Alt Goes Mainstream: The Latest on Alternative Investments, WealthTech, & Private Markets
00:13:13 · Yann Magnan, Michael Sidgmore
[00:13:13] S1: Maybe at some point. And collect these documents, identify the relevant KPIs, collect the KPIs, standardize this information, create consistency. And then that information is used for evaluation. So from that perspective, what we need is, well, not much. Eventually, we need a Dropbox from the portfolio company, eventually that could accelerate certain things. But most often, we are seeing that the portfolio companies would send these documents by email to the investment teams, and it would be automatically forwarded to our platform, and it's done. [00:13:45] S0: Even if different companies report their metrics in different ways, you're still able to handle all that? Because I think that's part of the challenge when you think about different categories, accounting is one example. Yeah. Part of the challenge with something like automation of certain things like accounting or same here where it's valuations is everybody may have a different way of reporting something.
00:14:06 · Yann Magnan
[00:14:06] S1: Yeah. Everybody has a different way of reporting something. And the GPs typically have one way... They want to have one way of looking into each and every information because we want to be able to look through their portfolio, look across their portfolio, and understand when they invest into one specific strategy or one specific sub industry. They want to be able to benchmark companies. They want to be able to understand or to learn from one company and replicate with the other one. But if you want to do that, you need to make sure that the data that you get is very consistent and standardized. Otherwise, you just can't do anything out of that. The beauty of technology is that you can do that automatically now. We have 98.6% accuracy when we do that. It's just like massive. And so it's done automatically. It saves a lot of time. That means that these very smart people that work in these GPs, they don't have to spend like two or three hours at night just collecting these numbers and putting that in the proper standard and proper format. And that's a lot of time saved that they can use to do something else, much more value add. So that's a bit the basic value proposition here. But what we are seeing happening is what I was saying as well is that once all these data is in one place, properly structured, probably standardized, There are so much more that you can do out of that. That's why you can start thinking about AI algorithm that can be like early warning signals, red flags, can you inform the business back with certain information that are not obvious to see if if the information is scattered across multiple multiple folders, multiple Dropbox, multiple Excel spreadsheet. It's just undoable.
00:15:44 · Michael Sidgmore, Yann Magnan
[00:15:44] S0: Does a tool like 73 strings, which is incredibly impactful because of what it's doing to make information much more easily accessible, faster to get, and transparent, does it actually remove the need for certain human processes and even potentially certain service providers, or does the process really stay the same? [00:16:06] S1: The process stays the same, but of course, the moment you're saying that certain tasks are done faster, of course, that definitely removes the need for certain certain amount of time that is spent doing this type of work. Is that a good or bad thing? Well, I guess, of course, it's tough for people that will be impacted. But here's the thing is that the industry is growing so fast and there's such a lack of resource in the industry that anyway, what I'm hearing from my clients is that their key pinpoint is that they want to make sure that they can grow as fast as they can. They want to make sure that they leverage the resources that they have as best as they can. They want to make sure that these resources are not spending 30% of their time doing things that the machine could do, then that they focus on where they really bring value. So from my perspective, it's only going to be helpful to the industry, only going to be helpful to continue to grow the industry and to continue for these resources to continue to grow into their own jobs.
00:17:02 · Michael Sidgmore
[00:17:02] S0: You bring up a really important point, which is the moment in time we are at in this industry, which is, one, the acceleration of focus on the wealth channel and the capital that's coming in from the wealth channel. That dovetails with another big trend, which is the rise of evergreen structures, where reporting happens more frequently. They're open ended or evergreen vehicles. The reporting and valuation become even more important, particularly as you're getting to the individual wealth client. They need more frequent valuations. And then there's also a massive rise in private credit, which the size and scale of those funds are growing, the number of assets that could be in those funds could grow. What do you think about those two trends really accelerating the need for better valuation software post investment to get this data quicker, analyze it better, and create more transparency?
00:17:59 · Yann Magnan, Michael Sidgmore
[00:17:59] S1: The answer to that is definitely yes. I mean, are seeing that happening, and we are seeing that happening actually really, really fast. When we started the 73 string journey, it was four years and a half ago. We were thinking, okay, valuation world is mostly is quarterly. Some clients are actually doing twice a year, but the entire market is going to move quarterly. Fast forward, four years later, four years and a half later, we've and seen an acceleration in the past year with all these funds targeting the retail investors in particular here in The US and retail investors wanting, by the way, to invest in private. There's very significant appetite. So it's market going towards a joint point of contact, [00:18:39] S0: so it's
00:18:39 · Michael Sidgmore, Yann Magnan
[00:18:39] S0: so it's [00:18:40] S1: perfect. But the issue is that you have to change a lot of the processes that you operate on a regular basis. And when it comes to what we do, what we are seeing happening is that if you want to attract retail investors into private capital, you have to make sure that they get the proper information, that they get this information in a frequent basis because as you said, the funds are evergreen. If you want to get retained investors, people like you and me to invest into private, you will have to offer us that we can get in when we want, we can get out when we want as well. So that's higher frequency. That's also a question as to the robustness of evaluation because there's going to be transaction. And again, it's real cash that is going to be transacted based on these valuations. So you need to be pretty sure that you have done the work properly, that you have documented the work properly, that if you have a regulator or an editor coming to you and saying, hey, what have you done here? You can very quickly share that information and you get the proper approval to get [00:19:36] S0: that done. Is the industry ready to handle this new way of doing things when it comes to things like evergreen structures? I mean, some of these structures may have daily tickers. Right? So there's daily, certainly monthly frequency rather than quarterly frequency with a lot of these fund structures. Is the industry ready to handle all that?