Private investment fintech Arch raises $20MM from capital markets insiders

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You’re the best, today’s agenda below.

1. FINTECH: Arch, a Digital Admin for Private Investments, Closes $20 Million Series A Funding Round
2. LONG TAKE: We made ChatGPTs for asset allocation and stock analysis, it hallucinated financial answers & got some right (link here )
3. PODCAST CONVERSATION: How Legalist, a $770MM litigation finance investment firm, uses tech and data analytics to deliver alpha, with Co-Founder Eva Shang (link here )
4. CURATED UPDATES

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Digital Investment & Banking Short Takes

FINTECH: Arch, a Digital Admin for Private Investments, Closes $20 Million Series A Funding Round

Alternative investments are becoming increasingly important in consumer portfolios, whether that includes illiquid private assets, art, LP interests, or crypto-currencies. Tools like Carta, Addepar, iCapital, and now Arch, touch different parts of the industry workflow. The more technology we see built in this space, the more accessible it becomes to regular people and their financial advisors.

Private markets investment management platform Arch offers a platform that helps high net-worth individuals (HNWIs), investment firms, and institutions manage the administrative work associated with private investments, including data hygiene, K-1 workflows, and reporting automations. Currently, it has over 200 clients, including one of the largest US banks, and it tracks thousands of positions of alternative asset investments worth over $60B.?

Arch works by aggregating data and documents for its clients’ investment portfolios, including alternative assets and esoteric products. This information is then displayed in a single client and advisor-facing platform, removing the need to utilize a myriad of third-party portals. It provides reporting-ready data that can be leveraged by investors, advisors, and accountants directly, minimizing the data manipulation required, and removing the need to interact directly with each party. Arch also provides investment manager tools for reviewing and managing portfolio updates, capital calls, investment opportunities, and distributions, as well as aggregating tax documents.??

Many wealth management platforms have attempted this before. We think of Addepar, the original alts performance reporting platform, as one such solution. Or, take Arch’s current competition, CAIS and iCapital, which perform administrative work on behalf of investors invested in products on their platforms. Arch can capture any GP or LP structure, in addition to private companies, directly held startup investments, and directly held real estate. In the rare case that 100% of an investor’s assets are managed through iCapital or CAIS, then Arch has no advantage. However, for the vast majority of investors who even have a modicum of private equity or “alternative” interests — such as real estate — on a variety of platforms, Arch is potentially a compelling solution.?

Bringing together a range of disparate data sources is important in investment management to support decision-making. Alternative investments are becoming more commonplace for consumers, through technology and new fund structures. A prime example of this is ELTIF — alternative asset funds specifically designed for retail investors in Europe. ELTIFs significantly reduce the minimum entry requirements and allow feeder funds to participate. However, this leads to an increased operational load due to the increase in investors and, subsequently, data to manage. Minimizing or automating administrative work is fundamental. This challenge is only expected to increase as private markets are expected to grow from $9.5T to more than $13T by 2025, accounting for 10% of global AUM. ?

Arch raised a $20MM Series A this month that brings its total funds raised to $25MM in the past two years. By catering to a rapidly growing private markets sector with novel capabilities,?Arch is helping organizations to stay lean and automate administrative work regardless of where the investments lie.?

?? Related Coverage ??

• Podcast: How AI-enriched data aggregation is empowering the next generation of financial institutions, with Envestnet's Farouk Ferchichi
• Digital Wealth: $130B Alts fintech iCapital acquiring $7B investments feeder fund platform from UBS
• Digital Wealth: Bain projects digital-human hybrid firms winning wealth mgmt with private and crypto assets, growing revenue pool to $500B in 2030

Blueprint Deep Dive

Long Take: We made ChatGPTs for asset allocation and stock analysis, it hallucinated financial answers & got some right

OpenAI has recently launched the ability to create custom GPTs, like persistent prompts narrowed on a particular context.

We quickly built an asset allocation bot and a fundamental analysis bot, and tested them on financial advice capabilities. The results are mixed, but illustrative of the potential future where data firms plugged into ChatGPT benefit from new market power. Below is our conclusion, and the transcript of the conversations.

?? Read Long Take

???Podcast Conversation: How Legalist, a $770MM litigation finance investment firm, uses tech and data analytics to deliver alpha, with Co-Founder Eva Shang

In this conversation, we chat with Eva Shang - co-founder and CEO of Legalist. She is a Harvard drop-out, a Thiel Fellow, and was awarded Forbes 30 under 30 in 2018. After founding Legalist at the age of 20, Eva led the company through Y-Combinator’s S16 accelerator program.

Legalist raised its inaugural fund of $10.25 million in 2017 and its second fund of $100 million in 2019. Eva has been featured in the New Yorker, the Wall Street Journal, the Boston Globe, and other news outlets for her work on Legalist and access to justice. Along with her sister Melissa, Eva is the co-author of Mia Lee is Wheeling Through Middle School, a middle-grade novel starring a girl with a disability.

?? Listen to Podcast

Curated Updates

Here are the rest of the updates hitting our radar.

Paytech

• ? Italy Payments Specialist Nexi in Talks With F2i Fund on €800 Million Sale of Assets - Bloomberg
• Volante raises $66M for payments tech for banks and other legacy financial businesses - TechCrunch
• Interplay secures $45M for third fund focused on B2B marketplaces, vertical software - TechCrunch
• Milan-based fintech Qomodo raises €34.5 million to revolutionise essential expenses for physical retailers - EU Startups
• Once valued at $500m, Till Payments is teetering on the brink - AFR
• Flywire Acquires StudyLink to Accelerate Expansion in the Australian Higher Education Market - Globe Newswire

Lending

• Allfunds Gauges Interest From Private Equity Firms - Bloom
• Singapore-based startup EduFi raises funding for its student loan platform - TechCrunch

Financial Operations

• ? Enable, a platform for managing B2B rebates, is now worth $1B - TechCrunch
• Fintel makes double acquisition of VouchedFor and AKG for combined ￡9.1m - Fintech Futures

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