Alt Goes Mainstream: The Latest on Alternative Investments, WealthTech, & Private Markets
00:28:11 · Yann Magnan, Michael Sidgmore
[00:28:11] S1: The answer is yes. I would say in theory, because in practice, there might be situation where even within the same GP, you can't share information from one phone to another one, as simple as that. But in practice, is doable is that once you have collected all these data, once you have allocated to the portfolio companies, something that could be called like a unique identifying number or something like that, then if one party agrees to share that data with another party because they have an interest to do it, can can just be done automatically. It's just there. It's not just that you're sharing the data, by way. You're sharing the data with the underlying source document with all the audit thread that goes with it. The amount of time saved, plus the comfort that you give to your LPs and to your auditors is just massive. [00:29:01] S0: Brings rise to a really interesting concept, which is another trend we're seeing in private markets is the big firms are getting bigger. They're adding different investment strategies or funds to their platform, and they're becoming multistrat. So the ability to actually leverage all the data they have across the different business units, I imagine, would be helpful over time.
00:29:01 · Michael Sidgmore, Yann Magnan
[00:29:01] S0: Brings rise to a really interesting concept, which is another trend we're seeing in private markets is the big firms are getting bigger. They're adding different investment strategies or funds to their platform, and they're becoming multistrat. So the ability to actually leverage all the data they have across the different business units, I imagine, would be helpful over time. [00:29:24] S1: It's not that it would be full. I think that's going to be the next gold mine of industry. That's where definitely size will matter. I mean, matters on many things, but in particular on that, the bigger you are, more investment you have done, the more various use cases you've been able to see. If you have all this data and you have standardized that data and you can use that with proper set of calculation, algos, however you call that, then you're getting so much smarter than your competitor. As simple as that. Smarter, faster. If you're capable of informing your investment team few weeks earlier than your competitors, hey, we are saying something here, there's a pattern, there might be a risk that is coming up, you should speak to that company. I mean, that's invaluable, I think. [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
00:30:12 · 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?