Private equity's $7tn back office still runs on spreadsheets
Private equity manages roughly $7tn of assets, and the structures that hold them still live in spreadsheets. A fund's capital sits across legal entity chains, jurisdictions and currencies, and mixes debt with equity, so no single source of truth exists and finance, deal teams, portfolio company management, advisers and auditors each reconstruct the same cap table. DealsPlus attacks the recurring version of that pain, quarterly cap table reporting, rather than the once-every-few-years exit. Venkat expects the fix to come bottom up from a single source of truth, with AI useful only after the data is consolidated.
Takeaways
- Private equity's back office still runs on Excel. Venkat traces the gap to front office processes running ahead of the back office, plus Excel overload in the back office. Funds manage about $7tn in assets. Teams ask for cap table data without naming it, and work in silos on what is the same source data.
- Quarterly cap table reporting is the recurring pain. DealsPlus picked cap tables from the quarterly reporting angle because that pain recurs, while exit efficiency comes up once every four or five years. A fund with 50 investments keeps 50 different spreadsheets, with no validation in the files.
- Private equity cap tables need a different product. Unlike venture, PE capital sits across legal entity chains, multiple jurisdictions and currencies, and mixes debt with equity. Solving it means entity management, structure charts and waterfall valuations. Venkat says Carta has done an amazing job in venture, but the problem is different.
- A fund never has one source of truth. Data sits across finance, deal teams, portfolio company management and auditors. Software with role based access controls brings them together on sensitive data, and tax acts as the glue between the front office and the back office.
- A mid-market fund wastes 1,000 hours a year. Venkat estimates a fund with 20 portfolio companies across jurisdictions wastes easily over a thousand hours annually, with further cost from slow data access and firefighting. Risks found only at exit bring adviser costs and disputes with buyers over warranties and price adjustments.
- Funds buy point solutions, then consolidate data. Funds want best in class applications for each problem and are consolidating into data cubes or warehouses. One DealsPlus client built a data warehouse and plugs applications into it. Venkat says AI is of little value until data is consolidated.
- Fund-level reporting is the hardest remaining problem. Using consolidated portfolio data at fund level, as source data for carry modelling and complex investor tax reporting such as US K-1s, means connecting portfolio information through the funds all the way to the LPs. Venkat calls this the hardest piece.