Comment: Welcome to the altverse
Industries evolve by adopting new technologies that are catalysts and enablers of seismic shifts to new paradigms. The private markets are among 33% of industries that have been slow to digitalise, only now beginning the journey toward transformation. As the asset class scales, it requires upgrades to modernise the fund manager/GP, investor/LP, and service provider experience. +SUBSCRIBE, a leading enterprise software provider to the private markets industry, is an early advocate of digital transformation.
Three phases of transformation
Phase one: Robo placement agents and product marketplaces. Recently, private markets have democratised to become mainstream, enabled by countless B2B and B2C marketplaces. These product marketing platforms leveraged the trend to add more alts to traditional 60/40 portfolios. The first phase is complete.
Phase two: Transaction and data systems. As new investors and products arise, so does the need for new investment operations and data infrastructure to handle transaction processing, data collection and system integrations. An efficient data-rich workflow across front-, middle-, and back-office processes is critical to maintain and scale these private investments. This second phase is the current opportunity.
Phase three: Lifecycle platforms and exchanges. Turnkey asset management platforms (TAMPs) did wonders for portfolio management of registered securities. Capital market assumptions, allocation models, risk factor analytics, performance data and rebalancing transaction capability are delivered seamlessly to the user, allowing high-value manager selection to take centre stage. Private markets futurism might be summarised similarly – enabled by TAMPs and exchanges accommodating for the analysis and lifecycle management of private investments. These powerful platforms will be built on top of modern technologies of blockchain, data lakes and open APIs. This third phase is what’s next.
Universal buy button for fundraising and investor onboarding
Two hundred and nineteen pages – that’s the total number in a recent subscription packet that our unified private markets platform digitally generated, processed, submitted and closed. It was accurately created in 15 seconds to include the subscription document, PPM, LPA, tax form, alts risk form, custodian form, side letter and AML documents. It took a record three days from fund setup to investor closing. The offline manual process takes weeks and the burden of the friction fraught, paper-based, email-dependent, error-prone workflow falls on overwhelmed investor relations professionals and their service provider counterparties (such as law firm paralegals, fund administrator onboarding teams, and consultancy firm AML and tax agents).
Solving for the complexities of the large enterprise
Take the complex and make it simple, easy to operate and delightful to use. As the largest participants in the private markets industry across fund managers, fund administrators and leading fund formation law firms chart their digital transformation strategy, the starting point must be how much initial complexity any software solution can handle on ‘day one’. Then, there must be high confidence that the opportunity to enhance the solution quickly exists on ‘day two’. Enterprises seeking complex ‘solutions’ should be wary of simple ‘tools’ that satisfy immediate needs and will struggle with the future need to iterate across the three interactive fundraising workflow moments – pre-trade, at-trade and post-trade. Now more than ever is a time to deliver a futuristic customer experience for all private market participants.