eVestment’s latest “Alternative Fund Administration 2016 Industry Survey” shows potential boon for some, but also highlights concern for others

For the last several years eVestment has published a seminal annual survey on the global Alternative Fund Administration industry.  This year is the 16th edition of the survey, and it was released at the end of April.  The survey includes funds with over USD $6.6 trillion in combined total assets under administration, and consists of hedge funds, private equity firms, real-estate funds, funds of funds, and liquid alternatives.

As usual, the survey is full of really compelling insights into the state of the alternative investment industry.  We encourage everyone in the industry to read this survey – but we especially recommend that fund administrators read it.  The survey can be found at eVestment’s site here.  There is also a great recap of the survey from Tabinda Hussein at ValueWalk that can be found here.

We wanted to highlight some important points that jumped out at us from the survey.  First, let’s start off with some good news for the industry in general, and for Fund Administrators in particular:

  • Alternative investments continue to grow as an important avenue to improve performance and provide greater diversity within investment portfolios
  • Growth was most strongly seen in Private Equity and Real Estate, and firms in these asset classes are increasingly looking to third party administration for help
  • Fund Administrators that have been dedicating both financial and human resources to improve their offering have become key players in the ongoing health of the alternative investment industry

Now, let’s talk about some of the more sobering insights from the survey:

  • Many see massive changes looming in the alternative investment industry – especially with Hedge Funds. This is translating into some real concern, and the expectation is that there is trouble on the horizon
  • When respondents were asked whether they “foresaw net entries or exits from the fund administration industry”, almost 74% of respondents answered “exits”
  • Increasing regulatory procedures and requirements are adding complexity and additional workload, which is making it harder for fund administrators and fund managers alike to stay current and afloat

For us here at BaseVenture, much of the results of this survey served as validation of the important role that we are aiming to play with Fund Administrators, Private Fund managers, and Private Banks.

Here are three quotes from the survey that jumped out at us, because they nearly perfectly sum up both the over-arching problem, as well as the solution that we offer to help solve:

  1. “The subsequent demand for institutional quality infrastructure and the imposition of new regulatory regimes have required a renewed emphasis on operational accuracy and efficiency.”
  1. “Overall, fund managers realize that they will have to put more focus on cyber-security and technology solutions to improve administrative capacity. One administrator explained, ‘Apart from regulatory events and financial market conditions, we expect an increasing tendency for client firms to be savvier about core technology, control environments, cybersecurity, and investor presentation. As a result, there will be growing demands for technology maturity amongst fund administrators.’”
  1. “One large U.S.-based fund administrator said that while managers have stuck to their performance fees, management fees have been adjusted by funds. However, as ensuring compliance and transparency has become more expensive, it has been harder to make reductions in management and incentive fees.”

We created BaseVenture to help Fund Administrators, Private Banks, and Private Fund Managers spend less time on operations, and more time generating growth.  Fund Administrators and Fund Managers that are feeling the pain points that are detailed in this survey should know that BaseVenture can be a valuable partner to help them further position themselves to take advantage of the opportunity “boon” that this industry still holds.

Learn more about us at www.baseventure.com

Sources:  All quotes included in this blog post were taken either directly from the eVestment survey or the ValueWalk article referenced at the beginning of this post.

A big Finovate Spring for the BaseVenture team!

John Pizzi and Steve Lemmer on stage @Finovate

The BaseVenture team is just back after a very successful Finovate Spring 2016 earlier this week!  Finovate has a special significance to us, as it has a rich history of introducing the world to the most innovative FinTech solutions.  We were very proud to follow in that tradition, and we used Finovate to debut our new FundManager.io platform.

John and Steve presented the latest addition to our platform, which includes a robust workflow automation for the creation, approval, and execution of private investment subscription documents, as well as enhancements to other features including our document upload and vault, and our dashboard reporting.  You can see the actual presentation at the Finovate site here.

Here are a couple of screen shots of our new platform:

Invest Workflow
Dashboard Reporting

There were private banks, fund administrators, fund managers, law firms, and potential technology partners in the audience, and we were strongly encouraged by the positive reaction to our offering.  We even got a few shoutouts on Twitter after our demo on stage!

Here is a picture of the BaseVenture team that attended Finovate.  A big thanks to the Finovate team for putting on another exceptional FinTech event!
BaseVenture team at Finovate Spring 2016

Stop forcing investors to jump thru hoops just to get key documents like K-1’s & Capital Statements

When people talk about making investments in private funds, the last thing that comes to mind are physical pieces of paper.  And yet documents play as important a role in alternative investments as they do in publishing or any other industry. Prospective investors are often made aware of private funds via documents like a fund prospectus, or other marketing documents.

