Introduction

Private equity and venture capital (PE/VC) firms rely on robust software systems to manage investors, deals, and funds in an increasingly complex market. As a PE/VC executive, the decision to buy a pre-built solution or build a custom software in-house is critical. This report examines that dilemma through the lens of a PE/VC firm evaluating Asset Class – a pre-built platform for private capital management – versus developing an internal system. We will explore the benefits of purchasing Asset Class’s solution, the risks and costs of building from scratch, and compare factors like cost, time-to-market, maintenance, security, compliance, and scalability. Real-world examples and case studies from the financial industry are included to illustrate why buying a proven solution often outperforms trying to reinvent the wheel.

The Asset Class Platform: Features and Benefits

Asset Class is a comprehensive software platform specifically designed for private capital firms (including private equity, venture capital, family offices, real estate funds, etc.). It offers an end-to-end solution covering the entire investment lifecycle – from fundraising and investor onboarding to deal flow tracking, portfolio management, and investor reporting. Built on top of industry-leading technology (Salesforce for CRM, DocuSign for e-signatures, and Plaid for bank connectivity) and delivered as a cloud-based service, Asset Class provides a rich set of standard features out-of-the-box.

Comprehensive Functionality

Asset Class bundles multiple modules critical to PE/VC operations. It includes a full Customer Relationship Management (CRM) system optimized for investor relations, fundraising, and deal sourcing. It also offers Investor & Fund Management (IFM) tools to handle investor onboarding, capital calls, distributions, and reporting. Additional modules cover Deal Flow Management (DFM) for tracking investment opportunities and Portfolio & Asset Management (PAM) for monitoring portfolio company performance. This breadth of functionality means a firm can manage every stage of the fund and deal lifecycle on one platform, rather than piecing together multiple disparate systems.

Rapid Deployment and Time-to-Value

A standout benefit of buying Asset Class is speed of implementation. Because it’s a ready-made solution, a PE/VC firm can start using it almost immediately after configuration. With Asset Class new funds can be launched and investors onboarded “in hours, rather than weeks” using its 100% online platform (with digital onboarding and investor portals) – dramatically accelerating time-to-market for fundraising. In contrast, building an equivalent system in-house could take many months or even years of development. By purchasing Asset Class, an investment firm can start raising capital and managing investor relationships right away, gaining a competitive edge in closing deals and securing LP commitments.

Feature-Rich Investor Portal and Onboarding

Asset Class comes with a feature-rich investor portal that can be fully branded for the firm. Through this portal, Limited Partners (LPs) get secure online access to their investment information, fund documents, and new opportunities. The platform supports streamlined digital onboarding with online subscription documents, e-signature via DocuSign, and integrated compliance checks (KYC/AML), allowing investors to complete commitments 24/7 from anywhere. This not only enhances the LP experience but also reduces manual paperwork. Asset Class’s onboarding automation was highlighted by Fidus Capital (a private credit firm) as a major efficiency gain – it “streamlined digital onboarding for investors” and improved how capital calls and distributions are handled. For a PE/VC firm, these capabilities mean less friction in bringing investors on board and calling capital when needed.

Integrated Workflow and CRM Capabilities

Every module of Asset Class includes core CRM and workflow functionality to track interactions and tasks. The system logs every call, email, meeting, and task with investors or prospects, giving the team a centralized view of all touchpoints. It integrates with common email and calendar systems (e.g. Outlook, Gmail) so that communications are automatically synced into the CRM. A venture firm that adopted Asset Class noted the integration with email, calendar, and document tools as a key benefit, enabling them to focus on investor communications while the software seamlessly captures the data. Asset Class also provides workflow tools like work queue management and activity tracking to ensure nothing falls through the cracks. In short, the platform comes with built-in productivity features that an in-house build would have to recreate from scratch.

