SEI, the $8B market cap investment management technology firm, has partnered with Canoe Intelligence, an automated data and document management service provider for alternative investment managers. Recently SEI also partnered with wealthtech provider, LifeYield, to add tax-efficient retirement income planning into their offering. We are encouraged by the integration of third party best in class solutions.
SEI’s Archway Platform, offered through its family office division to automate workflows in middle and back-office operation functions, includes includes (1) charts of accounts and sub-ledgers for partnership accounting and tax; (2) portfolio management analytics via a client portal; and (3) outsourced services for bill payment and client reporting. Reminder that family offices still spend a meaningful amount of time on manual functions.
Canoe’s technology sources investment documents (e.g., K-1s, capital calls, account statements, HF fact sheets, quarterly reports) from an array of fund administrator portals, scans these documents, and categorizes them into a database for extraction and validation, delivered via APIs to downstream accounting and reporting systems. Getting good alts data into structured systems is hard, and a messy problem. Putting machine learning on top of the platform seems like the right answer, and SEI is distribution for that solution.
UAE-based wealthtech Baraka has closed a $20MM Series A round led by Peter Thiel’s Valar Ventures with participation from Knollwood, bringing total funds raised to $25MM. Baraka is part of Abu Dhabi’s tech ecosystem Hub 71 and is backed by Y Combinator.
The commission-free investing platform offers investors more than 6,000 US stocks and ETFs and its investor toolkit, which contains stock analysis and reports from Refinitiv. Reminder that the London Stock Exchange acquired Refinitiv for $27B to rival Bloomberg. In terms of analytics, those include 12-month price targets, sector analysis, and scoring across earnings, fundamental analysis, relative value, price momentum, risk, insider trading, as well as comparative analysis. Baraka’s toolkit also includes (1) automated investing; (2) a Sharia compliance screener; (3) dividend reinvestment plans, and (4) a calendar with relevant information and updates about stocks in your portfolio.
Baraka will use the funding to expand throughout the Gulf Cooperation Council states (Saudi Arabia, Qatar, Oman, Kuwait and Bahrain) and Egypt, and add an extended hours trading option. On that note, Hub71selected its latest cohort of 16 tech startups — Hub71’s startups have accumulated $436MM from investors while generating close to $700MM in revenues. The ecosystem is now developing cross-border programs helping startups scale in other markets while deepening market access to the UAE.
While this particular company is a pretty straightforward mix of roboadvice and automated microinvesting, we do think it is important to highlight local champions, as digital wealth tends to have trouble consolidating internationally given different regulatory regimes and market psychographics.
Algorithmic wealth management platform Kristal.AI raised $10MM, bringing total financing to $27MM. Kristal.AI also recently crossed $1B in AUM, tripling AUM over the last twelve months.
Kristal offers a range of investment products, such as its Pre-IPO fund, mutual funds, and structured products such as equity-linked notes (ELNs). Kristal also builds algorithmic portfolios, such as Kristal high growth, which consists of a multi-asset ETF strategy driven by an automated asset allocation. Most roboadvisors use Modern Portfolio Theory for their asset allocations — e.g., Singapore-based roboadvisor StashAway offers proprietary asset allocation using its Economic Regime-based Asset Allocation (ERAA), which is MPT augmented with the state of macroeconomic conditions. Private market solutions, such as ESOP liquidity, are also supported.
In January 2020, when Kristal raised $6MM for its Series A, it was handling $100MM in AUM, and has since surpassed $1B in client assets and grown its investment product suite. Adoption is trending across wealthtechs in Asia, such as Singapore, India, and Indonesia. Invite-only Dezerv recently hit $120MM in AUM within a year of launch, and Endowus recently surpassed $2B in AUM. Kristal.AI has also announced an application for a license to expand into the United Arab Emirates, and if approved, we can expect more competition. Technology is borderless, even if regulation is local.
In the previous coverage of the Q2 Robo Report, we expressed, “Things are looking pretty dire YTD” given the poor equity performance and uncertainty in global economic conditions. The recent destruction in the market has spared no one, and has especially hurt those invested in growth and international markets. The average YTD performance across the 30+ roboadvisors covered in Q3 stands at -20%. Such is the life for the passive investor in a risk-off environment.
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