Funds are formalized via subscription documents with investors, and they are managed via a variety of documents like Capital Statements, K-1 tax documents, and Capital Calls.

Despite the importance of these documents, the alternative investment industry is completely fragmented in how it handles the storage and distribution of key documents with its investors.  We talk to fund administrators, private banks, and fund managers all the time here at BaseVenture, and we rarely hear the same method being used twice.

The typical fund administrator, private bank, or fund manager stakeholder uses a mix of physical filing cabinets, digital folders on laptops, web portals, as well as a smattering of cloud storage providers to manage and distribute documents to their investors.  This quickly becomes a complicated puzzle to solve, because stakeholders need to be able to recall which avenue they used for a specific document, and then remember how to get to that document.

Additionally, these documents are typically standalone, meaning that they aren’t integrated or connected in any way with other key documents.  This results in documents that don’t provide any additional level of intelligence to help make them become (re)usable in other areas in the process of managing a fund.

The situation is actually worse for the most important “stakeholder” there is – the investor!  The investor might be required to receive documents via several different avenues.  A subscription document might come via overnight courier, whereas a Capital Statement might come via a web portal, and a marketing document might come via an email.

There is typically no uniformity used across document types, and the investor is often left to their own devices to respond as necessary to the document no matter which avenue was used to get it to them.  This typically involves numerous logins with multiple usernames and passwords across web portals, encrypted emails, and cloud storage providers.

Our aim at BaseVenture is to radically streamline and simplify critically important operational processes such as this one.  Storing and distributing important alternative investment documents should not be this complicated.  Our FundManager.io offering unifies all documents onto one platform, and importantly, gives the investor a single
method to access and act upon any key document for the private fund.

We start by giving the fund administrator, private bank, and fund manager a secure document vault where they can easily upload and store key documents.  Unlike electronic laptop folders, or the usual cloud storage providers, our document vault was built specifically for the alternative investment industry.

This means that everything about the experience of uploading and storing documents is completely designed to prompt for relevant factors for the fund administrator, private bank, and fund manager.  Our vault includes robust tagging and taxonomy that accounts for named documents like Capital Statements, K-1 tax forms, and more.

This tagging truly turns a document into useful data, whereby powerful filtering and grouping can be done across document type, investor, entity, time periods, and more.  Equally as important, because these documents are now data, they add a level of intelligence that can be applied to other key areas, such as pre-populating new documents, and enhancing reporting.

Sharing and accessing these documents by any stakeholder involved is extremely simple.  A flexible permission system enables access to users as defined by the appropriate stakeholders.  So, a fund manager can enable access for an investor to only those documents that are for that specific investor, while a fund administrator or private bank can enable access for fund managers and/or other service provider partners to documents pertaining only to those investors that belong to that specific fund manager.

Sharing a document by any stakeholder is done in a single manner – simply click on the “share” button and complete the step.  And of course documents don’t have to be confined only to be viewed online, they can be downloaded and printed anytime as well.

Importantly, security is also much more robust.  Rather than relying on unsecure email Inboxes, etc., we employ the same security in our platform that is seen in other mainstream applications like mobile banking.  The user has one username/password combination to remember, or we can integrate with the existing login process that a fund administrator, private bank, or fund manager utilizes for its investors.  Documents that are uploaded are protected within the secure vault.

Here at BaseVenture we are all about helping simplify the lives of fund administrators, private banks, and fund managers by reducing the time that they spend on operations so that they can spend more time generating growth.

We believe that it’s time to give all the stakeholders involved in the private fund industry – be they fund administrators, private banks, fund managers, and especially investors, the freedom to stop dumpster diving in their email Inboxes, filing cabinets, and typical storage providers to handle document upload and distribution.

It’s not every day that the Governor of Nevada calls your company smart and Innovative!

It is humbling to hear our company, BaseVenture, included in a sentence with the words smart, promisinginnovators and entrepreneurs.  It is even more humbling when the words are spoken by the Governor of the great state of Nevada, Brian Sandoval.

We believe that smart investments in promising technology companies like BaseVenture will help increase Nevada’s competitive edge as an incubator for the next generation of innovators and entrepreneurs.

- Brian Sandoval, the Governor of Nevada,

We have a growing operation in the Capital of Nevada, Carson City, made possible in part by the investment and support of the Adams Hub.  Our team in Carson City supports our national operations, using the latest technology to provide top level sales, customer service and support to all our customers.