Analytics, Reporting and Dashboards

The platform delivers real-time dashboards and reporting across departments – from fundraising pipeline metrics to investor relations KPIs. PE/VC executives can instantly see the status of deals in the pipeline with intuitive Kanban-style boards and pipeline reports, as well as track fundraising progress and investor commitments in real time. Custom reports and performance tracking for portfolio companies are also available, helping firms monitor the health of their investments. These analytics are crucial for data-driven decision making and LP reporting. Asset Class’s comprehensive reporting was specifically cited as a value-add by clients like ADIT Ventures and Fidus Capital. Building an internal system with comparable reporting capabilities (and ensuring accuracy) would be a significant project on its own.

Security and Compliance Built-In

By leveraging proven enterprise technology under the hood, Asset Class benefits from bank-grade security and compliance standards. The platform is deployed on Salesforce’s infrastructure, inheriting robust data security, encryption, and user access controls. Compliance features such as audit trails, permission controls, and GDPR/SOC2 compliant data handling are part of the package, relieving the firm of having to engineer these from scratch. For example, data privacy concerns are often raised as a reason to build in-house, but in reality most reputable software vendors (Asset Class included) offer configurations that ensure no sensitive data leaves the firm’s control. In short, Asset Class comes pre-equipped to meet the security and regulatory needs of financial institutions, whereas an in-house build would carry the burden of implementing and continuously updating these safeguards.

Ongoing Support and Continuous Improvement

Purchasing Asset Class also means gaining a partner for the long term. The vendor provides dedicated support, training, and regular updates. Any firm-specific configuration or onboarding is supported by Asset Class’s team (and the platform’s flexibility allows customization of workflows without altering core code). As regulations evolve or new features are developed (for example, improvements in digital signatures, integrations with new banking APIs, or enhanced analytics), the vendor rolls out updates to all clients. This continuous improvement cycle ensures the software stays current with industry best practices and technology trends, without the PE/VC firm having to invest additional resources. In effect, the cost of R&D is shared among all the vendor’s clients. For a PE/VC firm, this means the software keeps getting better over time – an advantage highlighted by Asset Class’s mission to “deliver best-in-class solutions for fundraising, investor relations, investor portals, deal flow, portfolio management, and fund administration” as the private capital market evolves. In contrast, a homegrown system can quickly become outdated unless the firm continuously pours development effort into it.

Proven Track Record in the Industry

Adopting a pre-built solution that is already tested in the market significantly reduces implementation risk. Asset Class is used by firms worldwide in the private equity and venture capital space. Case studies demonstrate its positive impact – for instance, ADIT Ventures, a VC firm, has been an Asset Class customer for nearly four years and credits it with providing “an intuitive user interface and a customizable workflow” that allow their team to focus on communicating with investors. The platform became “indispensable” for managing their deal pipeline and investor relationships. Similarly, Fidus Capital, a private credit manager, reported that Asset Class “allowed us to streamline our investor communications and improve our reporting efficiency,” helping them grow their investor base while delivering best-in-class service to existing LPs. These real-world endorsements indicate that Asset Class delivers tangible benefits and is trusted by peer firms. By buying a solution with a proven track record, a PE/VC firm can avoid the trial-and-error that comes with building new software, and have confidence that the system will perform as expected.

In summary, the Asset Class platform offers rich functionality tailored to PE/VC needs, fast deployment, integrated workflows, strong security, and ongoing support. It essentially provides a “turnkey” solution that lets an investment firm hit the ground running and focus on its core business of raising and deploying capital, rather than expending energy on software development.

Risks and Challenges of Building In-House

On the other side of the equation, some PE/VC firms consider building a custom in-house software solution, believing it could be tailored exactly to their needs or provide a competitive edge. However, building enterprise-grade software for private capital management is a complex, expensive, and risky undertaking. This section outlines the major risks, costs, and challenges an in-house build would entail:

High Development Costs and Budget Overruns

Developing a full-featured PE/VC management platform internally requires a substantial investment. A firm would need to hire software engineers, product managers, and possibly external consultants. The upfront cost alone can run into the hundreds of thousands or millions of dollars for a multi-module system. For example, industry research by ProSights (an investment tech advisor) found that even a basic internal tool can burn through >$500,000 over a couple of years, and more ambitious projects at larger firms have cost $2 million or more to develop. These figures often exclude the opportunity cost of diverting investment professionals’ time to assist in development. Moreover, initial budgets are frequently exceeded. Without prior experience building such software, firms may underestimate the scope – leading to budget overruns or needing to cut features. It’s telling that ProSights observes “anything less than $1M annually of budget is insufficient” to build and maintain a useful internal system for a PE firm. In contrast, buying a solution like Asset Class involves a predictable subscription fee (often in the low five- to low six-figure range per year depending on firm size), which is typically far lower than the multi-million-dollar development path.

