Alternative investments, like venture capital and private equity, have been around for decades. But the process for investing in these assets is still incredibly antiquated.
The legacy process
The first step, sourcing deals, is often done through personal relationships and networking. Once a potential deal is found, a non-disclosure agreement (NDA) must be signed to access the investment materials. Then, the due diligence process begins.
This is where things can get really cumbersome. Potential investors must fax over their subscription agreement and personal information to the fund manager. A first-round bid or non-binding term sheet is then drafted and sent back to the potential investor.
Once further due diligence is completed and both parties are happy with the deal, a preliminary investment memorandum (PIM) is sent out. If the potential investor wants to move forward, they must then engage a lawyer to review the PIM.
The final step is investment committee approval, after which wire instructions are sent out to the investor. The entire process is still done manually and is incredibly time-consuming. It’s not uncommon for the whole process to take months or even years.
But things are finally changing. A number of startups are working on making the alternative investment process more efficient and modern. Gridline has developed an online platform that allows investors to access alternative investments, including private equity, with a few clicks.
While it will still take some time for the industry to catch up, it’s clear that the days of faxing over subscription agreements and personal information are numbered.
Gridline’s solution
The legacy approach to alternative investing is cumbersome, time-consuming, and outdated, which limits many individuals’ ability to access these types of assets.
Gridline has developed an online platform that makes it easy for investors to discover, track and invest in alternative assets. The platform is simple and intuitive and allows investors to quickly register and deploy capital.
Gridline has also digitized the entire process, from sourcing deals to investment committee approval. This streamlines the process and makes it much easier for potential investors to get involved.
The future of alternative investing is digital, efficient, and open to everyone. With Gridline, gone are the days of faxing over documents and waiting months for a deal to go through.
Democratizing access to alternatives
We’ve written about the many benefits of alternative investments, but one of the biggest is the potential for high returns. Private markets have significantly outperformed public markets for the past two decades, and investors are taking notice. In 2021, global private equity fundraising hit a record $733 billion, and 2022 is on pace to exceed that.
Institutional investors are allocating more of their portfolios to private equity, real estate, and other illiquid assets as they chase higher returns. And it’s not just pension funds and endowments; even insurance companies and sovereign wealth funds are getting in on the action. Not only that, but alternative assets like venture capital have a low correlation to traditional asset classes, providing much-needed diversification.
In a world with rampant inflation, low-interest rates, and political uncertainty, alternative investments offer a unique opportunity to generate real returns. So it’s no wonder that they’re becoming more popular every day.
However, accessing these types of investments has been difficult, if not impossible, for many individuals. This is where Gridline comes in. By making alternative investing more efficient and accessible, we’re opening up these types of assets to a wider range of investors.
This democratization of access to alternative investments has the potential to change the landscape of investing, and we’re excited to be at the forefront of this shift.