Introduction
Venture Capital (VC) and Private Equity (PE) funds operate in an environment where trust, timeliness, and confidentiality are paramount. Limited Partners expect accurate reporting, uninterrupted communication, secure handling of sensitive data, and dependable operational execution regardless of disruptions. Yet most VC and PE funds are intentionally lean and heavily dependent on third parties, cloud platforms, and distributed teams. This combination makes Business Continuity and Disaster Recovery (BCP/DR) readiness not merely a resilience exercise, but a fiduciary and governance requirement.
Operational disruptions are no longer limited to physical disasters. Today’s highest-probability events include cyber security risk in VC incidents, ransomware, cloud outages, email compromise, service provider failures, power disruptions, and regional connectivity issues. For funds managing sensitive investor and deal information, even a short outage can delay capital calls, disrupt portfolio decisions, compromise regulatory deliverables, and damage investor confidence.
Regulators and trustees increasingly view BCP/DR as part of responsible fund governance. While SEBI may not prescribe a single format for BCP/DR for all funds, inspection themes and audit practices consistently reward funds that demonstrate structured planning, clear accountability, evidence of testing, and the ability to recover critical operations. This guide explains how VC and PE funds should approach BCP/DR readiness in a practical, proportionate, and inspection-ready manner.
Why BCP/DR Matters for VC and PE Funds
BCP/DR readiness protects three core fund obligations:
- Investor protection: ensuring investor services, confidentiality, and reporting remain reliable
- Operational continuity: ensuring critical processes continue during disruptions
- Governance credibility: demonstrating fiduciary discipline and preparedness
For funds, the biggest risk is not disruption itself, but the inability to respond quickly and credibly. A well-managed incident often strengthens trust; a poorly managed outage erodes it.
BCP vs DR: What Funds Must Understand
Although often used together, BCP and DR serve different purposes:
- Business Continuity Planning (BCP): How fund operations continue during disruption
- Disaster Recovery (DR): How IT systems and data are restored after disruption
VC and PE funds need both because disruptions affect people, processes, vendors, and systems simultaneously.
Top Disruption Scenarios for VC and PE Funds
BCP/DR planning must be scenario-driven. High-impact, high-probability scenarios include:
- Ransomware impacting endpoints or shared drives
- Email or cloud account compromise affecting communications and documents
- Cloud platform outage affecting storage and collaboration
- Fund administrator or vendor outage impacting accounting and reporting
- Data loss due to misconfiguration or deletion
- Key personnel unavailability during a critical event
- Office-level disruptions (power, fire, connectivity)
The goal is not to plan for every possibility, but to prepare for realistic operational threats.
What “BCP/DR Readiness” Looks Like for Funds
For VC and PE funds, readiness is demonstrated through:
- Clear ownership and decision authority
- Identified critical processes and recovery priorities
- Defined recovery objectives for systems and data
- Tested backups and restoration capability
- Vendor resilience oversight and fallback options
- Documented plans and evidence for audits and trustees
Readiness is a governance posture, not a document alone.
Step 1: Establish Governance, Ownership, and Oversight
BCP/DR fails most often due to unclear accountability. Funds should define:
- Accountable owner: typically COO, compliance lead, or fund manager delegate
- IT/DR execution partner: internal IT or MSP
- Trustee and leadership oversight: periodic review and approval
Trustees and auditors expect evidence of oversight, not just the existence of plans.
Step 2: Identify Critical Fund Processes
AIFs Fund benefits should document what must continue during disruptions. Typical critical processes include:
- Investor communication and LP queries
- Fund accounting, NAV, and reporting cycles
- Capital call and distribution readiness
- Deal approvals and internal governance workflows
- Regulatory and compliance deliverables
- Access to key fund documents and records
Criticality should be prioritised based on impact to investors and regulatory obligations.
Step 3: Map Systems and Dependencies
VC and PE funds are dependency-heavy. The BCP/DR plan should map:
- Email and identity systems
- Cloud storage and document repositories
- Deal management tools and CRM
- Fund administrator portals and reporting platforms
- Payment workflows and banking interfaces
- Legal, KYC, and compliance tools
This dependency view is essential for realistic recovery planning.
