Embracing technology: The evolution of Deal Clubs
Deal Clubs offer a unique way for investors to collaborate and access larger investment opportunities that they wouldn’t be able to as individual investors. By pooling resources and combining knowledge, groups of investors work together to identify promising opportunities and make informed decisions on which investments to pursue.
With investor demand for private markets growing and the popularity of deal clubs on the rise, many are now looking to digitise their operations to streamline, professionalise and drive sustainable growth.
The rise of Deal Clubs
Over the last decade, Deal Clubs have grown in popularity and attracted more participants, including individual investors, high-net-worth individuals and family offices. The reasons for this can be varied, but are typically due to investors seeking to diversify their portfolios, access a wider pool of private market opportunities, and potentially achieve higher returns. The ability for individual investors to tap into the collective deal-making expertise and experience of the club is another obvious benefit.
As the number of Deal Clubs has grown, there has also been a trend towards specialisation and clubs focusing on niche sectors. Investors are often keen to explore opportunities in specific industries or investment themes in which they have expertise or believe there is untapped potential. By concentrating their efforts on particular sectors, Deal Clubs can develop a deeper understanding of the market dynamics and position themselves as investment specialists within a specific space.
How Deal Clubs are using technology to support growth
Many Deal Clubs are adopting technology to enhance their deal origination, communication, and collaboration processes. For example, by distributing deals via a digital platform they can add a level of professionalism, efficiency and robustness to their operations, while also mitigating against the risk of regulatory compliance failings.
Digitising their private markets processes allows Deal Clubs to:
Share information more effectively
Online private markets platforms, like Delio Core, enable investment opportunities and supporting information to be shared with investors at the click of a button.
Centralising all of their private markets deals through a digital hub enables seamless communication and collaboration among deal club members. This approach can facilitate real-time discussions, easier document sharing, and far quicker decision-making, particularly if members are operating from multiple locations.
Strengthen their regulatory processes
Deal clubs often emphasise the importance of collaborative due diligence processes to evaluate investment opportunities. Members can pool their expertise, industry knowledge, and resources to conduct thorough research and analysis on potential deals. This collaborative approach helps in mitigating risk and allowing them to make more informed investment decisions.
The use of a digital platform can enhance these compliance processes as deal activity can be recorded automatically to create a real-time audit log of activity. On the Delio Core platform, mandatory checks can be built into workflows, meaning that deals can’t progress until they’ve been approved by someone with the required regulatory permissions. This extra level of governance will not only give members peace of mind, but also help to enhance the reputation of the club itself.
Automate processes
Technology can streamline the administrative tasks associated with Deal Club operations significantly. By automating processes such as investor onboarding, documentation management and reporting, deal clubs can free up time and resources to focus on deal sourcing, analysis, and value creation.
Simplify reporting
Technology solutions can also create more efficient and robust reporting on investment performance across the Deal Club. Having a centralised hub for portfolio and investor reporting makes it easier for information and analysis to be accessed by members on demand, meaning time and effort is saved in compiling those reports. This also contributes to the club being able to provide an improved level of transparency and professionalism to their operations.
In summary…
The trends discussed in this article reflect the evolving landscape of private equity deal-making. Deal Clubs are becoming more organised, specialised, and accessible to individual investors and need their operational processes to reflect this approach. With more investors looking to collaborate and draw on the specialist knowledge available across members, technology will play a key role in shaping the role of Deal Clubs in the future of private markets.
Find out more about how Delio can help your Deal Club by booking a demo with our team.
