Alt Goes Mainstream: The Latest on Alternative Investments, WealthTech, & Private Markets
00:30:12 · Michael Sidgmore, Yann Magnan
[00:30:12] S0: Brings up a really interesting question, which is, do you think the automation of a lot of this data will benefit the larger firms more than the smaller firms [00:30:22] S1: or vice versa? It will benefit the larger firms because they have a capacity to move faster, definitely. The smaller firms, they will need to react pretty fast, definitely, to make sure that they keep up with that trend. And they will need to find ways as well to complement their dataset if their existing dataset is a bit limited. [00:30:49] S0: Yeah. I mean, it's interesting because on one hand, smaller firms can leverage technology like 73 to automate a lot of what they would do in the post investment processes and in their operations function. So they may not need to hire as many people. Obviously, they'll still have to work with service providers as everybody will. But does that benefit them from a cost perspective as much as it would benefit a larger firm who will probably have more people, more assets to value and track, but also they get the benefit of that too? [00:31:16] S1: I would say that our pricing model is developed in a way that, yeah, I mean, it's going to create value for everybody.
00:31:16 · Yann Magnan, Michael Sidgmore
[00:31:16] S1: I would say that our pricing model is developed in a way that, yeah, I mean, it's going to create value for everybody. [00:31:23] S0: So brings up an interesting question from a business building perspective as you build a business in private markets. You've chosen, and for good reason, to work with many of the largest firms in the industry. What did it take to build technology from the relative outset to work with the industry's largest firms? A lot of startups will start bottoms up and go upstream, starting with smaller customers and then growing in size and scale to the enterprise level as they build their business, particularly in enterprise or enterprise software vertical SaaS. You chose to work with the largest firms first. Why did you do that? And what was the thought process behind that?
00:31:58 · Yann Magnan
[00:31:58] S1: I would start answering to that question by saying, actually, we chose to work with the larger firms because we could afford to, to start with. And the reason why we could afford to is because we have developed platform in the first two years, as I explained, basically thinking we want to be able to cover multiple use cases. We want potentially to be able, if we would like to use that technology for ourselves, that's not our play today, definitely not, but that was the mindset a bit coming from a EY auditor background. Thought I need to have a plan B, ever my plan A, that plan A does not work. But the reality is that when we went pitching our solution to our first clients, first potential clients at that point in time, they were already large multi strategist type of fund. Actually, first client was Eurazeo French manager, 40,000,000,000 under management. They do private equity, small, mid, large. They do growth equity. They do venture, and they do private credit. And so we could afford to go to a Eurazeo and tell them, look, we have a solution that you will be able to use across the board. What do you think about that? So when you're in that position, of course, you're thinking that's a pretty interesting play because as I'm going to work with these large clients, multi strategies, that will enable me to continue to to build up my solution, to continue to add new features because I'm certainly going to discover new pinpoints, new use cases. I work with your Azure or as I start working with Blackstone. And then when you're in that position, then you've been able to arise the larger guys. That's when you can start going to the smaller guys, all due respect, and say, look, we have this set of solutions. It's been developed across multiple large clients, and it's going to fit your purpose. So I thought as an entrepreneur, but it was a pretty interesting way to go. And probably, again, we could afford it. I know that trying to go the other way around, starting with small and then trying to get up the chain, it was a bit more difficult, especially in that industry. Because again, when you get to the bigger boys, the endpoints and the use cases can be pretty complex.
00:34:03 · Michael Sidgmore, Yann Magnan
[00:34:03] S0: What do you think were some of the reasons why you were able to, even as an earlier stage company, be able to work with such large firms from the outset? [00:34:13] S1: Migraine, maybe. No, I mean, to me, it's a question of for our first clients, it's still not the question of trust, trust that we understand what their pain points are and trust that we will deliver on what we promised. And that comes from twenty plus years of experience. Not just me, by the way. I mean, seventy three Strings is a very large team and a fantastic team. And it's basically trusting us that we know what we're talking about and we are going to deliver. And we have tons of past clients that can attest to that, but we know what we're talking about and that we are going to deliver. [00:34:57] S0: So you talk about experience being important in all of this. Another piece of the puzzle that I think is really important in private markets is getting the right strategic involvement around the table. You have strategic investors, Blackstone, who's also a customer, Fidelity International. What's the value of having strategics, and why did you decide to go that route? And related to that, do you think there's something different about private markets where it's imperative as an entrepreneur to involve strategics in the business rather than keep them on the outside?
00:35:32 · Yann Magnan
[00:35:32] S1: The value that we're getting from our investors is just fantastic. Whether it's, by the way, our first set of investors when we did our seed via family offices and the friends and families that, you know, helped us not just with capital, but with consistent advice and permanent advice. And then Blackstone and Fidelity International and new guys bringing extra pair of eyes, extra expertise. What's actually interesting is that the conversation with Blackstone started with them as potential client. And then one day I received a call saying, hey, we are very likely going to become a client, but we think that we should become an investor as well. I was honestly very, very annoyed about that because here is the thing is that I learned a lot from Blackstone as a client for our solution, and I learned a lot from them being a minority investor into my company as well. They have an experience and an expertise in helping grow the companies like us that is, you know, massive. And the team that is led by is just has just been fantastic with us and for us. Same with our friends at Fidelity International. They've been there. They've done that. They've seen many use cases that they can tell us, oh, be careful with that or contrary, you should move faster on that side of things. So very important to me. I would just say they are strategic. Yes, they are minority investors, which is something very important to us as well. But we are going to continue to grow to add, if possible, more investors in the mix. And strategic in the sense people that don't just bring capital but bring also more than that experience, expertise, network are going to be very relevant to us.
00:37:18 · Michael Sidgmore, Yann Magnan
[00:37:18] S0: It's an interesting question too, because when you think about a lot of successful market data businesses in other categories, capital markets, market trade web, MarketAxess, just as a few examples, Acadiasoft is another example. They brought the industry together. iCapital has done it in private markets too. Do you feel that there's an importance around that, particularly for something like valuations? And what I'm really getting at here with this question is, does creating industry participation, not just in a customer sense, but also in an investor sense, move you closer towards standardization and uniformity around data and processes that'll make private markets go faster? [00:38:00] S1: Yeah. And the answer to that is definitely yes. I think there is a strong use case that there is a technology out there that would facilitate this reporting and valuation work and also data standardization work that would be useful for the entire industry. And that's what we're hearing from our investors and from the industry, generally speaking, that anything that can be done to get these things done faster anyways in the interest of industry. So short answer is yes.