Logan Henderson, founder and CEO of Gridline, a new alternatives investment platform based in Atlanta, Georgia that launched today, says his company will be able to compete and stand out against other established alts platforms that have been successful in recent years.
“[The] difference between a Gridline and an iCapital comes to the types of funds that you're going to have on the platform, the access point,” Henderson told RIA Intel. The most compelling investments are often in the form of smaller funds that have targeted strategies and can deploy capital more efficiently — those are the funds Gridline is seeking, he said.
Unlike other alternative investment platforms, according to Henderson, asset managers do not pay Gridline to be on its platform. Gridline charges end investors an assets-based fee between 50 to 100 basis points, depending on the value of the assets an investor has on the platform.
There are currently fewer than 10 funds through Gridline. Henderson declined to share who the asset managers are at this time, citing the the advice of Gridline's legal counsel. “From a securities marketing standpoint, you only get access to the funds in the product once you've gone through the registration,” he said.
Other established alternative investments platforms have spoken publicly about the managers they work with. For example, Gridline competitor iCapital publicly announced a partnership with Bridgewater Associates, the world’s largest hedge fund with approximately $150 billion in assets.
Gridline vetted more than 50 managers for the funds currently on the platform, who came from referrals sourced through the company’s network or by way of direct outreach to managers. Gridline used third-party datasets to analyze manager performance relative to their peer group and all managers and funds went through a due diligence process, Henderson said.
Henderson did share that the platform will have two product offerings: traditional feeder funds structured with direct access to a single manager, and thematic multi-manager products, which give investors access to five to 10 underlying managers with broad-based exposure through a single investment.
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The goal is to help smaller investors build portfolios that look like ones belonging to larger institutions. “To build a sound alternative investment portfolio you need to have exposure across asset classes with multiple managers, multiple vintage years. If you kind of look at the endowment model for asset allocation as the gold standard, it looks very different than the average individual's investment portfolio,” Henderson said.
Gridline is currently focused on private equity and venture capital funds but it expects to add more asset classes and strategies in the future, Henderson said.
In the world of alternative assets, barriers are high. Alternative investments are expensive, complex, and usually illiquid, so many advisors don’t even consider them, something a recent report said could put investors' portfolios at risk. Investors and advisors who do want access to alternative assets within private markets are often constrained by high minimums and a closed network that rewards connections.
To get the type of broad-based exposure needed to have a sound alternative investment portfolio typically requires access to a lot of capital. Most fund managers have a minimum capital commitment of $1 million for a single investment in a fund and limit investment to qualified purchasers. Investments in alternatives have traditionally been the purview of ultra-high-net-worth individuals, family offices, and large endowments.
Gridline, and other platforms like it, pool investments from clients using the platform to meet fund minimums. Investors on Gridline need to be accredited and have a minimum investment of $100,000 per product, though some products have higher minimums and are limited to qualified purchasers due to the fund requirements, Henderson said.
“The goal is really to open it both to accredited and qualified purchasers,” he said.
Like similar platforms, Gridline says its modern software streamlines the traditionally cumbersome alternative investment process. Performance, tax, and treasury reporting are automated and performed by the company. “The entire investing process, from discovery, deployment, and managing, is now done through a single platform,” Henderson said.
Investors fill out a questionnaire with personal information that is stored in the system and provided to the advisor on behalf of their clients which is then applied to all the agreements moving forward. Once on the platform, advisors can see the investment opportunities, and click through funds to get a tear sheet of the team, their biographies, and their investment strategies. If the advisor chooses to invest, they can link bank accounts, configured investment amounts, preset their capital call schedule. Any personal information stored on the platform is pre-filled.
“It really has shortened the entire process to a matter of minutes and it also just removes, you know, through the investment process, it removes the sourcing and diligence element. It removes the document negotiation element,” Henderson said.
Alternative investments are a growing asset class with large inflows. 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 Prequin. Private equity and private debt will account for the bulk of that and are expected to grow at 15.6 percent and 11.4 percent per year respectively, far outpacing out all other asset classes which will grow at 5 percent or less per year.
Gridline is hoping advisors and their clients make up a portion of that.
“The big focus for us is the independent advisor channel, who are smaller teams and don't necessarily have the administrative and back-office teams to build and manage a really robust alternative investment portfolio,” Henderson said.
“We're not the first people who've tried to come up with democratizing access to this asset class,” he said. “But to do it effectively, and to do it efficiently, it has to be predicated on a really robust software platform. We really lean really heavily into the software side of things so that [we] can bring more people into the industry.”
Investors in the platform include 10 family offices, 25 general partners at professional investment firms, some individual investors, and RIAs, Henderson said. Cooley, the international law firm with 1,500 attorneys that represents Gridline, is one of the investors, Henderson told RIA Intel. He declined to share who any other investors were at the time. The founder did not share how much capital Gridline has raised.
Holly Deaton (@HollyLDeaton) is a staff writer at RIA Intel and based in New York City.