Gridline has announced the launch of its new digital investment platform, which went live on Tuesday, “focused on allowing investment advisors, individual investors, family offices access to professionally managed alternative funds that have traditionally been in sophisticated enclosures.” And there has been a playing field for institutional investors,” said Logan Henderson, CEO and founder of the new fintech company.
The demand for private market investing has increased significantly over the past few years, as investors and advisors seek out assets uncorrelated in traditional markets and seek to diversify their portfolios. According to a recent Prekin report, alternative assets are expected to rise to about $13 trillion in 2021, and the firm expects this to grow to $23 trillion by 2026.
But there are several barriers to entry for small investors, Henderson said. Gridlines has also worked to automate the back-office processes involved in investing in options such as performance reporting, Treasury management and tax reporting.
“One of the headaches for investment advisors is putting their clients into options and the administrative burden associated with building that type of portfolio,” he said. “With the technical infrastructure we have in place, it removes all of those barriers, and it allows them to really focus on connecting with their customers and having a strong product line that they can offer. “
The platform starts with an investor questionnaire, which asks about their expansion into the alts space and how much capital they want to invest. The platform then automates the verification and verification process, and the user can then go to the market and view the available products.
Each offering has a tear sheet with an overview on strategy, thesis and team as well as a gridline perspective.
Once an investment is selected, the user clicks a button to make an investment, and subscription contracts are automatically populated. The platform supports ACH and wire transfer; It also provides visibility into when capital is being called.
The user then has access to a dashboard showing performance-level data on all of their holdings, performance reports, portfolio values, funded and unfunded commitments, and underlying investments. The tool has an API-oriented architecture, so it can push data to any custodian or reporting tool, Henderson said.
“As we looked at all the different touchpoints with a private market transaction, it is still a very manual and archaic process,” he said. “So taking advantage of that core technology capability and that enterprise software background, we can really streamline it so that, frankly, in a matter of minutes you can go through exploring investment opportunities, deploying capital and Management – all from a single dashboard.”
Gridlines offers two types of investment, the first being a traditional feed fund structure, a deposit investment vehicle that feeds a single fund manager. This would be suitable for someone who already has some access to options, but wants to increase their current holding on a low cost basis.
The second is Gridline’s thematic multi-manager products, which provide instant diversification, similar to traditional funds, Henderson says. These are structured as closed-end funds and the gridline assigns five to 10 underlying managers managing the capital. Gridlines does the sourcing and due diligence to make sure it’s a curated offering.
These funds will provide access to early or late-stage ventures, low or middle market buyouts and opportunistic real estate strategies, to name a few. Some will be available to qualified buyers, while others will be available to accredited investors. The minimum starts at $100,000, although some products will have a minimum closer to $250,000, Henderson said.
“You are able to capitalize with multiple fund managers across different asset classes, geographies, past years—everything you need to build a really strong private market portfolio,” he said.
Gridlines charges a simple asset under management fee on the total assets managed on its platform between 50 and 100 basis points. It does not charge carry interest.
To be sure, there are other alternative investment platforms focusing on serving retail financial advisors. iCapital, for example, works with the world’s 200 largest alternative GPs; 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 advisory firms/teams that have transacted over $15 billion since its inception. CAIS recently received $225 million in new capital, raising the firm’s valuation to over $1 billion.
Henderson says Gridline’s multi-manager funds are one thing that sets its offering apart from other digital alternative platforms.
Gridlines also works with smaller funds than other platforms. For example, they will work on the venture side with funds of less than $500 million, and on the buyout side with funds of less than $2 or $3 billion.
“We’re not working with your big global fund managers, so it’s a little more focused, and frankly, a little more targeted in the manager’s investment thesis,” Henderson said. “They can be a little more nimble in the types of companies and assets they are investing in, and they have a direct hand in turning a good technology into a great business.”