Leveraging Gen AI For Asset Management Investor Relations And Capital Formation Teams


Leveraging Gen AI For Asset Management Investor Relations And Capital Formation Teams

As Generative AI (Gen AI) progresses from cautious optimism to practical implementations in the asset management industry, investor relations (IR) and capital formation teams can significantly benefit from integrating Gen AI tools in their workflow.

What Are The Gen AI Tools For Fundraising / Capital Formation Teams?

Gen AI can enhance the fundraising process by improving quality of outreach at scale, accelerating the fundraising timeline, proactively managing diligence risks, and saving costs across seven stages:

1. Primary Research And Campaign Planning: The ability of AI to parse through large amounts of data and summarize key takeaways can help capital formation teams identify potential investors and market opportunities. One practical example is summarizing investment committee meeting minutes of key plan sponsor prospects.

2. Investor Outreach And Personalization: Next, armed with context and intelligence about the prospects, use Gen AI to craft personalized marketing communications, increasing engagement and response rates.

3. CRM Maintenance: Capital formation and fundraising teams spend a lot of time managing CRM – adding notes, documenting meeting next steps, etc. Subject to prospective investors agreement, Generative AI tools can help summarize meeting transcripts saving the team’s valuable time. In addition, introduction of sentiment analysis and engagement tracking adds new intelligence in decision-making. Certain Gen AI agents can also update CRM records accurately based on human prompts.

4. Investor Due Diligence Readiness: Due diligence is a key component of the fundraising process which while being resource intensive, has a significant impact on winning prospective investor’s trust. Responsiveness, quality, and transparency are key elements that capital formation teams can leverage to create differentiation. AI applications in this stage include:

  • Helping create standard DDQ or respond to DDQs/RFPs much faster by enabling autofill and response re-generation, while maintaining an audit trail
  • Increase accuracy of response by adding intelligent sourcing of content associated with the distribution channel and investment strategies. For example, asset managers do not want to use responses meant for a global emerging markets strategy for a private credit strategy
  • Integrate content tools for all stakeholders including subject matter experts and reviewers to ensure an integrated experience away from siloes
  • Gen AI can also assist with translation of content which can facilitate seamless communication with the global investor base

5. Regulatory Compliance: Ensure all prospective investor communications and documentation comply with regulatory standards, as an example with SEC’s Marketing Rule. New Generative AI tools can help calibrate the content with regulatory guidance.

6. Limited Partner Agreement (LPA) And Side Letter Negotiation: Use AI-powered legal tools to speed up negotiating LPAs and side letters clauses.

7. Investor Diligence And Onboarding: Conduct thorough screening and background checks on potential investors using AI to minimize financial crime-related risks.

What Are The Gen AI Tools For Investor Relations And Client Service Team?

Gen AI can significantly enhance investor relations and client service and reporting frameworks:

1. Quarterly Investor Letters Drafting: Most asset managers create a quarterly letter for their current and prospective investors. Gen AI can help create a first draft for quarterly letters, saving time and ensuring consistency.

2. Translation Tools: Much as AI-powered translation can help with diligence materials, the same use case should be deployed for ongoing client reporting to ensure ease of use and reach for a global and diverse investor base.

3. Investor Education And Responses To Ad Hoc Queries: Gen AI tools can help enhance the ability of IR teams to provide self-service investor education capabilities, and customized answers to investor queries using AI-driven summarization and customization prompts.

Once we identify the areas where Gen AI tools can have the greatest impact for asset managers, how do asset managers successfully integrate these tools for investor relations and fundraising teams? We offer you a checklist.

A Gen AI Implementation Checklist For Investor Relations And Fundraising Teams

To maximize the benefits of Gen AI, a checklist is helpful:

1. Last Mile Review: Gen AI models are probabilistic, necessitating human oversight to ensure accuracy, especially around facts. Any application of Gen AI should have an integrated ability to review the output.

2. Ring Fencing The Scope: Understand the risk of hallucination with the models and ensure the use case maximizes the ROI of the technology. As an example, Gen AI tools should not be used solely for fact-checking.

3. Agents Vs. Human-In-The-Loop: Managing in silos can lead to challenges and change management issues. Integrated solutions facilitate seamless collaboration across stakeholders.

  • Source Attribution And Workflows: Ensure robust workflows for review and sign-off, source attribution, and maintaining an audit trail
  • Collaboration: Integrated solutions streamline the collaborative process for tasks such as populating RFPs, DDQs, and drafting quarterly letters, which require inputs from multiple stakeholders

4. Proactive Risk Management

  • Acceptable Use Policy: Ensure that the firm has clear policies on using AI tools and ensure the team understands the policy requirements
  • Data Confidentiality: Ensure stringent data privacy and confidentiality measures are in place and provide training and guidance to the teams using Gen AI tools
  • Vendor Approval: Ensure that the right process is in place for approval of vendors with Gen AI capabilities

5. Implementation Blueprint For Investor Relations And Fundraising Teams

  • Learn About Prompt Engineering: Many Gen AI tools will have pre-defined prompts but can also provide customization for the users. Investor relations and fundraising teams should understand the nuances of crafting effective prompts for AI tools to create a superior experience
  • Create Applied Gen AI Taskforce: Most asset managers would build or use applied AI solutions. Investor relations teams should join the firm’s Gen AI task force to influence future roadmap
  • Create A Budget And Prioritization Roadmap: Get budget allocated to Gen AI applications and prioritize projects to integrate Gen AI effectively
  • Define Success Metrics: Clearly articulate what success from Gen AI integration looks like for your firm and your team, ensuring alignment with overall business goals and success metrics

By thoughtfully integrating Gen AI into their workflows, asset management teams can enhance their fundraising and investor relations efforts, driving better outcomes and operational efficiencies.

Reach out to us to continue the dialogue and see how DiligenceVault’s technology can help with efficient client reporting and fundraising initiatives.

The Collection Of  Tools Used By The Teams Includes:


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