Alt Goes Mainstream: The Latest on Alternative Investments, WealthTech, & Private Markets
00:22:38 · Venkat Subramaniam, Michael Sidgmore
[00:22:38] S2: I think so. I can talk about cap table management because I know the problem, and I'm sure it applies to a lot of these other solutions as well. Some of the issues we are solving for are so complex and so esoteric that it'd be very difficult to bring them all together in a big single application. You need domain knowledge, but you also need very good engineering connection with that. And we live and breathe that solution. So if you're a private market fund and you go, well, these guys know this bit, and they will solve that bit perfectly for us. And all they're doing is thinking about that all the time and they carry on build. You have to keep on building as well. It doesn't stop. That's the problem taken care of. And that probably is happening across the board, whether it's investor relationships or portfolio monitoring as innovation happening all the time. So I think point best in class solutions, connect them together through APIs or data of ours is... That'll be the trend. [00:23:33] S1: How much does size of fund drive complexity? So what I mean by that is, are there technology solutions that can serve every firm from the small single fund firm all the way to the multi
00:23:33 · Michael Sidgmore, Venkat Subramaniam
[00:23:33] S1: How much does size of fund drive complexity? So what I mean by that is, are there technology solutions that can serve every firm from the small single fund firm all the way to the multi [00:23:48] S2: strategy platform? That's a very interesting question. I don't know yet if you can build a solution that serves multi strategy in in our context, possibly down the line, but you have to focus on one to stop it and solve that perfectly. Because I think if you take capital as an example, if you're solving that for private equity, it's very different to solving that for real estate to debt. But I think once you solve one, and and the most complex one will be private equity for various reasons, then there are ways in which you can roll it out across other strategies, but you probably need to focus on that problem. Solve it. On that point as well, do [00:24:28] S1: you think it's better to build for the larger firms? It's harder to sell the larger firms. Yeah. But is it better in your mind as an entrepreneur building software for private markets firms? It's better to start with the larger firms more complex and then work your way down, or the other way around, start with smaller firms, work your way up, and add features and and complexities based on the size and scale
00:24:28 · Michael Sidgmore, Venkat Subramaniam
[00:24:28] S1: you think it's better to build for the larger firms? It's harder to sell the larger firms. Yeah. But is it better in your mind as an entrepreneur building software for private markets firms? It's better to start with the larger firms more complex and then work your way down, or the other way around, start with smaller firms, work your way up, and add features and and complexities based on the size and scale [00:24:48] S2: of a fund. Yeah. It's a great question. I think we we ended up building a solution that finally works whether you're a large or small firm. I think for the challenge of private equity is you might be a very small firm managing, say, 500,000,000 in in AUM. The complexity in your deal structures will not be too dissimilar to a to a larger portfolio company or larger deal. It's very similar. But what happens is stakeholder management. So it's not the product. The prob... The product has to be pretty similar, but a larger fund will have many more people. With the software, you're also changing a lot of processes. It's a lot easier for a smaller fund to change those processes because the decision makers are concentrated in in
00:24:48 · Venkat Subramaniam, Michael Sidgmore
[00:24:48] S2: of a fund. Yeah. It's a great question. I think we we ended up building a solution that finally works whether you're a large or small firm. I think for the challenge of private equity is you might be a very small firm managing, say, 500,000,000 in in AUM. The complexity in your deal structures will not be too dissimilar to a to a larger portfolio company or larger deal. It's very similar. But what happens is stakeholder management. So it's not the product. The prob... The product has to be pretty similar, but a larger fund will have many more people. With the software, you're also changing a lot of processes. It's a lot easier for a smaller fund to change those processes because the decision makers are concentrated in in [00:25:31] S1: one place. Whereas in the larger fund, you have lots of different stakeholders. So it... It's more of a and a stakeholder management and behavioral problem than a product problem. It's a really interesting question that you bring up, which is, do you think a lot of this technology really positively impacts the smaller funds in a bigger way versus the larger funds? Because larger funds have the resources and scale to throw people at the problem. Do you think that they'll just continue to throw people at the problem? Maybe augment with software, but throw people at the problem versus a smaller firm may have to use technology because they have no
00:26:04 · Venkat Subramaniam
[00:26:04] S2: other choice. That's a... Yeah. I I think so. Right now, I think that is the case. We have a mixture of large fund clients and small fund clients, but I can tell you that small funds... There's two things there. One is small funds benefit a lot faster, but the clients who benefit from technology, who get the return quickly, are people who already have a degree of processes in place. They may not have technology, but they have a process, and they have a way in which things are happening. Now when they see technology, they are able to very quickly marry that process with technology and then get the return fast. So even if you're a small fund, but if you don't have process, you will struggle. And a lot of what we end up doing with our product is you're creating processes. And you need... I think even with things like AI, if you don't have data, AI is not of that much value. If you want data to be quality data, you need processes. And software is a great way to create very strong process. And, yeah, small funds will benefit faster. I think big funds are moving in their direction,
00:27:07 · Michael Sidgmore
[00:27:07] S1: but processes matter more. There's an interesting piece of your business though as well, which is in the process of creating these processes and the workflow tools for a certain fund, private equity will also have multiple transactions in a life cycle of a company. So one private equity firm will sell to another private equity I imagine firms that are larger will see smaller firm leveraging a platform like DealsPlus, seeing that process and saying, wow, this was easy. Maybe we should adopt this too. So there's some interesting inbuilt network effects in a lot of these technology solutions for private markets, because once one firm uses it, sees it, then others can use it. And that, I think, should only help the industry as a whole just to get more efficient.