FoFs Face Data Crisis as GP Reporting Failures Hit Decisions

What's New

Carta's 2025 survey of 100 senior investment professionals reveals that 92% of funds of funds report GP data issues have negatively impacted their investment decisions or reporting obligations, with 41% saying it always affects their decision-making. The findings expose a systemic breakdown in private markets data infrastructure as AUM has grown 20-fold since 2000 to reach $22 trillion.

Why It Matters

These data failures aren't just operational headaches—they're threatening the fundamental value proposition of fund of funds structures. As investors gain more direct access to private market funds, FoFs that can't deliver superior transparency and insight risk losing their raison d'être. The inefficiencies also pose structural risks to capital raising at a time when investor expectations for reporting quality have never been higher.

Big Picture Drivers

• Format friction: 31% struggle with unstructured delivery methods like PDFs, emails, and scanned documents from GPs

• Volume overload: 28% cite the sheer quantity of data as overwhelming internal teams

• Timing gaps: 18% report delays in receiving information, directly impacting LP reporting cycles

• Standardization void: 43% identify inconsistent calculation methodologies across managers as a major obstacle

• Resource drain: Teams spend an average of 33% of their time on manual data handling rather than analysis

By The Numbers

• 92% of FoFs experience data quality issues with GP reporting

• 33% of team time consumed by accessing, processing, and standardizing GP data

• 54% of firms report AI is widely integrated across multiple processes

• 56% are investing in technology and automation to combat fee compression

• 95% of AI pilots fail, typically due to deploying generic solutions for specialized tasks

Key Trends to Watch

• Regional divergence: U.S. firms are adopting automation at twice the rate of European counterparts (68% vs. 34%), creating a potential competitive gap.

• Automation priority: 43% of FoFs rank increasing automation as their top priority for the next 12 months, signaling a decisive shift from manual processes.

• Purpose-built AI emerging: Generic LLM tools are proving inadequate for private markets complexity, driving demand for domain-specific solutions.

• Fee pressure accelerating change: 44% are passing costs to investors while 41% are cutting internal costs, making technology investment a margin protection imperative.

The Wrap

The research makes clear that FoFs face an existential technology decision: those who invest in purpose-built automation will free their teams for alpha-generating activities, while those relying on spreadsheets and generic tools will struggle to meet rising investor demands with shrinking margins. The winners will be defined not by data volume, but by their ability to transform fragmented GP information into competitive intelligence.