Step 4: Define Recovery Objectives (RTO and RPO)
Even lean funds should define two basic targets:
- RTO (Recovery Time Objective): how quickly a system must be restored
- RPO (Recovery Point Objective): how much data loss is acceptable
For example, investor reporting systems may tolerate longer RTO, but deal documentation repositories may require rapid restoration. Auditors and trustees look for evidence that recovery objectives are intentional and approved.
Step 5: Build Backup and Recovery That Actually Works
Backups are often assumed to exist but rarely tested. Funds must ensure:
- Coverage for critical systems and key data stores
- Regular backup schedules with retention policies
- Isolation from ransomware and deletion risks
- Restore testing and documented results
Backups without testing are not considered “recovery readiness” in audits.
Step 6: Create a Practical Continuity Playbook
Funds benefit from a short, usable playbook that defines:
- Disruption declaration criteria
- Escalation and decision-making steps
- Communication procedures for staff, trustees, vendors
- Workarounds for critical processes
- Temporary operating modes (remote-only, limited access)
AIF environments need playbooks that partners can use under stress.
Step 7: Vendor Resilience and Third-Party Failover
Most fund disruptions originate from vendors or platforms. Funds should ensure:
- Vendor criticality classification
- Contractual incident notification obligations
- Documented fallback processes
- Periodic vendor resilience reviews
Trustees increasingly ask how the fund operates when a key vendor risk management fails.
Step 8: Test, Validate, and Improve
BCP/DR is not credible without testing. Lean funds can use:
- Tabletop exercises (scenario discussions)
- Restore tests for backups
- Access failover tests for cloud tools
- Vendor outage simulations
Testing should result in documented actions and improvements.
Step 9: Maintain Evidence for Audits and Inspections
Regulators, auditors, and trustees look for:
- Approved BCP/DR policy and plan
- RTO/RPO definitions and approvals
- Backup and restore test evidence
- Incident logs and continuity decisions
- Vendor resilience artefacts
Evidence turns continuity planning into fiduciary proof.
Common BCP/DR Gaps in VC and PE Funds
Frequently observed gaps include:
- Plans exist but are outdated or untested
- Backups exist but cannot be restored quickly
- No clarity on decision authority during disruptions
- Over-reliance on a single vendor without fallback
- No documented evidence for trustees or auditors
These are governance and discipline issues more than budget issues.
How Infodot Helps VC and PE Funds Achieve BCP/DR Readiness
Infodot Technology supports VC and PE funds in establishing practical, inspection-ready BCP/DR capabilities without requiring large internal teams.
Infodot helps by:
- Creating fund-specific BCP/DR frameworks and playbooks
- Defining RTO/RPO targets aligned to fund operations
- Implementing and managing resilient backup strategies
- Conducting restore tests and tabletop exercises
- Building trustee- and audit-ready evidence packs
- Supporting incident-driven continuity execution
This enables fund leadership to demonstrate operational resilience and fiduciary diligence confidently.
Conclusion
BCP/DR readiness for VC and PE funds is no longer a “nice-to-have.” It is a practical requirement driven by cyber threats, outsourcing dependencies, investor expectations, and increasing regulatory scrutiny. Funds do not need complex enterprise programs; they need clear governance, realistic recovery objectives, tested backups, vendor resilience oversight, and evidence of preparedness.
The funds that prepare proactively reduce disruption impact, protect investor trust, and demonstrate mature governance. In a world where operational disruptions are inevitable, continuity readiness becomes a strategic advantage—one that directly supports credibility, fundraising, and long-term performance.
FAQs
Why do VC/PE funds need BCP/DR?
BCP/DR protects investor servicing, fund operations, and confidential data, ensuring disruptions do not become regulatory or reputational failures.
Is BCP/DR a SEBI expectation for funds?
SEBI increasingly expects operational resilience and documented preparedness, especially for systems handling investor data and critical processes.
What is the difference between BCP and DR?
BCP keeps business processes running during disruption; DR restores IT systems and data after disruption or outage events.
Do small funds need formal BCP/DR plans?
Yes, expectations apply proportionately; lean funds still need clear plans, ownership, and evidence of readiness.
What disruptions should funds plan for first?
Cyber incidents, email compromise, ransomware, cloud outages, vendor downtime, connectivity failures, and key staff unavailability are priorities.
Who should own BCP/DR accountability in funds?
A senior operations or compliance leader should own accountability, with leadership oversight and managed partners executing technical tasks.
