The Institute for Innovation Development interview series will be inviting top innovation specialists and innovative fintech companies from around the world to talk to our readers about their latest innovation activities. The series seeks to uncover innovation best practices, learn from innovative business creators and discover how to apply these insights to a financial advisor’s business.
Artivest, a New York City-based fintech company, offers a technology-driven investment platform that expands access to leading private equity and hedge funds. We caught up with CEO and founder James Waldinger to discuss how Artivest brings innovation to the alternative investment ecosystem.
1. The Artivest alternatives investment platform is characterized as a “full-stack solution.” What does that mean?
Our mission at Artivest is to enable wealth managers, including financial advisors, family offices and their qualified clients, to efficiently access leading private equity and hedge funds. For us, full-stack means full service—an end-to-end alternatives investment platform that includes low-minimum access to a vetted set of managers, easy-to-understand online fund information, seamless monitoring capabilities and integrated reporting. Our team has spent years building, testing and refining our platform to remove friction and digitize the otherwise complicated, manual experience of private fund investing.
2. You have mentioned that your mission is to service and upgrade the industry. How does the industry need to be upgraded?
Investments in alternatives have largely been driven by institutions -- a high-dollar, low-transaction volume business -- and have been done the same way they were done 20 years ago. However, these institutional-focused processes that private equity and hedge funds utilize to process investments, including customized pitch books and phone calls, travel and cumbersome, error-prone legal documents, cannot scale to meet the needs of the large number of smaller-sized investors that now seek these products. As the demand for alternatives has expanded to the individual high-net-worth (HNW) market, the processes and infrastructure in place for most fund managers fall short.
Many HNW individuals and advisors have traditionally avoided alternative offerings given the logistical obstacles in making an investment, such as the cumbersome compliance, the error-prone paperwork, the access to funds and the high minimums. The Artivest platform offers a single solution to all of these concerns for both individuals and their advisors. By tapping into technological efficiencies, Artivest aims to offer access to these types of products while keeping both minimums and fees competitive.
3. Artivest has garnered a lot of attention due to powerful endorsements from a very prominent list of funding partners. How have you been able to gain the support of groups such as KKR, RRE Ventures, Nyca Partners and Peter Thiel?
We are grateful and humbled by the support of our financial backers and partners. We believe our success thus far in attracting these premier partners is predicated on the need and scale of the opportunity we’re addressing and, of course, the strength of our team.
Fundamental shifts in the industry are creating new challenges for both fund managers and financial advisors. The Artivest platform addresses the imperative for both groups through a single innovative solution that facilitates engagement.
Recognizing the evolving landscape, our team relied on decades of collective experience in technical, financial, legal and operational areas to create an innovative and integrated software solution. The Artivest business team hails from well-established alternative investment managers, top-tier banks and advisory firms. Our technology team brings a Silicon Valley emphasis on design and usability not traditionally found in financial firms. Our executive team has decades of leadership experience across technology and finance. We believe that this level of talent and sophistication is uncommon for a young, venture-backed company like ours.
4. You are enabling a wider range of investors, but how do you enable a wider range of fund managers?
In many ways, it’s two sides of the same coin. Artivest’s technology-driven investment platform streamlines the process for both investors and funds. In the past, as a fund manager, the infrastructure to serve limited partners (LPs) became exponentially more resource-intensive as the number moves from 30 to 40 institutional LPs to 100 or 500 varied LPs. To complicate things further, these LPs could range from individuals, trusts, small endowments or pensions, with investment funds coming both directly or via an advisor or consultant. So even though funds hoped to appeal to the high-net-worth audience, they did not have the infrastructure to serve this fractured, nuanced investor channel.
Artivest makes it economically feasible for more funds to access the high-net-worth market. Several top funds have told us they were actively considering building infrastructure when we created Artivest. They instantly recognized the clear advantages, from economics to regulatory risk reduction, to using a third-party provider. Outsourcing to Artivest reduces costs, resources and headaches for a fund, and ultimately allows firms to focus more on their investment approach.