- Sponsors often invest in investor management platforms but fail to properly implement the software, leaving the tools underutilized.
- Poor system documentation, unintuitive user interfaces, and lack of experience make adoption difficult and discourage regular use.
- Without proper implementation, maintenance, and controls, sponsors tend to lose confidence in investor managements platforms and revert to manual processes.
Many private equity real estate sponsors recognize the value of technology in streamlining investor management, so they purchase dedicated platforms with the intention of modernizing their processes. Yet it is common to see those same platforms sitting idle, half-implemented, or used only for the most basic functions.
Instead of becoming a hub for capital raises, reporting, and investor correspondence, the tools often collect dust while sponsors fall back on manual spreadsheets and fragmented workflows. The result is not only wasted software spend but also lost opportunity to scale and inject professionalism into the investor relations function.
Our team observes five common reasons behind this underutilization.
1. Time Intensive
Sponsors underestimate the upfront lift required to configure an investor management platform properly. These systems are not plug-and-play; they require mapping the existing investor database, setting up historical capital activity, integrating with accounting records, and designing communications templates.
For sponsors juggling acquisitions, financings, and asset management demands, dedicating time to platform setup is rarely prioritized. The result is that the platform never gets fully stood up. Without the proper foundation, subsequent updates become more time consuming, and many sponsors abandon the effort altogether in favor of quick manual workarounds.
2. Poor Native User Documentation
Investor communications platforms typically advertise robust functionality, but their native documentation often leaves sponsors guessing how to implement key features. Step-by-step guides are either too high-level to be actionable or omit key details. Training videos are frequently outdated or inconsistent with the current interface. This is a significant hindrance to inexperienced users, and it leaves them piecing together workflows by trial and error.
The absence of clear, reliable documentation slows adoption and increases the risk of errors, which understandably discourages sponsors from leaning on the system. In many cases, sponsors revert to email and Excel to avoid wasting time deciphering unclear instructions.
3. Unintuitive User Interface
Even when documentation is available, the design of many platforms can feel counterintuitive. Functions that should be simple, such as uploading investor notices, generating management reporting, or customizing correspondence templates, often require the user to navigate through multiple layers of menus.
User interfaces are not always designed with the specific workflows of private equity real estate in mind, and without the ability to customize the system, this can lead to a mismatch between sponsor needs and platform functionality. The less intuitive the system feels, the less likely busy teams are to integrate it into daily operations.
4. Platform Oversight Assigned to the Wrong Personnel
A common mistake among private equity sponsors is delegating platform setup and management to junior or administrative staff who lack the authority or visibility to structure the system appropriately.
Investor management touches on sensitive areas such as capital call notices, distribution waterfalls, and K-1 dissemination, all of which are topics that require experience. When junior personnel are asked to build out the platform, the result is often partial implementation or misconfigured settings that reduce the overall value of the system to the sponsor group.
5. Lack of Controls Undermines Confidence in the Platform
Once issues surface, whether missing statements, botched fundraising workflows, or incorrect waterfall settings, sponsors tend to lose confidence in the platform altogether. Sound investor management centers around accuracy and trust, and a single, visible mistake can undermine the credibility of the system.
Without strong internal controls, reconciliation processes, and validation steps, sponsors are reluctant to expose the platform to investors. This lack of confidence causes teams to choose manual methods when completing high-stakes workflows. The irony is that investor communications platforms are built to reduce risk and improve accuracy, but poor implementation and oversight can lead to the opposite outcome.
Final Thoughts
Investor management platforms are only as effective as the processes and expertise behind them. The right structure, oversight, and controls are critical to ensuring these tools add value to the sponsor’s investor relations suite. Sponsors that lack the time or internal resources to configure and maintain these systems find themselves defaulting to manual workarounds, which undermines the very purpose of investing in technology.
This is where a CFO services firm can make a difference. Beyond simply setting up the software, a capable partner brings the accounting discipline and investor relations perspective needed to configure the platform for specific use cases.
Additionally, ongoing support will typically focus on establishing controls and implementing reconciliation processes. Above all, a knowledgeable CFO partner helps sponsors leverage the investor management platform to build trust-based relationships with investors, drive growth, and mitigate operational risk.
Lexcraft Advisors is a CFO services firm that supports middle market real estate funds and syndications. Our team takes pride in providing sponsors with reliable financial operations solutions that mitigate risk and facilitate growth. To learn more about our services, schedule a complimentary meeting with our team.