There is a new standard amongst allocators. Your tech stack still knows the old one.

The private markets industry is not what it was a decade ago, and size is not the only thing that has grown. 

Alternative assets are on track to reach $32 trillion in global AUM by 2030, according to Preqin in their 2030 Private Markets report.¹ Yet, despite the volume of capital flowing into private markets, the most significant change is the structural complexity of the firms that are managing it. The modern private fund has transformed beyond recognition in the last twenty years  — master/feeder arrangements, parallel vehicles, co-investment SPVs, different share classes, fee waterfalls and carried interest structures all vary by investor. The nature of the fund itself has become the operational challenge. 

And much like the parallel side of the market, where allocators have not sufficiently modernized for their increasing allocation to alternatives, the infrastructure running many of these funds has not kept pace.

The infrastructure that was built for a different era

Fund administration was built around one primary function: maintaining an accurate accounting book of record. Though it does that job well, it was never designed to give fund managers dynamic, look-through visibility into the funds they are running. 

The ABOR may be able to record the structure, but it does not make it queryable. To understand look-through exposure across nested entities, calculate return metrics at the LP level, or model the impact an upcoming capital call will have on distributions, the team  must export the data and rebuild it elsewhere. Even for the most sophisticated funds, that place is often Excel. 

The industry knows this as “shadow accounting” and it’s been a standard practice at most firms, regardless of size, for many years. Data leaves a governed system to a spreadsheet, where teams recreate and reproduce what the accounting platform could not. The issue with this approach is clear: every export is static — a snapshot in time, rather than a dynamic source of truth. And the process must be repeated quarter after quarter.  

The fund structure has compounded in its complexity, but the workflow hasn’t changed.

Fragmented data, compounded risk

Shadow accounting works until it doesn’t, and when it goes wrong, the consequences can be severe.

One key issue lies in version control. There’s often multiple exports, with multiple teams working on different documents. These include different dates and different assumptions embedded in formulas. When a number does not reconcile, it takes time-consuming, manual processes to resolve the problem. Everyone working across these systems recognizes some of these day to day challenges, but this effect compounds across the firm. Quiet errors on fee calculations grow over time, capital account statements fail to cleanly tie back to the ABOR,  and performance figures calculated in spreadsheets, lacking a chain of custody and governance, become hard to defend when under scrutiny. 

The operational cost of this is high. Each ad hoc request, every modeled scenario and each custom cut of data requires rebuilding from scratch. The headcount to run a sophisticated fund on legacy infrastructure scales directly with complexity and AUM. As the fund grows, the economics of that model erode.

The infrastructure you need is finally here

Addepar sits above the accounting system as an aggregation and analytics layer. Your ABOR stays in place — what changes is what can be done with the data inside of it.

The foundation of the platform is in advanced entity mapping and modeling. Addepar natively maps the ownership structures that define modern, private funds: complex allocator account hierarchies, nested SPVs, master/feeder relationships and co-investment vehicles.

From that foundation, Addepar enables:

• On-demand exposure: Look-through exposure is available across structures on demand and analysts no longer need to reconstruct every time someone needs a number.

• Dynamic performance metrics: Performance metrics update dynamically as new capital events are logged. The platform is not dependent on batch processing cycles or macro dependent spreadsheets. We enable a level of understanding not possible when data lives in disconnected systems.

• Forecasting and pacing: Cashflow forecasting and pacing models are built on actual portfolio data, not offline estimates. Scenario analyses reflect the true fund.

• Unparalleled benchmarking: Access to performance data across more than 15,000 unique private funds, for unparalleled benchmarking that doesn’t require an entire research exercise.

• Streamlined LP reporting: When LP reporting needs to happen, it becomes a clean, easy byproduct of a modern infrastructure rather than a production cycle. We provide branded, customized reports that can be generated with a few clicks across the full investor base.

• Effortless visibility: LP portal access gives investors on-demand visibility without creating extra work for the IR team.

Scale without headcount

The firms that pull ahead as private markets approach the $32 trillion mark are not just the ones with the sharpest investment views. They’re the firms that recognize the importance of operational infrastructure and can execute at the pace and complexity demanded by private markets. 

Funds have become harder to run and the market more competitive. Allocators have become more demanding, and more sophisticated in what they have come to expect. When these pressures compound, they point in the same direction: the era of managing world-class funds on spreadsheets is coming to an end.

References

1. Discover the Private Markets in 2030 Report. Preqin Insights+, 2025.