Gridline has announced the launch of its new digital investment platform, which went live Tuesday, “focused on allowing investment advisors, individual investors, family offices access to professionally managed alternative funds that have traditionally been the playing ground for sophisticated endowments and institutional investors,” said Logan Henderson, CEO and founder of the new fintech company.
The demand for private market investments has grown significantly over the last couple years, as investors and advisors seek uncorrelated assets to the traditional markets and look to diversify their portfolios. According to a recent Preqin report, alternative assets surged in 2021 to about $13 trillion, and the firm expects that to grow to $23 trillion by 2026.
But there are a number of barriers to entry for smaller investors, Henderson said. Gridline has also worked to automate much of the back-office processes involved in investing in alternatives, such as performance reporting, treasury management, and tax reporting.
“That’s been one of the headaches for investment advisors putting their clients into alternatives is the back office and administrative burden associated with building that type of portfolio,” he added. “With the technology infrastructure that we have, it removes all those bottlenecks, and it allows them to really focus on engaging with their clients and having a strong product line that they can offer.”
The platform begins with an investor questionnaire, asking about their experience in the alts space and how much capital they’re looking to deploy. The platform then automates the validation and verification process, and the user can then go into the marketplace and see the available products.
Each offering has a tear sheet, with an overview on the strategy, the thesis and the team, as well as the Gridline perspective.
Once an investment is chosen, the user clicks a button to invest, and the subscription agreements populate automatically. The platform supports ACH and wire transfers; it also provides visibility into when capital is going to be called.
The user then has access to a dashboard showing all their holdings, performance reports, portfolio values, funded and unfunded commitments, and performance-level data on the underlying investments. The tool has an API-oriented architecture, so it can push data into any custodian or reporting tool, Henderson said.
“As we looked at all the different touchpoints along a private markets transactions, it’s still a very manual and antiquated process,” he said. “So leveraging that core technology competence and that enterprise software background, we could really streamline it so that, frankly, in a matter of minutes you could go through the discovery of investment opportunities, deploying capital and managing—all from a single dashboard.”
Gridline offers two types of investments, the first being a traditional feed fund structure, a pooled investment vehicle that feeds into a single fund manager. This would be appropriate for the individual who already has some access to alternatives, but want to augment their current holdings at a lower cost basis.
The second is Gridline’s thematic multi-manager products, which, similar to traditional funds of funds, provides instant diversification, Henderson says. These are structured as closed-end funds and Gridline manages the capital to five to 10 underlying managers. Gridline does the sourcing and due diligence to make sure it’s a curated offering.
These funds will provide access to early or late-stage venture, low or middle market buyout and opportunistic real estate strategies, to name a few. Some will be available to qualified purchasers, while others will be accessible to accredited investors. The minimums start at $100,000, although some products will have minimums closer to $250,000, Henderson said.
“You’re able to deploy capital with multiple fund managers, across different asset classes, geographies, sectors, vintage years—everything that you need to really build a robust private market portfolio,” he said.
Gridline charges a simple assets under management fee on the total assets managed on its platform, ranging from 50 to 100 basis points. It does not charge carry interest.
To be sure, there are other alternative investment platforms out there focused squarely on serving retail financial advisors. iCapital, for instance, works with 200 of the largest alternative GPs in the world; it has $105 billion in total assets invested through the platform, used by more than 8,500 advisors. Another platform, CAIS, works with over 4,400 advisor firms/teams that have transacted over $15 billion in volume since its inception. CAIS recently received $225 million in fresh capital, bringing the firm’s valuation to more than $1 billion.
Henderson says Gridline’s multi-manager funds is one thing that differentiates its offering from other digital alternative platforms out there.
Gridline also tends to work with smaller funds than other platforms. For instance, they’ll work with funds with under $500 million on the venture side, and funds with under $2 or $3 billion on the buyout side.
“We’re not working with your large global fund managers, so it’s a little more focused, and frankly, a little bit more targeted in the manager’s investment thesis,” Henderson said. “They can be a little more nimble in the types of the companies and assets they’re investing in, and they have a direct hand in turning a good technology into a great business.”