The Role of Technology and Advisors in Capital Sourcing

By CIOReview | Wednesday, August 29, 2018
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Advancements in technology have not only added more data for capital sourcing but have also increased complexity. This, in turn, has increased the need for seasoned professionals who can analyze data and put together complex deals. All these have made it challenging for firms to adopt new technologies. An effective strategy to counter these challenges would be to incorporate more technology and internally develop new tools while focusing on internal talent and training.

The scope of capital sourcing has broadened to the extent that greater traunching is being done in capital stacks. Instead of just looking at lenders, companies now look at the B-piece of the lender, the intermediate pieces of the stack, or even a preferred piece of the stack. All this happens even before equity part of the process begins. All of this leads to the conclusion that as the complexity increases; the need for a proficient capital advisor also increases.

The importance of technology is more significant when it comes to commodity market trades. A commodity market is one that trades in the primary economic sector instead of manufactured products. This has led to more companies focusing on commodity-driven financing.

Experts ascertain that regardless of technology, experienced capital advisors who can analyze data to build relationships and get a deal done are a necessity. The essence of capital sourcing is what is done with the data in hand. Although companies may be technologically advanced, they need to have individuals who can drive transactions.

Building relationships are always critical when it comes to market performance and technology is incapable of this aspect. Therefore, individuals and technology need to work hand in hand to ensure that transactions get approved by investment committees. Technology only helps to take the next step in the world of investing.