Long Development Timeline and Delayed Time-to-Market

Building complex software is time-intensive. An in-house project could take many months or even multiple years to reach a minimally viable product, especially if the firm is effectively starting from scratch. For instance, a venture firm that attempted to build its own CRM and deal tracking tool spent 2 years on development before ultimately abandoning it due to poor results. During such a long timeline, the firm suffers delayed time-to-market for any improvements in operations – potentially struggling with manual processes or legacy tools while waiting for the new system. This delay can directly impact competitiveness: fundraising processes remain slow, investor onboarding is manual, and deal pipeline visibility is limited until the tool is ready. Every month spent building is a month not spent engaging investors or executing deals with optimal efficiency. There is also a risk that by the time an in-house system is completed, some requirements have changed or the technology approach is outdated (a phenomenon known as “build trap”). By buying Asset Class, a firm can start realizing benefits in a matter of weeks or even days, whereas building in-house defers those benefits for a year or more, during which the firm might fall behind more tech-enabled competitors.

Maintenance Burden and Hidden Costs

The work doesn’t end once an in-house system is built – in fact, that’s just the beginning. Ongoing maintenance is a significant burden. Software requires regular bug fixes, updates for compatibility (e.g., browser updates, integration points like email servers or banking APIs), security patches, and performance tuning. Firms often underestimate these ongoing costs. As one technology CEO put it, “Anything we build will have a maintenance cost in the future that has to be considered.” The Appcues software blog similarly warns that building your own solution comes with “plenty of opportunities for delays, bugs, security vulnerabilities, etc. The more issues you encounter, the more precious time and resources you tie up working to fix them.” In practice, a PE/VC firm would need to retain software engineers or IT staff indefinitely to address these needs, which is expensive. If key developers leave, the firm might struggle to maintain the code (often internal projects suffer from poor documentation). In contrast, a purchased solution’s maintenance is handled by the vendor – they have dedicated teams to ensure the software runs smoothly and is improved over time, spreading those costs across many clients. Hidden costs of internal builds also include training new team members to use a one-off system, documentation efforts, and potentially the cost of catching up to features that commercial solutions add over time. A candid observation from First Round Capital’s Peter Reinhardt is that many startups build internal tools and 50% of those tools can’t be maintained in the long run. The same risk applies to an investment firm: you might build a custom tool only to find it unsustainable to maintain after a few years, resulting in sunk cost.

Need for Specialized Talent and Expertise

A successful in-house build is not possible without top engineering talent. PE/VC firms, however, are not typically software development shops – their core expertise is in finance, not tech. Attracting and retaining high-caliber engineers is a major challenge. The best engineers often prefer to work at technology companies or startups where the product is the software, not at investment firms where they may feel like a side unit. To lure equivalent talent, a firm might have to offer extremely high compensation (potentially $300–$500k for an experienced engineer, comparable to Silicon Valley rates). Even then, the cultural mismatch and lack of a tech-focused environment can lead to turnover. Additionally, the firm needs internal product management savvy – someone who deeply understands the workflows of private capital AND can translate them into software requirements. Without such a “semi-technical investment professional” to guide the project, it’s easy for an internal tool to miss the mark. Many failed projects cited lack of proper oversight from the deal/investment team as a cause. In summary, hiring and organizing a team with the right skillset is hard for a PE/VC firm. If done improperly, the result is low-quality software. ProSights notes that firms which try to save money by offshoring development or using less experienced developers almost always end up with subpar results. By buying Asset Class, the firm essentially outsources these technical challenges to a vendor that already has an expert team in place.

