“They all do the same things differently.” So says Greg Woolf, CEO of Vantage Reporting, explaining the challenge he faced in developing software for private investment firms. He turned to a combination of software modules and customization, all based on Microsoft .NET.

The Vantage Precision Tailoring Framework and the company’s component-based software modules encompass the private investment lifecycle. Such household names – at least if your household is a hedge fund or buyout firm – as Bain Capital, Atlas Venture and Cerberus Capital have bought the Vantage solutions.

“They take money from investors, invest it, and give it back with the highest possible return,” Woolf explained. That’s what makes them the same. The ways they do it, however, are as individual as the partners in each firm.

As he was building up his Boston-based firm, Woolf concluded that private investment firms were not going to rip out the systems they already had installed. The firms, after all, tend to be partnerships and that does create a certain intense focus on expenses and the bottom line.

Atlas Venture investment professionals can now access qualitative information as well as historical transaction information through a Web front end.

Nor were the private investment firms apt to have a software company dictate how they conduct business. Sure, Ford and IBM might have rearranged their entire corporate operations to fit the SAP templates. But those were guys who, until recently, all wore white shirts, dark suits, conservative ties and happily followed lots of rules as they poured down from on high. Hedge fund managers and private equity executives tend to be a little less easily imposed upon.

“They differentiate themselves with their teams, their skills, and how they manage their investments,” Woolf said.

At Atlas Venture, Vantage started the relationship by providing a module for portfolio performance analysis.

Michael McArdle, the director of finance at Atlas Venture, recalled that when he started two years ago the firm had a fund accounting system which users augmented through Excel reports that they prepared manually. Information was distributed to limited partners through a basic extranet, which didn’t have all the functionality needed to handle the portfolio and distribute information to users.

Vantage developed a Web front end that the Atlas Venture investment professionals now use to access historical transaction information from the accounting database as well as other qualitative information from any of one of four Vantage designed databases. By combining the databases on one SQL server, Atlas Venture’s users are able to seamlessly view and update information from a unified Web front end.

Once a deal has closed, information is easy to find in the accounting database. But before that, information and documents related to the deal, or about prospective deals, are held in a separate database where users can find relevant material with custom search tools and Microsoft text indexing. The company has integrated its deal screening system with Microsoft Outlook and created a button on the Outlook screen to move documents into the deal screening database.

“The response has been extremely positive,” said McArdle. “People have commented on how much more visibility they have into the pipeline and how smooth the quarterly reporting process has been. Now we can put together quarterly packages for our investment team in a single day; it used to take us two weeks.”

While Atlas Venture looked at other venders, it chose Vantage because the firm had private investment domain knowledge and a good reputation in the field.

“We didn’t have to teach them our entire line of business. Also, they were able to leverage our existing investment in our fund accounting system rather than force us to replace it.” Atlas Venture has built four discrete systems and deployed the full suite of Vantage solutions for direct investment firms, he added.

“We are always looking for ways to improve our systems. We started with our portfolio management system, then deal screening, followed by internal rate of return reporting, and then expanding the extranet to include a secure data room for fundraising which prospective investors can access with a username and password,” McArdle said.

The Precision Tailoring Framework means Vantage doesn’t have to reinvent the wheel every time, and the client doesn’t have to pay them to reinvent the wheel, he added.

“It’s a nice hybrid model. It isn’t a pure custom play where they come in and build everything from scratch, which involves more cost and risk. But it’s not a pure off-the-shelf system where you are stuck with whatever the vendor provides,” McArdle said.

Software has changed, becoming much more flexible than it was when SAP built its first enterprise system to run on mainframes, explained Woolf.

Since the private investment firms usually had some basic back-office systems for accounting and portfolio management, Vantage needed an open architecture that could link to the existing back-office systems easily, fill in the gaps between existing front-office systems, improve workflow, and provide new functionality like compliance.

“Most firms have off-the-shelf packages that do a great job on their core functionality but still fall short of the functionality each firm is looking for,” Woolf added. “Trying to push an investment manager on a deal team into a prepackaged solution is like having the tail wag the dog. We develop our solutions around the way a firm wants to conduct its business, as opposed to telling them they have to do business the way our software defines it.”

Vantage Reporting learned what firms needed by working with them closely while providing consulting services. The resulting software products the company developed officially launched in January at HedgeWorld in New York. The company embraced Microsoft .NET in its early beta stages and its development team is obtaining its Gold Partner certification.

“We found that the .NET technology gave us a competitive advantage in customizability,” Woolf said. He sees the financial services world turning to Web applications, which suits him just fine.

“That enables us to deliver and refine customized functionality without having to reinstall it on each client computer. Given that each customer has a unique implementation of the code, we can deploy updates in only one place, and that’s what a user sees when he or she comes in on a Web browser.”

The browser-based solution fits the structure of his private investment clients because most of them operate from several offices across the US or around the world.

Woolf said that the company’s collaboration with its clients tends to be ongoing.

“We go through a rigorous discovery process to design the software to meet their specific needs, but once they get the power of a SQL Server relational database and streamlined workflow, we can easily provide enhancements as needed,” he said.

www.atlasventure.com

www.vantage-reporting.com