is gathered together and modified. BI platforms are very good at different ways of metrics aggregation (like summing, grouping, multiplying etc) and filtering, but I doubt that any of them can calculate IRR for you out of the box, without lots of complex formulas and custom coding.
Actually, this need for clear separation between metrics calculation and presentation layer isn’t peculiar for private equity industry. Many other industries follow the same approach. In general, classic BI systems are good for analysing classic transactions (sales, logistics, manufacturing, accounting etc), but when it comes to something more specific (like digital advertising data, industrial production metrics, telecom), companies tend to use custom systems for metrics gathering and transformations and then use BI only for presentation layer.
Fund management platform + API
So, it is extremely convenient when the data is preprocessed in some kind of fund management platform first, and then exported to BI solely for presentation purposes. It allows to choose very simple business intelligence products and focus more on their beautiful UI/UX rather that hardcore functionality(which is extremely important in the case when you work with HNWIs).
Putting this all in the context of PE/VC data management, every private equity firm usually has its own set of custom reports it uses and distributes to its LPs. Probably the most common request is “personalised LP report” which usually includes both fund-wide metrics and metrics specific for the particular investor. It’s usually not that easy to build this kind of report at the level of BI platform relying purely on the accounting & valuation data, as there are metrics and concepts that are “difficult” for BI algorithms: IRR, carried interest and waterfall distributions, advanced yield calculations, scenarios & sensitivity modelling etc.
Therefore, the solution we came up with in AIRR was to incorporate this PE-specific metrics calculation functionality in the platform itself and then provide an API to export them conveniently. Sounds simple, but surprisingly most other platforms on the market lacked either one (metrics calculation) or the other (API for export) side of this puzzle.
How to implement it in practice for your fund?
Documentation for the AIRR API can be found here. AIRR provides every user with an API key, which he can use to export the data he has access to anywhere he needs. The data comes in json format which can be used as a datasource by any BI system or even Excel, if there is such a requirement.
As a result, even complex private equity reports become dynamically updated once the underlying numbers change, and they can be designed to be interactive and live to meet the modern visual reporting standards. By adopting AIRR in iTech we have tremendously decreased the workload on our analytics and back-office teams. AIRR does a lot of the presentation heavy lifting that is usually done by private equity analysts and makes all the numbers in your fund reports traceable and up-to-date.