Complexity and Scope Creep

The software needs of a PE/VC firm span multiple domains: CRM, document management, compliance, accounting integration for capital calls, portfolio analytics, etc. Building one piece (say a basic deal tracking database) might be manageable, but delivering a fully integrated system with all these capabilities is enormously complex. Often, internal projects start with a narrow scope but then creep as users request more features to match commercial solutions. This can lead to an ever-expanding project that never quite finishes or delivers half-baked features. One internal project at a venture firm attempted to incorporate third-party data and CRM functionality, only to end up with a “clunky and laggy” UI that caused the team to abandon it and revert to a vendor solution (Affinity). This example underlines how difficult it is to achieve the polish and performance of purpose-built commercial software. Every additional feature (be it email integration, or a mobile interface, or a data room module) adds complexity in development and testing. A lean internal tech team can quickly become overwhelmed trying to replicate what a dedicated software company has spent years perfecting. The risk is ending up with a fragmented tool that partially does many things but none of them as well as expected, leading to low adoption by the firm’s professionals.

Security and Compliance Risks

When building in-house, the firm assumes full responsibility for data security, privacy, and regulatory compliance in the software. This includes implementing secure authentication, encryption of sensitive data (investor info, bank details), audit logs, and ensuring the system meets standards like SOC 2, GDPR, etc. Any lapse in security could be disastrous – a data breach of investor information would damage the firm’s reputation and incur legal consequences. Large software vendors typically invest heavily in security measures and certifications, whereas an internal project might not have the same rigor or resources. Moreover, keeping up with security patches (for underlying frameworks, servers, etc.) is an ongoing task. If a firm’s IT team is small, they may struggle to promptly address vulnerabilities. Compliance requirements in finance (such as retention of records, privacy notices, and consent tracking) must also be built into the system logic – something easily overlooked by developers unfamiliar with industry regulations. Therefore, building your own software can inadvertently expose the firm to operational and compliance risk if these aspects are not handled meticulously. Buying a proven solution like Asset Class mitigates this, as the vendor’s reputation hinges on strong security and compliance, and they typically undergo audits and implement best practices across all clients.

Risk of Project Failure or Low Adoption

Perhaps the biggest risk of all is that after spending significant time and money to build an internal system, the end result may fail to meet user expectations or achieve adoption within the firm. ProSights notes that they have seen “dozens of times” where months of effort and large budgets resulted in a tool that the team does not actually use. Common reasons include poor user interface, not addressing the real workflow needs, or employees simply resisting change if the tool is cumbersome. The unfortunate reality is that internal IT projects in many industries have high failure rates. A PE/VC firm’s investment professionals are extremely busy; if the new software slows them down or doesn’t deliver immediate value, they will revert to spreadsheets or prior methods. In the unsuccessful examples cited earlier, one firm’s in-house deal sourcing tool had “minimal usage from the investment team” despite costing $2M to build, and another firm’s custom CRM was so unintuitive that they scrapped it. This risk of low adoption means the theoretical benefits of a custom solution might never materialize, turning the project into a write-off. By contrast, a vendor solution like Asset Class is refined through feedback from many firms and is built to drive user adoption (with intuitive UI and training/support included). Indeed, asset managers who have implemented Asset Class praise its usability and have quickly embedded it into their day-to-day routines. The vendor’s success depends on users actually using the software, so it is designed accordingly.

In summary, building a custom system in-house comes with substantial risks: high and unpredictable costs, long delays, heavy maintenance needs, difficulty in hiring talent, ensuring security/compliance, and the possibility that the end product fails to deliver value. These challenges often distract a firm from its core mission of investing. As the CTO of Segment once advised, “Only build if you’re left without a choice… I’d estimate that 50% of startups that I see build tools can’t maintain them.” For a PE/VC firm, which is not in the software business, the hurdles are even higher. In most cases, the wiser course is to leverage an existing solution and avoid these pitfalls.

