Fund Managers Increase Tech Adoption to Fuel Subscriptions

Fund managers have found technology. A new survey from investment management software company Juniper Square found that most sponsors planned to use fundraising technology this year, with CRM software and data rooms the most frequently used tools.

“What has been highlighted is the need. Commercial real estate needs to be modernized. The immediate question is that a LP wants to understand what is happening with an investment,” Matt Lawson, CMO at Juniper Square, tells GlobeSt.com. “As we entered this crisis, that same urgency and immediacy increased. That is something that technology can help with. It can help with the frequency, personalization and the quality of that communication. That is what we saw drive demand for the digital transformation in this crisis.”

In 2020, Juniper Square saw increased adoption this year even from general partners in the middle of fundraising efforts, helping to drive the acceleration of investment technologies. “We have seen a real acceleration of demand for our software. GPs have come to us and said they are in the middle of a fundraise and needed to do it more efficiently than in the past, and we have been able in some cases to respond in days or weeks to get their funds closed and fully subscribed,” says Lawson.

Juniper Square’s technology platform not only help fuel subscriptions, but on average, individual investments were larger. According to the survey, capital commitments average $150,000 to $300,000; however, Juniper Square’s internal commitments averaged $300,000 to $500,000. In addition, sponsors in the Juniper Square network secured 73% of commitments from return investors, while survey respondents claimed only 52% of capital commitments came from existing investors.

Overall, sponsors also showed an improved outlook for the 2021 capital environment. Sponsors expect more capital availability this year, and 94% plan to execute fundraising, and the pandemic is likely the catalyst for the boost in activity. “General partners are responding to what they are hearing, so it is interesting to see that there is an uptick in investment for CRE,” says Lawson. “I don’t think that it is surprising if you look at the Financial Crisis. Some of the best performance that we have seen from closed-in private funds came on the heels of that crisis. For funds that had been formed a year or two prior, it was less so. I think that investors are anticipating that could happen again on the backend of this crisis. Only time will tell.”

The dynamics of the Financial Crisis also prepared investors for this event and likely helped to drive rapid technology adoption. “We have seen that GPs were quick to be transparent with investors, and part of that is using tools like Juniper Square to increase the transparency and frequency of reporting,” says Lawson. “More unique to this crisis is that we need to be flexible with tenants in payment and terms. The Great Financial Crisis helped GPs build a muscle with how to deal crisis, and I think many are in a better position now than they were 12 years ago.”