The buzz around AI is not just a passing trend, but a palpable shift in the Private Equity and Hedge Fund circles. Heads of Investor Relations and C-level executives are not immune to this, as they too are exploring AI’s potential to revolutionize their business’s performance. 

Initially, the adoption of AI was limited to the front office and investment side of the industry, primarily due to the high costs associated with building an AI infrastructure and hiring AI data scientists. However, the entry of new players like Snowflake and Databricks, along with the development of AI engines by core Hedge and Private Equity CRM systems, has democratized the use of AI, empowering various functions within a fund. 

One of the areas where AI is proving to be a true game-changer is in Investor Relations and Business Development. As the competition for investors intensifies, the ability to effectively engage with and secure investments becomes a crucial differentiator, making the use of AI is not just a strategic imperative, but an exciting opportunity to revolutionize these functions. 

Leveraging 3rd Party Market Data is Still Somewhat Limited, but expect this to change quickly 

Platforms like Snowflake have created Marketplaces for third-party Data. While this is a booming area for certain industries, like Retail and big Pharma, where large data sets are readily available for the general population, the availability of data for Alternative Asset Managers on these cloud data platforms is still very limited. 

If you go onto Snowflake and search for well-known Market Data providers, Preqin is one of the only well-known Investor Market Data providers currently offered on their platform. Another limiting factor for now is that you still need to have a license with Preqin to use the data in Snowflake. 

We are confident that this will change quite quickly. In the next couple of years, the ability to access the same Market Data providers that most funds use today will be readily available on platforms like Snowflake and many of their competitors, ensuring a more robust AI landscape. 

Only time will tell how quickly access to this data on cloud data platforms will occur, but early entrants like Preqin will likely see a huge upside in being among the first providers to embrace a platform like Snowflake. Competitors who are afraid of losing market share will likely be forced to jump into the marketplace, which should bring positive value to BD and IR departments at even the smallest funds. 

How are Leading IR and BD departments Using AI Today 

AI is already being used by many of the leading IR and BD departments of leading funds to enhance the following key functions: 

• Fundraising

1. Identify the Characteristics of likely investors for a fund. Harvesting historical data on past successful Investor wins surfaces the attributes of essential interactions and communications.
2. Social Media Monitoring: AI tools monitor social media platforms for mentions of relevant keywords and sentiments, identifying potential investors and opportunities. 
3. Data mine conversations and emails for sentiment indicators and indications to predict the probability of investment. 

• Marketing Campaigns

1. Content Personalization: AI tools customize marketing materials and communications based on the specific interests and past interactions of potential investors. 
2. Automated Outreach: AI-driven email marketing platforms automate and personalize outreach campaigns, improving engagement rates. 
3. Campaign Analysis: AI analytics measure the effectiveness of marketing campaigns in real time, providing insights into what strategies are working and where adjustments are needed. 

• Investor Requests / Existing Investor Management

1. Chatbots and Virtual Assistants: AI-powered chatbots respond instantly to investor requests, improving communication efficiency and providing 24/7 support. 
2. Retention Analysis: AI models predict which investors will likely stay or leave based on their behavior and engagement, allowing IR teams to take proactive measures to improve retention. 
3. Data mine conversations for important investors to engage with based on sentiment indicators. Sentiment Analysis: Natural Language Processing (NLP) tools analyze investor communications and social media to gauge sentiment and address concerns proactively. 

A Full Circle Moment 

We talk to many C-Level executives at Funds, and one of their most common complaints is the difficulty of getting IR and BD teams to enter data into their CRM systems. Data entry has been the bane of most CTOs and COOs’ existence for as long as systems have existed. 

Firms like ours can help this situation by implementing user-friendly interfaces, mobile device user interfaces, and integrating automated feeds from various systems. At some level, the IR and BD teams need to provide, update, and clean their data since it will be the quality of the historical investor, campaign, and interaction data that drives this first wave of AI intelligence. 

1. Meeting Notes from Investors and transcribed notes from Calls and Meetings are the fuel that feeds the AI engine.  
2. The History of Pursuing a new Investor(s) when raising a new fund, how each pursuit evolved, and the interactions that drove those pursuits are the data that will predict who and what investors you should pursue in your next capital raise. 
3. The history of Website Engagement, Campaign Email reaction, and opt-outs are key pieces of information your business development team requires as they assemble new email campaigns and marketing materials and leverage customer journey workflow tools to automate your next email campaign for maximum investor engagement and results. 

Conclusion 

AI is here and only becoming more of a must-have for any fund that wants to remain competitive in winning new investors and keeping existing investors happy. Any Business Development and IR team that does not have an AI and CRM strategy is falling behind in the critical race to win the hearts and minds of investors. 

Now is the time to engage a consulting firm like FinServ Consulting to help your fund enhance or start your journey to improving your CRM and implementing an AI and Cloud Data-focused solution for your IR and BD department. 

With almost twenty years of helping the top 100 Hedge and Private Equity funds improve their operations and technology, FinServ Consulting is uniquely positioned to help your team as you improve one of the most critical aspects of your fund. With deep industry expertise and hundreds of projects successfully completed in all areas of alternative asset management, FinServ acts as an advisor and hands on implementer of real solutions that drive immediate results to your bottom line. 

Contact us today at info@finservconsulting.com to setup a meeting to talk about how we can help you on your journey.