AltExchange Launches Plaid-Like Service to Connect 50 Other Investment Platforms

The software firm aggregates and organizes information from financial advisors’ growing lists of alternative investment platforms.

Courtesy photo

Courtesy photo

AltExchange, a company that aggregates and organizes information from more than 50 alternative investment platforms for wealth managers, launched yesterday. It already has just under $100 million on its own platform and a list of 300 investors waiting to use it.

Zak Boca, co-founder and CEO of AltExchange, likened his company to Plaid, a software that allows banks and other financial services companies, with permission from their customers, to access account information at unaffiliated firms. Banks and fintech companies then use that account information to help their customers analyze their finances and make decisions.

AltExchange is doing something similar for self-directed investors and financial advisors, who are investing more in alternatives and accumulating additional technology platforms to manage those assets. With AltExchange, users can view those assets in one place, and it helps them report, analyze and make decisions about alternative assets on other platforms.

Investors can connect private equity, venture capital, real estate, cryptocurrency, NFTs, collectibles, employee stock options, and other assets, to AltExchange. It tracks performance, can generate real-time reports, automate capital calls, and tracks the impact of fees on performance with net and gross returns. The platform also can help users benchmark illiquid investments against liquid assets and consolidate tax and investment documents for all the linked accounts.

AltExchange currently supports integrations with more than 50 alternative investment platforms, including iCapital, an alts platform used by more than 7,000 financial advisors that has raised almost $750 million in funding. Other platforms include AcreTrader and CrowdStreet, two companies focused on real estate investing; and AngelList and Wefunder, two platforms that connect people with startups raising capital. The company told RIA Intel that it has an additional 25 integrations in the pipeline, including a crypto aggregator platform, and that the integrations will address most of the available types of alternative investments. The integrations are scheduled to be completed within the next 60 days.

In April, AltExchange plans to launch AdvisorVue, a separate portal that will allow financial advisors to view their client’s alternative assets and analyze performance. Advisors can already join a waitlist for that feature. The company also plans to launch a similar CPAVue portal for accountants.

AltExchange will track $1 million in alternative investments for free, then it charges investors $30 for every additional $1 million in assets on the platform. Advisors, CPAs, and others who want access to client accounts pay a monthly $399 subscription for each professional using the platform.

Dan Vene, co-founder of iCapital, and Bart Bonga and Luke Novak, members of the executive committee at Rothschild & Co., are investors in AltExchange, which is in the process of closing a seed round of funding. Boca told RIA Intel that the round of funding will be formally announced within the next three weeks. He did not disclose how much AltExchange expected to raise.

AltExchange is not designed for investors with only one or two alternative investments, Boca said. On average, investors have assets with seven or eight different platforms. In those cases, keeping track of the assets, and their performance, is worth the expense.

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In most cases, if an investor or wealth manager wanted to know how an investment on an alts platform was performing over the last five years, they’d need to download the relevant account statements, capital calls, and distribution notices, and perform complicated calculations, Boca said. Multiply that process by the number of investments or platforms an investor is using, and the hours of work can add up quickly.

“You would need to keep up with that every time they sent you a new document,” Boca said. “Most people do this in [Microsoft] Excel, but then they quickly [fail to keep up with it]. If you have more than a couple of these, you’re just not going to keep current on them.”

A process that could take some advisors days takes AltExchange about six minutes, Boca said.

Many advisors don’t invest in alternative assets, such as private equity or private debt. Although, a recent white paper by Cerulli Associates, a Boston-based research and consulting firm, suggested that advisors who don’t allocate to alternatives are putting investors at risk. “[Because] private markets have grown so quickly and become so large, [we feel] that advisors have to pay attention. [If] they’re not allocated to [alternative investments], they’re making a bet against these private markets,” Daniil Shapiro, associate director at Cerulli and author of the report, told RIA Intel at the time.

According to the study, advisors only plan to increase their allocation of alternative assets from 10.5 percent to 11.8 percent over the next two years. Despite this reluctance, the demand for alternatives remains high. Between the end of 2020 and the end of 2025, global alternative assets under management are expected to increase by 60 percent and reach $17 trillion — a growth rate of 9.8 percent per year, far outpacing global GDP and inflation rates, according to alternatives data and research firm Preqin.

Advisors are often unaware of alternate investments their clients have, which could be problematic, according to Boca. “Advisors don’t have visibility into [their investor’s] alts, so they don’t know that maybe they need to keep a couple million dollars in a short-term liquid money market to meet capital calls.”

When advisors talk to clients about aggregating accounts, they are often focused on retirement and brokerage accounts. Other account types are “too fragmented, unstructured, and they’re out of sync” with the software and processes advisors have in place, Boca said. He hopes AltExchange, founded in 2020, will change that.

The company is planning to onboard the 300 investors waiting to use it within the new few weeks. Others who sign up this week will also be added soon.

Holly Deaton (@HollyLDeaton) is a staff writer at RIA Intel and based in New York City.

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