In the world of private equity, the transformative power of a compact, yet expert team, is often understated. The work such a team can do spans from deep outside-in analysis for due diligence to PortCo pipeline enrichment, data-driven decisions and the building of internal analytical tools for deal teams.
I spent the last eight years managing such teams at companies like Advent International, advising various VCs and data platform startups where I demonstrated how a tiger team of senior data scientists can outperform the typical management consultants. By working more closely with deal professionals, they can deliver solutions that are data-driven, collaborative and immediate.
Unlike PE firms, VCs are constrained by fund size. This explains the prevalence of SaaS products such as Affinity, DealRoom, and CrunchBase among VCs. They often cannot afford to buy data from multiple data brokers, run entity resolution and get real, custom on demand insights. This would require buying datasets like geolocation, financial, satellite, review, employment, share of wallet, web traffic, mobile app downloads, click stream data and more.
PE firms, with their substantial fund fees, can often support a senior, technology-focused team. This is particularly advantageous as these fees can sometimes be fund reimbursable, positioning this approach as a superior alternative to employing management consultancies.
One of the pivotal achievements during my time at Advent International was developing an in-house platform that was designed and brought to life with one primary objective: increasing the Internal Rate of Return (IRR). Our strategy involved tackling a wide range of challenges. To illustrate, here are a few critical digital initiatives proven to enhance your IRR.