Advancing portfolio monitoring tools through technology

Published on April 28, 2025 by Varun Puri

Private equity (PE) and venture capital (VC) firms often face high-pressure, time-sensitive situations where they strive to enhance the performance of their invested portfolio companies. The performance of these investments is a direct reflection of the firms' success in the market and their ability to raise funds efficiently. This performance can also be measured by the loyalty of limited partners who continue to invest with these firms over time.

To achieve these goals, PE and VC firms seek partners that can assist with middle-office operations. These operations encompass a range of activities, including the following:

• Portfolio company data procurement: Collecting accurate and timely data from portfolio companies is crucial. This data forms the foundation for all subsequent analysis and reporting.

• Reporting data availability: Ensuring that data is readily available and up to date is essential for making informed decisions. This involves setting up systems to track and report on data availability.

• Streamlining and validating data: Data must be cleaned, standardised and validated to ensure its accuracy and reliability. This step is critical for generating meaningful insights.

• Assisting clients with reporting requirements: Clients increasingly require customised reporting solutions that provide them with complete control over the investment lifecycle, from deal identification to deal exit. This requires a deep understanding of client needs and the ability to deliver tailored reports.

Despite the availability of a number of PE portfolio-monitoring tools and VC portfolio-monitoring software in the market to handle the processes mentioned above, they often fall short. They tend to be off-the-shelf solutions that are not coupled with managed services and often lack bespoke reporting capabilities. As a result, clients are left to manage these tools themselves or rely on third-party vendors. This creates a gap in product ownership, preventing clients from fully deploying and benefiting from these solutions.

Recent advancements in AI- and machine learning (ML)-based data extraction present new opportunities for portfolio monitoring. These technologies are fast and user-friendly and feature progressive learning with self-auditing platforms. They can automate data collection and analysis, facilitate data ingestion into the platform using various templates and provide deeper insights with more precise predictions. Additionally, generative AI (GenAI) has evolved to enable users to generate tailored reports and outputs based on the available data.

However, the adoption of these technologies is still in its initial stages. The complex processing that occurs in the background has made the portfolio-monitoring process less transparent, leaving clients struggling to understand the flow of information.

Additionally, the output generated by GenAI often feels incomplete due to a lack of domain-specific knowledge. The future of portfolio-monitoring solutions presents further challenges. Firms must decide whether to deploy these solutions as software-as-a-service (SaaS) or make them more workable with managed-services support. This decision would significantly affect how effectively these tools can be integrated and used to meet the evolving needs of PE and VC firms.

Key considerations for the future

As technology continues to evolve, it will be important for firms to stay up to date with the latest advancements and continuously improve their portfolio-monitoring solutions. This includes investing in research and development and staying attuned to client feedback.

• Integration with managed services: Combining software solutions with managed services can provide clients with the support they need to fully leverage these tools. This approach ensures they have access to expert guidance and can focus on their core activities.

• Transparency and understanding: Enhancing the transparency of AI/ML processes and providing clients with a clear understanding of how data is processed and analysed will be crucial. This would help build trust and ensure they feel confident in using the insights generated by these technologies.

• Customisation and flexibility: Offering customisable solutions that can be tailored to the specific needs of each client will be important. This includes providing flexible reporting options and the ability to adapt to changing requirements.

In conclusion, while the current landscape of portfolio monitoring presents several challenges, there are also significant opportunities for innovation and improvement. By focusing on integration, transparency, customisation and continued improvement, PE and VC firms can enhance their portfolio-monitoring capabilities and achieve their performance goals.

How Acuity Knowledge Partners can help

Our AI-powered portfolio monitoring tool FolioSure designed in-house is a comprehensive and secure digital portfolio-monitoring and reporting solution that provides general and limited partners with streamlined and validated data for bespoke investor reporting requirements, aided by managed-services support.

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