The PE Tech Dilemma That Isn’t

Finding the Best Portfolio Management Software

The private equity and venture capital world is divided into two groups of people: old-guard defenders of Excel spreadsheets and reform-minded advocates of portfolio monitoring software.

Are we being dramatic? Maybe. But debates around the relative merits of Excel spreadsheets and finding the best portfolio management software are happening at PE and VC firms everywhere. It’s a serious question with major implications for productivity, data accuracy, and workflow optimization. And while the right answer undoubtedly varies from firm to firm, considering both sides of the argument offers a useful lens for examining your own organization’s data needs.

Despite our being a portfolio monitoring software company, we’re not insensitive to the arguments wielded by spreadsheet defenders, including these:

• Spreadsheets are a known entity. There’s no denying there’s comfort in the familiar. For a long time, Excel spreadsheets have been the bread-and-butter of investment management. And their usage is intuitive to anyone born this side of 1970. 
• Spreadsheets allow for data manipulation to meet diverse needs. Many firms have an (unofficial) resident Excel whiz adept at arranging data for various reporting functions. From collecting quarterly financials to meet LP data requests, to preparing sheets with customized metrics to compare portfolio company performance—Excel offers endless ways to organize numbers for meaningful analysis.
• Spreadsheets can become highly-designed, tailor-made templates. For formats used over and over again—quarterly reports, portfolio company tear sheets, etc.—many PE and VC firms use Excel (and other Microsoft Office tools) to create templates with spacing, fonts, and designs that match their brand identity.

Of course, advocates of portfolio monitoring software have their own set of talking points, such as:

• Portfolio monitoring solutions offer real-time data. These next-gen software systems function as a single source of truth, ingesting fund and portfolio company data into a centralized database and ensuring constant accuracy. No need to manually update information across multiple files
• Portfolio monitoring solutions automatically generate reports and interactive dashboards. Whether you’re working on cash flow calculations or scenario modeling, portfolio monitoring solutions automatically configure data in innovative ways, streamlining any analysis.
• Portfolio monitoring solutions simplify creation of custom metrics and KPI tracking. Users can create and manage financial and operating metrics for portfolio companies. Each team member can view KPIs relevant to their role. And with best-in-class portfolio monitoring solutions, employees can also track the history of a given metric over time.

The good news? This battle need not end in a stalemate. At Cobalt, we believe even the best portfolio management software need not totally supplant spreadsheets. It is our belief that the marriage of the two is often the best way to enjoy the benefits of each. 

Leading portfolio monitoring solutions offer plug-ins that allow users to seamlessly send data between Excel spreadsheets and software systems. This way, trusty standbys can remain in use, but fueled by more accurate data and more efficient processes. For more on the ways portfolio monitoring software augments the power of your spreadsheet, read our white paper, Four Excel Power Hacks for Fund Managers.