Alternative investments have historically operated in an opaque marketplace. It’s hard to get access and it can be just as difficult to perform due diligence. Tack on excessive fees pervasive in private markets and it can be difficult to succeed as an investor in private markets.
Transparency is one of the central values we built Gridline on and it’s a key way we ensure our customers are as successful. We are a trusted advisor that provides access to sound investments. We’re doing this in two key ways: Our fund selection process and our simple fee structure.
Our fund manager selection process is rigorous, mixing elements of art and science to ensure our users are successful. We break this process down into our four Ps: Performance, People, Process and Philosophy. These four principles mix qualitative and quantitative measures to sort the managers who have true skill from those who may have just gotten lucky.
Once we make our selections, we are transparent in passing our findings onto users. Every opportunity within Gridline’s marketplace provides key pieces of information to give users a comprehensive view of risks each opportunity.
This includes a traditional “tear sheet” with key details on the fund’s team, investment thesis and past performance.
As a registered investment advisor ourselves, we act in your best interest. Part of that is providing the Gridline Perspective on each investment. This perspective is a synopsis of what went into making sure the evaluation process is robust and unbiased, why our experts think this is a sound investment and our take on what gives the fund’s team a unique edge.
Opening up the world of alternative investments to a wider swath of investors is exciting.
This is a space where a home run can mean huge returns. Individual investors now have the opportunity to allocate capital like the most sophisticated institutions. But often we see main street investors paired with the riskiest deals that have little oversight once their money is deployed.
Investing in alternative assets, like a venture capital fund, is a little more complex than just buying a stock or even a mutual fund. Picking winning companies is only half of what good fund managers do. They spend as much — or more — time nurturing these investments to ensure they’re successful.
That’s why picking actively managed funds — and, by extension, the fund manager — are so critical in this arena. Passive SPVs and rolling funds may provide access to interesting deals but they are by nature less engaged in ensuring the underlying investments are successful once the capital is deployed.
These kinds of investment vehicles can easily make money just on the management fees, but lose nothing when the underlying investments fail. You may want to pause a bit when you see these opportunities announced with rocket sign emojis. Fund managers should be key advisors to the companies they invest in, providing expertise and value to help everyone come out a winner.
The selection component of a manager’s job isn’t easy, either. Consider for a moment the difference in the options available between the more efficient public markets — where data on every company is readily available — and opaque private markets. Mutual funds may have to pick from a few thousand securities while the options available to venture capitalists is the universe of a half-million private companies.
Skill matters here and it’s easy to make a misstep. Manager dispersion bears this out, showing that the difference between top and bottom-quartile managers is more than 7.5 times greater in private markets. Top managers in private equity beat even the average manager by two times.
Managing a fund is difficult work that requires real skill. How do you avoid the duds and pick one that maximizes your return? Gridline takes this job seriously, performing extensive due diligence on every fund we invest in and offer to our users. We’ve broken down our process into four principles, the four Ps.
Everything we do at Gridline is focused on maximizing returns for our members. This includes our selection process, which ensures you have access to managers who can pick sound investments and actively manage those companies to produce returns that beat the public markets.
You know the pain if you’ve ever invested in alternatives.
The process — even in 2021 — is pretty old school. You hit up your network to try to see what opportunities are out there. Once you’ve picked one, it’s time to go through the litany of forms you’ve signed a thousand times before, from fraud prevention to subscription to authorizing transfers.
It gets even worse after you make your investment. Reporting is non-standard and all over the place, with erratic capital call frequencies. It can be nearly impossible to track unfunded commitments, with your best bet being a spreadsheet you have to manually update. There’s no way to accurately and comprehensively view your portfolio of alts.
These are the headaches Gridline aims to solve. If you think about our marketplace as the on-ramp to alternatives, the technology that digitizes a previously manual process serves as the rails. From filling out your investor profile to signing legal documents to getting a dashboard view of your alternative investments, we’re making the whole process quick and seamless.
Inside our marketplace, we’ve made it easy to narrow down your options and see what investments align with your goals. What used to take months of networking and negotiating allocations can now be done in a few clicks.
We made it easy to drill down on the key decision points that are most important to you: Is the fund focused on early or late-stage companies? Is it run by an emerging or established manager? Maybe you want a manager who has experience at KKR or got an MBA at Harvard.
One of the biggest headaches with alts remains all the paperwork. Every time you make an investment, you’re likely filling out the same 30-page form you did for the last one. While digital signatures have become more common, the whole process still feels pretty antiquated.
Gridline streamlines the entire documentation process from start to finish. When you sign up, we’ll collect the basic information and perform instant verification to comply with Anti-Money Laundering and Know Your Customer (KYC) regulations.
That saves us (and you) a lot of time later when you make your first investment. We’ll pre-fill the subscription documents with the details you already provided and you’ll be able to sign them digitally right within the Gridline platform. There’s no jumping to another website or having to download and scan documents to email in.
Once you make your first investment, all the information you’ve provided can be used for follow-on investments, meaning you’ll never have to fill out a lengthy subscription agreement again.
One of the trickiest parts about Alts is having a sense of performance after you invest. There’s no reporting standard across funds, making it difficult to get a unified view of your portfolio and see what your total contributed and committed investments are.
We’re making it easier to track this data by normalizing all the non-standard performance reports you get from funds and putting it into a dashboard. At a glance, we help you see everywhere you’re invested as well as a summary of what capital has been committed and called. You can drill down into investment-specific data to see how it’s doing over time and call up documents related to it. You’ll be able to quickly see notable investments a fund has made and an aggregated newsfeed that pulls in the latest headlines on portfolio companies.
These innovations are how we’re completely digitalizing the alternative investment experience with the features and functionality you expect from consumer-grade investing apps. There’s no reason accredited investors can’t have the research, digital signing and easy transfer setup that millions of public market investors already have.