Do trustees review BCP/DR readiness?
Yes, trustees expect assurance that critical fund operations can continue and recover, supported by periodic reporting and evidence.
What are RTO and RPO in simple terms?
RTO is acceptable downtime; RPO is acceptable data loss. Both should be defined for critical systems and processes.
How detailed should a fund’s BCP/DR plan be?
It should be concise, practical, role-based, and usable during stress, avoiding excessive complexity or enterprise-style documentation.
Are cloud platforms automatically resilient?
Not fully; cloud providers ensure infrastructure availability, but funds must plan identity access, data recovery, and vendor failover.
Why are backups often insufficient in practice?
Backups fail when untested, incomplete, poorly retained, or accessible to ransomware. Restore testing validates real recovery capability.
How often should backups be tested?
At least quarterly for critical data, with documented results and remediation actions to demonstrate readiness to auditors.
What evidence do auditors expect for BCP/DR?
Approved plans, RTO/RPO decisions, backup and restore test reports, incident logs, vendor SLAs, and review minutes.
Do funds need a disaster recovery site?
Not always; many funds use cloud-based resilience. What matters is demonstrable recovery capability and tested restoration processes.
How does ransomware impact BCP/DR planning?
Ransomware requires isolated backups, rapid containment, clean recovery steps, and communication governance to minimise downtime and data loss.
Should incident response and BCP/DR be connected?
Yes, most disruptions are cyber-driven. Incident response triggers continuity actions, restoration steps, and stakeholder communications.
What is a continuity playbook for funds?
A short guide defining who acts, escalation steps, communication rules, and operational workarounds during system or vendor disruptions.
How should funds handle vendor outages?
Classify critical vendors, define fallback processes, require notification SLAs, and document alternative operating modes for key deliverables.
Is remote work part of business continuity?
Yes, remote operations are often the primary continuity mode. Secure access, MFA, and device controls are essential.
What is the most common BCP/DR gap in funds?
Plans exist but are outdated, untested, and unsupported by evidence, making them ineffective during incidents and audits.
Should funds run tabletop exercises?
Yes, tabletop simulations validate decision-making, escalation, and communication, and produce actionable improvements without heavy operational disruption.
How often should BCP/DR plans be reviewed?
At least annually and after major changes or incidents, ensuring plans reflect current systems, vendors, and operating realities.
Do funds need to notify investors during disruptions?
Only when investor interests are materially impacted. Communication should be factual, approved, and aligned with legal and trustee guidance.
Can BCP/DR readiness support fundraising?
Yes, LPs increasingly assess operational resilience. Strong readiness improves trust and reduces perceived operational and cyber risk.
What systems are typically “critical” for VC/PE funds?
Email, identity access, cloud documents, accounting/reporting platforms, investor communication tools, and payment processes are typically critical.
How do funds ensure access during outages?
Maintain secure alternate access methods, MFA, break-glass accounts, and documented procedures for restoring access and permissions safely.
What is “break-glass” access?
Emergency privileged access used only during outages, controlled tightly, logged, and reviewed to prevent misuse or hidden compromise.
Should funds keep offline copies of key documents?
Yes, secure offline or immutable backups of critical documents support continuity if cloud access is disrupted or compromised.
How do auditors assess “operational resilience”?
They evaluate governance, tested recovery capability, vendor dependencies, evidence of reviews, and whether critical processes can continue.
Is cyber insurance enough for continuity risk?
No, insurance does not restore operations. BCP/DR controls reduce impact and enable faster recovery and regulatory defensibility.
What role does an MSP play in BCP/DR?
An MSP can implement backups, monitoring, recovery workflows, and testing, but fund leadership must retain governance and oversight.
How can a lean fund achieve strong BCP/DR?
By prioritising critical processes, standardising tools, using managed partners, testing backups, and maintaining audit-ready evidence consistently.
What is the first step to improve BCP/DR quickly?
Define critical processes, map dependencies, set RTO/RPO targets, and validate backups through an immediate restore test.
How does Infodot support BCP/DR readiness?
Infodot designs playbooks, sets RTO/RPO, manages backups, conducts tests, prepares evidence packs, and supports continuity execution.
What is the biggest benefit of BCP/DR readiness?
It reduces downtime, protects investor trust, supports regulatory confidence, and ensures the fund can operate credibly during disruptions.
