Fintech company AltExchange has launched a new platform designed to “modernize” reporting for alternative investments.
AltExchange is a wealth management software provider that aggregates and organizes information from more than 65 alternative investment platforms. According to the company, its new Digital Custodian Platform will provide asset managers with visibility into the company’s network of RIAs in addition to handling all post-investment workflows like document aggregation, performance calculations, capital calls, and distributions. (AltExchange describes the offering as a “custodian experience” — the firm does not actually custody assets.)
Kareem Hamady, AltExchange’s chief operating officer and co-founder, likened the new platform to CAIS or iCapital, but for smaller asset managers that might not meet those alternative investment platforms’ requirements or do not want to pay for those platforms.
“There’s a lot of asset managers, like tens of thousands, that probably don’t fit into iCapital and CAIS. And they’re left with trying to raise money from individuals and they can’t raise from RIAs,” Hamady said.
According Hamady, the cumbersome process of trying to track alternative assets for multiple clients is a deterrent for RIAs. “Every time there’s some event they have to track, they have 10 logins. They have to download PDFs. They have to manually type them into a spreadsheet, and then they’ve got to upload that spreadsheet into their portfolio management system. So, we do all that for them.”
AltExchange launched in March 2022 as a direct-to-consumer platform for investors and their advisors to connect and visualize disparate alternative assets under one platform. In August 2022, the company shifted its focus to solely advisors with the launch of its platform AdvisorVue. The company also changed its fee structure, moving away from a monthly flat fee of $399, and it now charges 4.8 basis points on assets tracked through the platform. Because of this, the company is able to provide unlimited logins to advisors and firms who use the platform.
The company has grown significantly in the last year. At the time of its launch, it had just under $100 million on the platform and a waitlist of 300 investors. Today, AltExchange serves about 100 RIA firms and hundreds of advisors, with thousands of end clients on the platform. According to Hamady, AltExchange’s average RIA client manages assets in the single-digit billions, and each advisor brought on the platform will typically bring dozens to hundreds of clients when they are onboarded.
With the launch of AdvisorVue in September, AltExchange has been able to triple its revenue, and the company expects the same to happen with the inclusion of asset managers. AltExchange has already established partnerships with a few asset managers, including Roers Companies, a real estate focused firm, and it will announce another partnership in April.
Based off current conversations with asset managers, and the continued growth in the advisor space, Hamady expects the company’s revenue to grow between two or three times within the next few months, with asset managers making up 50 percent of the company’s total projected revenue.
“There’s a lot of stuff happening. We’re probably going to 2 or 3X where we’re at from now between now and the middle of April, based on what we know,” Hamady said. “It’s one of those things that if you were to publish an exact number, it’s going to be out of date immediately.”