Private equity software providers are going all-in on blockchain and digital ledgers, aiming to add a layer of trust and transparency to processes like valuation, capital calls, and waterfall events.
But the technology’s end users are still catching up, constrained by limited research and development budgets and uncertainty about how to use blockchain effectively.
Last week, Apex Group announced that it had partnered with fintech firm Inveniam Capital Partners to offer its valuation software, which is blockchain-enabled, to its clients. The same day, Broadridge Financial Solutions announced that its Private Markets Hub, which uses a digital ledger to facilitate its processes, is now available to North American funds.
“These are applications and elements of crypto that don’t generally make headlines,” said Jonathan Doolan, managing partner at consulting firm Indefi. “It’s more around what is the application of the technology.”
These technologies aren’t necessarily new. And it’s not as though private equity and venture capital firms are hesitant about the blockchain: In recent years, these investors have plowed a significant portion of capital into assets using the technology — not to mention cryptocurrencies.
But according to Doolan, it’ll take two to four years before it really becomes clear how general partners can incorporate blockchain technology into their businesses.
“Everybody is exploring and dabbling in it,” Doolan said. “It might also be said that in a lot of ways, it’s a luxury.”
Doolan explained that private managers need to have meaningful R&D budgets — something that the largest players will have, but smaller and emerging managers may not — to really explore how blockchain technology can improve their operations.
“[Managers] are thinking: ‘If we ignore this, we may miss. It could also be a bit of vaporware. There haven’t…
