Bite Investments: High Expectations for Digital Growth in the Private Capital Industry
In an interview with WealthBriefing, William Rudebeck, CEO of Bite Investments, discusses the high expectations of digital growth in the private capital industry and the reasons why asset managers are spending more time and money investing in technology.
What are the reasons for fund managers investing heavily in tech to improve their digital capabilities?
Rudebeck: There are several underlying reasons for private capital’s investment in enhancing its digital capabilities. If everyone else is updating their legacy infrastructure, it is important for firms to not be left behind, but more importantly, it enhances operational efficiency. Additionally, security has become increasingly important, and legacy infrastructure can have the potential for security risks. According to Bite’s latest white paper, titled “The Tech’s Factor: the digitalization of private markets in 2022 and beyond”, data from U.S. senior executives from middle market, boutique funds, and asset managers showed that 90 percent of firms with assets under management of more than US $1B say that keeping ahead of the game regarding technological capabilities at their organisation is a top priority.
What will a digital future look like for the private markets industry?
Rudebeck: External digital investments (e.g., for advisors and service providers) are expected to increase. Over three quarters (80 percent) of larger firms expect to make external digital investments north of US $1M, with 33 percent anticipating investments of between US $5M and US10M. In terms of the services used by these external digital third party providers, it’s often the size of the company that dictates what is needed and prioritised. For instance, 81% of larger firms use a specialist third-party software service provider for their due diligence. However, smaller firms are more likely than larger ones to say they currently use third parties for their portfolio/fund management, analysis, and investor profiles.
What digital operational efficiency will have the largest impact on how private equity firms will operate over the next ten years?
Rudebeck: Cloud/Software-as-a-Service (SaaS) will have the most significant impact. For this reason, increased investment in cloud/SaaS solutions are deemed necessary to improve operations. Most firms expect to invest further into areas in which they have already made progress and investments. Besides cloud/SaaS solutions (78–80%), these also include social media, and mobile and collaborative digital technologies (75-83%). The primary benefit of using cloud/SaaS platforms is to streamline operations.
How has Covid-19 affected the private capital industry?
Rudebeck: The pandemic has been a catalyst for change. It has encouraged large firms to enhance their technological capacity and smaller firms to capitalize on a first mover advantage. Those businesses which had already laid their digital foundations or had technology at the centre of their business model are better positioned. This has also been true for the private capital industry. Whether meeting investors or building relationships to attract new business, activity primarily had to be conducted remotely over the past few years. Many smaller fund managers have struggled in these conditions because they may not have a track record or the relationships, but technology is helping to bridge that gap.
What are the underlying drivers for digitalising private markets?
Rudebeck: Whatever improvements and upgrades are being made; they all rely on data. As digitalisation accelerates, fund managers will have to adapt to the continuous tech evolution. Our mission at Bite Investments opens possibilities in alternative investment markets with digitalisation and a new forward-thinking approach, enabling firms to configure their own digital platform to improve the experience for existing and prospective investors and limited partners. Investors are arguably the most important part of the private capital ecosystem. Therefore, catering to their desires and demands is an absolute priority.
About Bite Investments
Bite Investments provide a seamless end-to-end investment process. Our investor solutions software enables asset managers to provide a fully digital user service to their investor base, whilst our online investment platform allows the full spectrum of investors to invest in top-tier alternative investment funds in a streamlined process.