Head-to-Head Comparison: Buying vs. Building

To make a well-informed decision, it’s helpful to directly compare the two options across key dimensions. Below is a detailed comparison of buying Asset Class’s pre-built solution versus building an in-house software, focusing on costs, time, maintenance, security, compliance, and scalability:

Cost Considerations

Buying Asset Class

Typically involves a subscription or license fee, which might range from tens of thousands up to a few hundred thousand dollars per year depending on firm size and modules used. This cost is relatively fixed and predictable (often categorized as an operating expense). Implementation fees may apply but are modest compared to building from scratch. Crucially, this cost includes ongoing support, hosting, and updates by the vendor. As noted, external products for investment firms generally come at “low 5-figure to low 6-figure” annual costs and are purpose-built for the use case. There is no large upfront development expenditure; instead the cost is spread over time. From an ROI standpoint, the benefits (efficiency gains, time saved, possibly needing fewer support staff) often quickly justify the subscription fee. Additionally, opportunity cost is minimized – the firm’s deal team continues to focus on investments rather than diverting time to a software project.

Building In-House

Involves significant capital expenditure upfront. Hiring developers or consultants, project managers, purchasing infrastructure or development tools, etc., can easily cost hundreds of thousands before a usable product is delivered. Real-world examples show costs like $500k over 2 years for a failed CRM project, or multi-millions for more advanced internal systems at large firms. Maintenance will add a continuing yearly cost (staff salaries, servers, etc.) that can exceed a vendor’s subscription fee by multiples. One analysis flatly states that trying to build internally for “cost savings” is a misguided reason – you will “almost always end up with an inferior product vs. the cost of buying software.” In other words, the total cost of ownership of an in-house build is likely higher than purchasing, once you account for development, maintenance, and the cost of time delays. Unless the firm has very unique needs (and a very large budget to support them), buying is usually the more cost-effective route.

Time to Market and Implementation

Buying Asset Class

Provides a fast path to a working solution. Much of the implementation is configuration rather than coding. A firm can typically get the core platform up and running in a matter of weeks, including migrating existing data and training the team. Asset Class even advertises launching new funds and onboarding investors in “hours” due to its fully online workflow. While a full rollout might realistically take a few weeks to train staff and integrate with any internal processes, this is still a fraction of the time needed to develop software. This rapid time-to-market means the firm can start realizing efficiencies (e.g., automated investor reports, live deal tracking) in the same quarter that the decision is made. Quick implementation is particularly valuable if the firm is in the middle of a fundraise or needs to improve operations before the next audit or investor meeting. Essentially, buying shaves months or years off the timeline, allowing immediate alignment with industry best practices.

Building In-House

Carries a long timeline. Designing the system, writing code, testing, and iterating can push out a usable launch by 12–18 months or more, depending on complexity. There’s also a ramp-up period to hire and onboard a development team. Every month spent building is a month of continued inefficiency in current operations. From a competitive perspective, a firm could lose ground – for instance, competitors using modern investor portals might impress LPs and close commitments faster, while a firm still building its tool might rely on slower email-and-spreadsheet processes. Furthermore, internal builds often suffer delays (scope creep, technical hurdles, etc.). It’s not uncommon for internal IT projects to run behind schedule, meaning the anticipated benefits are delayed even further. For a PE/VC firm, which operates in a fast-paced deal environment, such delays could mean missed opportunities. In summary, time-to-value is significantly slower when building internally, and this time factor often tips the scale in favor of buying.

Ongoing Maintenance and Support

Buying Asset Class

All maintenance — from server uptime to bug fixes and updates — is handled by Asset Class as part of the service. The firm’s employees won’t need to fix software bugs; instead they have access to vendor support resources. Asset Class regularly updates the platform with new features or improvements (e.g., enhancements in reporting or security patches) at no extra development cost to the client. The vendor also ensures compatibility with other integrated services (Salesforce updates, DocuSign API changes, etc.). Additionally, support teams and documentation are available to assist users, and Asset Class likely provides training materials and best practice guides drawn from working with many firms. This means the solution stays current and reliable without the PE/VC firm dedicating internal resources to it. The predictable subscription covers these maintenance aspects, transforming what would be a large variable cost (in internal engineering hours) into a fixed service relationship. Essentially, the heavy lifting of keeping the software running and evolving is outsourced to the vendor.

