Alt Goes Mainstream: The Latest on Alternative Investments, WealthTech, & Private Markets
00:00:00 · Michael Sidgmore
[00:00:00] S0: This episode of the Alt Goes Mainstream podcast is brought to you by Ultimus, a leading full service fund administrator for asset managers in private and public markets. As private markets continue to move into the mainstream, the industry requires infrastructure solutions that help funds and investors keep pace. Ultimus is a leading full service fund administrator for asset managers in both private and public markets, offering a wide range of capabilities across registered funds, private funds and public plans, as well as outsourced middle office services. Delivering operational excellence, Ultimus helps firms manage the ever changing regulatory environment while meeting the needs of their institutional and retail investors. Ultimus provides comprehensive operational support and fund governance services to help managers successfully launch retail alternative products. Trusted by institutions, investment consultants, registered investment advisors, state governments, and fund managers, Ultimus provides solutions for nearly every investment structure in the marketplace. Visit www.ultimusfundsolutions.com to learn more about Ultimus' technology enhanced services and solutions or contact Ultimus executive vice president of business development, Gary Harris, on email at gharris@ultimisfundsolutions.com. We thank Ultimus for their support of Alt Goes Mainstream. Welcome back to the Alt Goes Mainstream podcast. Today's episode is with a founder who is building mission critical software for private equity firms. We are joined by Venkat Subramaniam, the cofounder of DealsPlus, to discuss why he has built DealsPlus. DealsPlus provides a digital solution to streamline, digitize, and automate the management of complex holding capital structures for private equity firms. Historically, private equity firms have relied on humans and manual processes to manage and track cap tables, transactions, and entities. This process has required significant human intervention has often been rife with errors, making deals harder to consummate and transactions harder to complete. Venkat has taken his fifteen years of experience advising private equity managers and cross border transactions, most recently as an associate partner at EY UK, to build DealsPlus to create a single source of truth for capital structures for private equity firms.
00:02:34 · Michael Sidgmore, Michael Sidgmore, Venkat Subramaniam
DealsPlus works with a number of industry leading private equity firms and is backed by a private equity firm with 38,000,000,000 in AUM. Venkat and I had a fascinating conversation about the challenges private equity firms face with managing and tracking transactions and portfolio companies. We discussed why it's been so hard to create cap table management solutions for private equity, how private markets can move from the Excel age to the digital age, how to build software that provides a single source of truth, the atomic unit of value in private markets, building an end to end platform versus building a point solution, and what's next post investment ops tech innovation. Thanks, Venkat, for coming on the show to share your thoughts and wisdom on private markets tech. [00:03:28] S1: We're going mainstream. Venkat, welcome to the Alt Goes Mainstream podcast. [00:03:34] S2: Thank you. Thank you, Michael. [00:03:35] S1: Pleasure to have you here. We're live from the Citywire Studios in London. I think quite a fitting place to do this podcast because it's really the home for asset managers and where they come and see what's going on in the world of private markets. You're building something that's really core to what alternative asset managers need to run their business day to day. So excited to get into that. First, really wanna hear your background in terms of how you got to build DealsPlus based on background in tax and m and a?
00:04:06 · Venkat Subramaniam, Michael Sidgmore
[00:04:06] S2: Before DealsPlus, I was a tax adviser, as you as you know. So my day job was helping private equity funds structure transactions. We used to do two things, deal structuring, or you're doing due diligence. And both go hand in hand. So you're putting in place all these really complex structures to make sure your returns are aligned, management equity plans, funds, and so on. And then on the other side, when a portfolio is coming for an exit, you're asking for all the information on those structures and your diligence in them. And what we were seeing was every time we would work on a transaction, especially on the diligence side, it used to take a long time to get hold of the facts. And then you'd find a lot of things haven't happened the way they should have happened and, you know, risks come in. And so you kind of go at some point, well, there must be a better way of doing these things. You're managing so much money. I think private equity funds manage about 7,000,000,000,000 or more in assets, and you're putting in place some very sophisticated investment structures, and there must be a better way of doing this. And that was the genesis behind DealsPlus. When you were in [00:05:10] S1: the middle of some of those transactions, what was it like? Like, walk us through some of the challenges that both you as the advisor, helping firms structure things, faced, but also, I'm sure you dealt with the team members too. As they were trying to deal with all of this, how did they feel?
00:05:10 · Michael Sidgmore, Venkat Subramaniam
[00:05:10] S1: the middle of some of those transactions, what was it like? Like, walk us through some of the challenges that both you as the advisor, helping firms structure things, faced, but also, I'm sure you dealt with the team members too. As they were trying to deal with all of this, how did they feel? [00:05:26] S2: We have plenty of war stories, and and I think if you speak to people in this industry, whether it's tax, legal, advisers, deal teams, they'll always say something that they have experienced. I've got lots of stories. One of the best I have is actually not mine personally, but our CPO's. He was also ex tax accountant. And there was this transaction at a big take public of a big private equity portfolio company. And it was, as always, time pressured. And he was doing the modeling of the returns. Basically, what was being projected in an Excel file was way off the reality because some of the instruments were not being accrued or the terms are different or the dates of accruals are different, and it's off by few billions of pounds, and and this kind of returns that have been communicated to various people. So that was a big nightmare. You you... None of this should be happening, but it does happen all the time. So you're under severe pressure, multiple teams, and you're trying to deliver in time. [00:06:25] S1: Why do you think there's such a lack of uniformity around many of these transactions and the processes? Is that something that has just been the way things have been industry? Is that a lack of technology? Is it something else?
00:06:25 · Michael Sidgmore, Venkat Subramaniam
[00:06:25] S1: Why do you think there's such a lack of uniformity around many of these transactions and the processes? Is that something that has just been the way things have been industry? Is that a lack of technology? Is it something else? [00:06:39] S2: I think it's a combination of both. With most industries, your front office is way ahead of what back office needs to do to catch up, and that's been partly what's happened with private equity as well. But I think things are now catching up, which is good news. I think there's a real realization that technology is there and it can do things. And when you have industry people trying to solve the problem with technology... And I think things like cloud computing and the way UI UX has improved and so on makes a huge difference. But Excel overload, back office always trying to catch up and keep up with front office, and that creates a lot of these problems. Do you think [00:07:16] S1: a lot of the technology solutions that are now being built for private markets could have been built five, ten years ago, or did technology innovation, whether it was process automation, AI, cloud, those things really been what's driven a lot of the more recent innovation in private markets? I think the the two biggest things that have made
00:07:16 · Michael Sidgmore, Venkat Subramaniam
[00:07:16] S1: a lot of the technology solutions that are now being built for private markets could have been built five, ten years ago, or did technology innovation, whether it was process automation, AI, cloud, those things really been what's driven a lot of the more recent innovation in private markets? I think the the two biggest things that have made [00:07:36] S2: the biggest difference for people like us to come and solve this is cloud computing. Cloud has really made a huge difference. You can launch products a lot more easily and a lot quickly. And I think there's a realization that processes are very important. And if you want humans to work with technology, the UI UX needs to be very, very clean and very user friendly. If you look at the legacy software systems, they were not really built for purpose. Some of the front technology and the way people are designing things, enterprise applications are becoming more like your Netflix of the world and so on. It's very, very important. And once that happens, data becomes cleaner that's coming in, and then AI can obviously play its role if the data is there. I think cloud computing and the way people think about designing software.