Our presence in Nevada also provides us with a competitive advantage as we rapidly expand our business to the many private funds, fund administrators and private banks in Carson City, Reno and throughout the state of Nevada.

We are proud to be a part of the “next generation of innovators and entrepreneurs” that are building and expanding their business in the “cradle of tech innovation” that is emerging in Nevada.

On behalf of everyone at BaseVenture (www.baseventure.com), I want to thank Governor Sandoval for his kind words and I also want to thank the Adams Hub (www.adamshub.com) and our Nevada based investors for all their support of our rapid growth and success.

Read the full press release.

Subscription documents and the need to modernize the process for alternative investments

The subscription document is the “last mile” of the alternative investment process.  It doesn’t matter if it is a Hedge fund, a Private Equity fund, or a Real Estate fund, the only way for an investment to become real is via the execution of a subscription document.

It usually doesn’t take long once we bring up the topic of subscription documents in our conversations with fund managers, fund administrators, and private banks before frustration is expressed.  In fact, we typically hear two things when talking about subscription documents with our clients; (1) how important they are, and (2) how difficult they are to complete in a reasonable period of time.

No one disputes the first point, but the second point is worth looking into more deeply.  A subscription document for alternative investments is typically a 50+ page document.  In addition to important information on the fund as well as the terms needed to invest in that fund, the subscription document requires the parties involved to populate fields to complete it.

Compounding the frustration, only a fraction of this 50+ page document is relevant to any single investor.  Depending on the type of investor, only a portion of the subscription document is needed to be filled in.  As an example, if you are an individual investor, you would fill out a different portion of the subscription document than if you are investing within your IRA.

The reason that the subscription document takes a while to complete is not typically because of the quantity of fields that need to be populated.  These fields are usually not very complicated, and often include basic personal information (e.g., name, address, etc.) as well as other important details like the amount of money that will be invested, bank instructions, and more.

Rather, the reason for the delay is usually because of two other factors.  The first is that it is very time consuming to re-input often similar or identical information across multiple fields within the same document.  As an example, we looked at a standard subscription document and found that the investor needed to populate her name & address 3 different times within one subscription document!

The other factor helping to cause the subscription document delay has to do with the number of approvals that are needed, the manner in which changes might be made to the document, and how signatures are gathered from the approvers.  Finalizing a subscription document typically requires the approval and signature of the investor, the fund manager, the fund administrator, and sometimes more.  A fund administrator will often have multiple levels of approvers ranging from Legal, Compliance, Operations, and more.  Many times physical signatures are still used instead of electronic ones, so this often adds to the delays.

Importantly, if at any stage of the approval process the person being asked to sign finds a mistake or wants to make a change, then the document typically gets passed back and forth via email or some other manual method.  There is rarely an effective manner to keep track of the status of the desired changes, or the expectation of when they will be made, which often leads to confusion.  This results in a lot of “chasing” that needs to be done, which burns time.

This subscription document problem is a perfect example of why we created BaseVenture.  The subscription document process utilizing BaseVenture’s powerful platform is radically more simple, fully electronic, and much quicker.

First of all, most of the information needed to populate a subscription document is already in our secure cloud, and it gets automatically filled out within the appropriate places in the subscription document. BaseVenture’s platform has built-in logic driving the user to address only the relevant portions of the subscription document and ignoring the vast number of areas that are not relevant to the user.  Importantly, this information continues to be accessible and usable for any need throughout the subscription process.

Secondly, the people reviewing and signing the document do this entirely online, with an intelligent workflow attached to it so that it is very clear which step in the process the document is in, who is on point, and what the next step will be in the process.  Any changes or corrections that need to be made to the document by an approver are done at intuitive points within the workflow online, and are able to be previewed in context by the approver.  Any changes made are updated and synced so that the changes are now data in our platform rather than one-time mark-ups on a document.

Lastly, once the subscription document is completed, this document doesn’t reside somewhere hidden in a filing cabinet, or buried in someone’s Email Inbox.  The subscription document is now data that resides in the cloud, with a layer of intelligence added to it that enables powerful tagging, sorting, and more.  And of course the subscription document is always available for viewing, printing, or sharing purposes.

Learn more at www.baseventure.com

Fund Managers & the operational struggle to raise capital for their funds

Here at BaseVenture we talk to fund managers regularly about the areas that they struggle with as they go about their daily jobs.  Our FundManager.io platform is targeted at the small to medium-size fund manager, typically with Assets Under Management (AUM) of less than $1B.  These could be hedge funds, private equity funds, real estate funds, and more.

