Challenge: The need to streamline a manual, time-consuming compliance process

Founded in 1998 and dual-headquartered in Dallas and Nashville, Pharos Capital Group is a physician-founded private equity firm that invests in growing healthcare companies. Pharos seeks to generate impact by investing in mission-driven companies aimed at lowering costs, improving patient outcomes, and expanding access to care, especially in underserved regions.

Pharos traditionally relied on its Chief Compliance Officer (CCO) and senior management’s collective memory and manual effort to stay atop investor obligations. Kimberly Futrell, CCO and Chief Financial Officer at Pharos, explained that this became a time- and labor-intensive process as the company expanded. For example, to determine co-investment rights, team members would discuss among themselves. They would then verify by examining a physical compendium of side letters – often as many as 20-30 side letters at a time.

Solution: Insight’s critical role in swift SEC compliance

Once Futrell and the firm’s partners discovered Ontra’s Insight solution, they recognized its potential to reduce the valuable time spent on tedious work and were eager to implement it.

The real test for Insight came about a year after Pharos started working with Ontra. The AI-powered solution then became a critical part of the company’s compliance strategy ahead of an upcoming SEC exam.

During the exam, the SEC asked Pharos to provide a list of side letters between any private fund managed by the advisor and any investor or beneficial owners. Futrell worked with the team at Ontra to procure the data she needed from the app in minutes, in stark contrast to the days or even weeks it would have taken in the past.

The team only took about 15 minutes for each fund using Insight to download and review the data needed to demonstrate compliance before crafting a response to the SEC.

However, not all of Pharos’ funds were managed through Insight. Futrell and her colleagues spent about 10 hours on each fund that didn’t use Insight, resulting in an extra 2-3 days of pulling side letter provisions. The difference was striking. For funds using Insight, the firm’s time was spent reviewing data and crafting a response, as opposed to days manually searching for and collecting the needed data.

Although the SEC did not request additional proof of compliance with obligations, Futrell was confident that the information was correct and accurately organized across funds because of Insight.

When asked if Insight ultimately achieved the objectives set out for it, Futrell responded, “Yes! The top objective was being able to confidently and quickly provide that list of side letter provisions to the SEC when requested. And that was exactly what Insight enabled us to do.”