CAIS, an alternative investment platform used by more than 5,000 advisory firms with more than $2.5 trillion in assets on the platform, said Wednesday it raised $100 million from Reverence Capital Partners, a private investment firm focused on financial services companies. Since CAIS began raising a new round of capital four months ago, it has attracted a total of $325 million from investors.
There’s a small chance, it could raise more, too.
In January, CAIS raised $225 million from Apollo Global Management, Motive Partners and Franklin Templeton, valuing the alts platform at more than $1 billion. (Apollo, a $481 billion alternative investment firm based in New York, invested in iCapital, a CAIS competitor, around the same time.) Included in the terms of those deals was an agreement that CAIS could keep the round of funding open to additional investors that it felt offered significant strategic benefits, Matt Brown, chief executive at CAIS, told RIA Intel.
After the deals in January were publicized, Reverence Capital reached out to CAIS about becoming an investor. It invested in CAIS at a $1.1 billion valuation. No other terms or conditions were disclosed. Milton Berlinski, managing partner and co-founder of Reverence Capital, has joined the board of directors at CAIS.
The round is effectively closed now, but CAIS is leaving a “little bit of the door ajar because no one can ever predict the future,” Brown said. Another investor, with more to offer than just cash, could materialize.
Reverence, founded in 2013, owns and partners with RIAs and has investment experience in wealth management, asset management, and technology companies. “Having investors who truly understand those three areas — which are the areas that we focus on — that have great networks and perspectives on the industry [add value] and that's why we wanted Milton Berlinski the founder to join our board of directors,” Brown said.
CAIS said in a statement that it plans to use capital raised this year to “fuel further advancements in CAIS’ technology, enhance the customer experience through personalized experiences, as well as digitize product operations for fund managers and financial advisors alike.” It also plans to hire across all parts of the business.
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In 2021, CAIS more than quadrupled the number of technology professionals it employed and that hiring momentum has continued into this year. Since it announced its latest investment round in January, it has hired an average of one employee per business day, Brown said.
“This capital will allow us to continue that pace, but we're not hiring just for the sake of hiring. We're hiring because we need the capacity on our team, in technology, in marketing, in fund onboarding and operations to be able to handle all the opportunities that we're seeing in the market to be able to grow the platform,” Brown said.
Alternatives are a rapidly growing asset class and many companies exist to cater this market.
Gridline, a alternatives platform similar to CAIS and iCapital but geared toward providing access to smaller funds, launched in February. AltExchange, a company that aggregates and can link accounts from more than 50 alternative investment platforms for wealth managers launched last week.
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, far outpacing global GDP and inflation rates, according to alternatives data and research firm Prequin.
Last November, CAIS also hired George Davies, a former astrophysicist and previous the chief data officer at TraverseIQ, a data analytics firm, and iSentium, a company that gathers real-time market sentiment data and creates indicators for traders, as head of data. In February, CAIS also launched a customized version of its platform built specifically for Focus Financial Partners’ network of 80 RIAS.
These moves are paying off for the company.
In 2021, the number of CAIS users increased by 29 percent to 5000 firms. In February 2022, the number of investments made through the platform had grown 109 percent year-over-year, according to the company. CAIS did not share how many investments have been made through the platform. Since January, 400 additional advisory firms and $500 billion were added to the platform.
Last week, CAIS publicly announced the members of CAIS’s new advisory council, CAC, a standing committee comprised of “seasoned and next-generation RIAs, independent broker dealers, RIA aggregators, and custodians.”
The advisory council is made up 21 men and two women whose companies will act as “beta test users for new applications, assess the impact of CAIS-sponsored programs, and provide ad-hoc guidance around the overall engagement, needs, and new solutions impacting the alternative investment ecosystem,” the company said.
Holly Deaton (@HollyLDeaton) is a staff writer at RIA Intel and based in New York City.