One of the most frequent complaints that we hear about relates to how a fund manager can raise capital.  Attracting and “closing” new investors is the lifeblood of any fund, and it is one of the most consistent activities that fund managers have to practice and master in order to succeed.  In fact, according to an article from DarcMatter, “For new funds, the biggest challenge is getting off the ground and raising capital.”*

There is a lot that a fund manager needs to do in today’s environment to attract new investors to his/her fund.  According to a 2015 Preqin study, the majority of fund managers cited an increase in the level of competition over the previous 12 months.**  Thanks to the easy availability of information on the Internet, and in part as an after effect of the financial crisis, investors are both more informed and anxious as ever about investing money in new funds.  Beyond any potentially strong relationship skills that a fund manager may have, any fund manager looking to attract new investors needs to have a well-articulated market plan, a smart sales strategy, effective marketing materials, and more.

Fund managers that we talk to often don’t mind this part of the job, and in fact several say that attracting new investors gives them their biggest sense of satisfaction.  However, the complaints generally begin when we start to delve into the operational process that the fund manager follows to get a new investor.

Most small to medium-sized fund managers use a hodge podge of tools to “manage” their pipeline of new investor prospects.  These tools range from spreadsheets to keep names and calculate probabilities, to email Inboxes or over-priced CRM solutions to keep notes & contact information, to their own memory to recall where things stand with a given prospect.

Most of these tools are not really connected to each other, and there is a significant amount of re-work that happens each time a new investor prospect is added, or even each time some important fact about an existing investor changes.  This translates to the average fund manager spending a significant amount of time on operational activities that can often become a major time suck, as well as a big source of frustration.

Unfortunately, getting the operational side working well is a major determinant in the overall success of raising capital.  So fund managers literally can’t afford to neglect this important area.

A fund manager that uses BaseVenture’s FundManager.io platform can tackle the operational needs of raising capital much more simply and effectively.  Our fund manager clients maintain their list of investor prospects in the Cloud, where it is safe, secure, and is available to them whenever and wherever they need it.  All of the important information that the fund manager meticulously gathers about their investor prospects during the sales process is added to robust profiles, and is reusable for any business need that the fund manager may have.  The fund manager can make changes anytime on anything from a simple address change to a more sophisticated pipeline probability report, and much more.

One of our most important missions here at BaseVenture is to help give back the gift of time to fund managers, by letting them spend less time worrying about their operations, and more time focused on attracting new capital and driving higher returns for their investors.

Learn more at www.baseventure.com



* DarcMatter: “Challenges Hedge Funds Face WHne Raising Capital” May 12, 2015.  https://www.darcmatter.com/blog/challenges-hedge-funds-face-when-raising-capital/

** ValueWalk: “Hedge Fund Managers Find Fund Riasing Challenging: Preqin” Aug 27, 2015                


It’s time to transform fund management and administration

CEO, BaseVenture

It’s time to transform fund management and administration.

What’s the Problem?

Fund management and administration is inefficient, antiquated and overpriced.

  • Funds that outsource their operations are underwhelmed and overcharged.
  • Funds that do it themselves struggle with expensive and outmoded technology

Note: These are private funds spanning real estate, hedge funds, private equity, venture capital, etc. — these are not the mutual funds and REITs on the public market.

Why does it matter?

  • Money invested in alternative investments will grow from $10T to over $18T (yes, Trillion) by 2020.
  • For small firms this is nearly all of their 2% management fees; for medium size guys it’s half their fees.
  • The costs to run these funds, particularly 3rd party fees is CRAZY!  Take a look at the chart above.  Thanks, Citi Prime Finance.
  • 80% of these funds are considered small ($250M in assets) or medium ($250M-$1B in assets) in size.  So there are like 40,000+ of them ready for a better way.

What’s the answer?

We looked long and hard and couldn’t find one.  So we created one.

The solutions for big funds are old, expensive and ill suited to small and medium sized funds (most of them).

BaseVenture (www.baseventure.com) gives fund managers the 3 things they want the most:

  • More time to raise capital and generate alpha
  • Less work and headaches
  • Lowers costs and increased investor satisfaction

Who’s it for?

BaseVenture is designed for fund managers and fund administrators (that help fund managers). It’s also great for private banks that want a better way to integrate their front and middle office and better serve their investors.

Learn more @  www.baseventure.com

© 2014-2016 Base Venture Investing, Inc.