Building In-House

The firm is solely responsible for maintenance. Any time a user encounters a bug or the system goes down, the internal tech team must troubleshoot and fix it. Regular maintenance tasks include updating underlying software libraries, patching security issues, and ensuring integrations (with email, portfolio accounting systems, etc.) continue to work as external services change. Over time, as the business evolves, the firm will need to allocate additional development to add features or modify workflows in the software. All of this demands a permanent allocation of IT staff and budget. If the original developers have left, new engineers must climb a learning curve to understand the custom code – a known challenge for proprietary internal tools. There’s also the risk that maintenance gets neglected if the firm hits a tight budget year or if priorities shift, resulting in the tool degrading in reliability. This contrasts with a vendor whose core business is to keep the software robust. In summary, with an in-house build the firm signs up for an open-ended commitment to maintain and improve the software, which can be costly and distracting year after year.

Security and Compliance

Buying Asset Class

Asset Class has invested in strong security measures as a selling point of its platform. Data is likely stored with encryption (both in transit and at rest), access is controlled through role-based permissions, and the platform may undergo regular security audits. The integration of Plaid for bank connectivity implies bank-level security for handling any payment or account data. The vendor’s reputation depends on preventing breaches and ensuring compliance with financial data regulations, so it stays up-to-date on that front. Features like audit logs, automated backups, and compliance certifications (e.g., SOC 2 Type II) might be provided. For the PE/VC firm, this means a much lower risk profile out-of-the-box – the system is designed to meet regulatory requirements (SEC, GDPR, etc.), and the vendor will likely sign contractual commitments on data protection. If a regulator or client asks about IT security, the firm can point to the vendor’s certifications and standards. Additionally, Asset Class being built on Salesforce means it inherits Salesforce’s world-class security infrastructure and compliance framework. From a compliance standpoint, features such as secure electronic signatures (via DocuSign) and digital audit trails make it easier to satisfy auditors and investors that processes are well-controlled. Overall, buying provides peace of mind that security/compliance is handled by experts.

Building In-House

The firm would need to design and implement all security controls from scratch. This requires expertise in cybersecurity – from database security to web application firewalls – which may not be readily available in-house. There is a risk of overlooking critical vulnerabilities, especially if the team is under-resourced or inexperienced in secure coding practices. Achieving the same level of security hardening as a mature vendor product is challenging. The firm also would need to establish compliance processes: e.g., ensuring data retention policies are followed, user access is reviewed periodically, and any sensitive personal data is handled according to privacy laws. If a regulatory audit occurs, the firm has to provide evidence of these controls in their custom system, which can be arduous if not built in from the start. Simply put, the burden of security and compliance falls entirely on the firm with an in-house solution. Any breach or compliance failure would be the firm’s liability alone. This added risk is often not worth taking when a reputable vendor solution is available. In fact, concerns about data privacy or control (often cited as reasons to build) can typically be mitigated with vendor configuration (e.g., hosting in a private cloud, data ownership clauses), making security/compliance a strong argument to buy, not build.

Scalability and Performance

Buying Asset Class

The platform is designed to scale across many clients and large data volumes. Whether the firm grows from 10 deals to 100 deals a year, or from 50 investors to 500, the system can handle it by virtue of its cloud architecture. The Salesforce foundation means it can support thousands of contacts, interactions, and records without performance degradation, as that infrastructure is proven in enterprise environments. If the firm launches new funds or operates across multiple geographies, Asset Class can accommodate that structure (multi-fund hierarchy, multi-currency reporting, etc., are likely supported features for a private capital platform). Moreover, peak loads – such as a flurry of investors logging in to view quarterly reports – are managed by the cloud service which can scale resources as needed. The firm doesn’t have to worry about provisioning servers or optimizing databases; the vendor ensures the service is performant. This scalability extends not just to technical performance, but also to functional scalability: new modules or features can be turned on as the firm’s needs expand (for instance, adding the Deal Flow Management module if the firm enters a new strategy). Asset Class, by serving many firms, has been