New Alternative Investments Platform Gridline Debuts for Wealth Managers

Logan Henderson, founder and CEO of Gridline, a new alternative investment platform based in Atlanta, Georgia, which launched today, says his company will be able to compete and stand out from other established alt platforms that have been successful in recent years.

“[The] The difference between a Gridline and an iCapital comes down to the types of funds you’re going to have on the platform, the access point,” Henderson said. Intel RIA. The most compelling investments often come in the form of smaller funds that have targeted strategies and can deploy capital more efficiently — these are the funds Gridline is looking for, he said.

Unlike other alternative investment platforms, according to Henderson, asset managers don’t pay Gridline to be on its platform. Gridline charges end investors an asset-based fee between 50 and 100 basis points, depending on the value of assets an investor owns on the platform.

There are currently less than 10 funds through Gridline. Henderson declined to share who the asset managers are at this time, citing advice from Gridline’s legal counsel. “From a securities marketing perspective, you only have access to product funds once you register,” he said.

Other established alternative investment platforms have spoken publicly about the managers they work with. For example, Gridline competitor iCapital has publicly announced a partnership with Bridgewater Associates, the world’s largest hedge fund with approximately $150 billion in assets.

Gridline reviewed more than 50 managers for funds currently on the platform, which came from referrals from the company’s network or through direct manager outreach. Gridline used third-party datasets to analyze manager performance against their peer group, and all managers and funds went through a due diligence process, Henderson said.

Henderson said the platform will offer two product offerings: traditional structured feeder funds with direct access to a single manager and multi-manager thematic products, which give investors access to five to 10 underlying managers. with broad exposure via a single investment. .

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The goal is to help small investors build portfolios that resemble those owned by larger institutions. “To build a strong alternative investment portfolio, you need to have exposure to all asset classes with multiple managers, multiple vintages. If you kind of think of the endowment model for asset allocation as the gold standard, it looks very different from the average individual’s investment portfolio,” Henderson said.

Gridline currently focuses on private equity and venture capital funds, but plans to add more asset classes and strategies in the future, Henderson said.

In the world of alternative assets, the barriers are high. Alternative investments are expensive, complex and generally illiquid, so many advisers don’t even consider them, which a recent report suggests could put investors’ portfolios at risk. Investors and advisors seeking access to alternative assets in private markets are often limited by high minimums and a closed network that rewards connections.

Getting the kind of broad-based exposure needed to have a strong alternative investment portfolio usually requires access to a lot of capital. Most fund managers have a minimum capital commitment of $1 million for a single fund investment and limit investments to qualified buyers. Investments in alternatives have traditionally been the preserve of ultra-high net worth individuals, family officesand large endowments.

Gridline and other similar platforms aggregate the investments of customers using the platform to meet minimum funds. Investors on Gridline must be accredited and have a minimum investment of $100,000 per product, although some products have higher minimums and are limited to qualified buyers due to fund requirements, Henderson said.

“The goal is really to open it up to both accredited and qualified buyers,” he said.

Like similar platforms, Gridline claims its modern software streamlines the traditionally cumbersome alternative investing process. Performance, tax and cash reporting are automated and done by the company. “The entire investment process, from discovery, to deployment and management, is now done through a single platform,” Henderson said.

Investors complete 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 future deals. Once on the platform, advisors can view investment opportunities and click on funds to get a tear-off sheet of the team, their bios and their investment strategies. If the advisor chooses to invest, he can link bank accounts, configure investment amounts, predefine his capital call schedule. Any personal information stored on the platform is pre-populated.

“It’s really shortened the whole process to minutes and it also removes, you know, throughout the investment process it removes the sourcing and due diligence element. It removes the negotiation element from the document,” 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% and reach $17 trillion, a growth rate of 9.8% per year, far exceeding global GDP and inflation rates, according to alternative data and research firm Prequin. Private equity and private debt will make up the bulk of this and are expected to grow 15.6% and 11.4% per year respectively, far outpacing all other asset classes which will grow 5% or less per year.

Gridline hopes advisors and their customers will be part of it.

“The main focus for us is the independent advisor channel, which are smaller teams and don’t necessarily have the administrative and back-office teams to build and manage a really strong alternative investment portfolio,” Henderson said. .

“We are not the first to try to democratize access to this asset class,” he said. “But to do it effectively, and to do it effectively, it has to be built on a really robust software platform. We really lean very heavily on the software side of things so that [we] can bring more people into the industry.

The platform’s investors include 10 family offices, 25 general partners from professional investment firms, some individual investors and RIAs, Henderson said. Cooley, the international law firm with 1,500 lawyers that represents Gridline, is one of the investors, Henderson said. Intel RIA. He declined to share who the other investors were at the time. The founder did not share the amount of capital Gridline raised.

Holly Deaton (@HollyLDeaton) is a writer at RIA Intel and based in New York.

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Dolores W. Simon