Alternative investments and private markets are an increasingly important way for RIAs to invest for their clients. But for many RIAs, it’s a daunting area.
Ryan VanGorder thinks his firm, Opto Investments, has the right approach to make it easier for them. Opto uses in-house investment specialists to assess private market opportunities and technology developers that help RIAs handle the “very large workflow” associated with them, including the screening, the documentation and reporting and the capital call management.
“I’ve been part of an analysis where that intersection felt a little bit underserved in terms of the right access and the right alpha generation portfolios for advisors,” VanGorder said. “I was really excited about the opportunity that there is this large transition in the marketplace into alternatives and private market investments, and that’s a space that really didn’t have the sophisticated level offering that sovereign wealth and Ivy League endowments and some of the more advanced investors in the world were getting.”
“We like to say we are building the Iron Man suit for advisors to navigate in the private markets,” VanGorder said.
Opto has raised a total of $170 million in funding, including a $145 million Series A in 2022.
Leading a private alts platform for advisors is a job that seems tailor-made for VanGorder. He has experience with tech companies running large sets of data—his first job out of college was helping software development company Avenue A (now Razorfish) prepare its IPO.
That was followed by six years in the finance department at investment management company Quellos Group LLC, which created sophisticated investment strategies for clients and ran hedge and private equity funds for institutional and wealthy investors. VanGorder’s role involved serving as a database administrator and creating data sets to keep the company’s financial records in order.
That firm was bought by BlackRock in 2007. When VanGorder and his team got there, the asset management giant was just scaling up its alternatives and private market offerings platform. VanGorder saw the platform’s growth from about $20 billion to the hundreds of billions in dollars it encompasses today.
Running financial planning and analysis for iShares, which acts as the main point of contact for BlackRock’s finance functions, allowed him to see the “central nervous system of the capital markets” in action. He worked with departments ranging from securities lending to institutional hedge funds and also got to see the more “retail” side of investment advisory as BlackRock developed its ETF products.
“It was really fascinating to be part of such innovation, growth and efficiency in capital markets,” VanGorder said.
So when an executive recruiter came knocking on his door in 2021, he knew that only a very specific kind of job could tempt him away from BlackRock: one that would involve the intersection of private markets, software development and RIAs.
He felt certain that a job like that didn’t exist until the recruiter introduced him to Opto’s founders, including Joe Lonsdale, Mark Machin and Jake Miller. He stepped into the CEO role about a year ago after joining the company as chief financial officer in April 2022.
To be sure, Opto is not the only firm trying to bridge the gap between the alternatives investment market and financial advisors. iCapital and CAIS are two that have raised millions of dollars to attack the same market. There is also Securitize Inc., Canoe and +Subscribe, among others.
Opto invests its own capital in the deals it selects and doesn’t receive compensation from the fund managers, according to VanGorder. It also offers advisors a “holistic, whole portfolio” approach, with exclusive access to “differentiated opportunities that help them build smarter private markets portfolios.”
Finally, Opto’s technology infrastructure is designed to help improve advisors’ workflow efficiency and cut out busy tasks having to do with the often cumbersome and time-consuming process that comes with private investments.
Once the friction has been taken out of private placements, RIAs will see the difference they can make, VanGorder says. “A nice differentiated private market portfolio can be a real alpha engine for clients in a day and age when advisors need to outperform the market and competitors,” VanGorder noted. “And the private markets are going to be the place to elevate them into the ability to do that.” —Elaine Misonzhnik