At first blush, wealthtech startup Arch looks like it’s all about alts. But company co-founder and CEO Ryan Eisenman says it’s really all about making things easier.
This month, the New York-based private investment management platform that made its public debut in the early stages of the pandemic celebrated a successful funding round that had major industry names like Focus Financial Partners and Altruist in the mix.
The company focused on modernizing K-1 workflows, automating operations and simplifying reporting for financial advisors now has a total of $25 million in funding to work with as it develops a client- and advisor-facing platform that tracks tens of thousands of positions encompassing more than $60 billion in investments across all alternative asset classes.
But Eisenman said where the company puts its focus going forward is really up to advisors and their clients. Where they feel pain, Arch intends to provide relief.
With all that new capital in Arch’s company coffers, Financial Planning recently caught up with Eisenman to discuss the mission, the message and why no one has solved the problems his firm is trying to fix.
This interview has been lightly edited for length and clarity.
Financial Planning: For those who are unfamiliar, what’s Arch all about?
Ryan Eisenman: What we do is we make alternatives easy to manage. Whether the alternatives are private equity funds, real estate, venture, hedge funds, credit funds, any kind of esoteric alternative, we believe that they should be as easy to manage as a stock or bond where you log into your Schwab other type of brokerage account, and you can see everything there. You can understand performance. You have a document center. It has your tax documents and your other documents neatly labeled. And it’s all in one place. But that doesn’t exist. On the outside, you have lots of different platforms, portals and emails to keep track of. And it’s just an administrative mess. And that’s true whether you have five alternatives or 50 … the problem just scales as people invest more and more in private markets. So our whole reason for existing is to, first, automate the manual work of managing alternatives. And that is like our Maslow’s hierarchy of what we’re doing as a company. First, automate work and save advisors and clients and accountants time. Give them peace of mind, and then give them better data and then help people make better decisions by giving them cleaner, more accurate, more timely information.
FP: Considering that you say this kind of solution doesn’t exist in the wealthtech space, I imagine solving for this is tough because there is no rulebook to follow. How do you even approach this in the first place?
RE: Yeah. Well, the real question is, why does this matter? And I think an important part of this is that the work we’re looking to automate for them is a massive drain on their productivity and their ability to serve clients, for sure. Like, if you are an advisor, what you want to do is you want to help your clients plan for their financial futures. You want to help them find the right products to invest in. And you want to help them make decisions and kind of be that counselor for their financial lives, and do it with really good data and really good tools. But oftentimes, the inefficiencies of alternative investments is a direct drain on their personal time, on their clients’ time and on their team’s time. It will even stop firms from being able to take on the next client. It’s really complex to serve the type of complex family office style clients, or to scale their firms. So we want to really unblock advisors from being able to scale and being able to better serve their clients. At one point, we adopted the tagline of, our goal is to automate everything that isn’t advice. So what are the things that advisors spend their time on today, especially around alternative investments, that we can automate so that they can deliver more advice and spend more time with their clients? And be with their clients in the ways that they want. Walk them through planning, or out on the golf course, if that’s the advisor’s favorite way of doing business, instead of needing to be buried in an email inbox.
FP: Arch is two years into its journey, and we know that in tech, that is an eternity. How much has the platform changed from launch to now?
RE: When we first started, all we did for the first six months for the company was we were a solution for collecting K-1s. That was our narrow focus. People call it a wedge. It’s like a problem that you solve that leads to other problems. Then after collecting K-1s and making them available to the investor or the advisor and accountant and kind of a single collaborative platform, then our clients were like, OK. This is awesome. But what about all these other documents? I need to go into the portal to get this and that, and these portals are really painful for folks. And that’s a lot of the reason why we have a business. So we’re essentially able to build the ability to pull every document from every portal. But the general story here is we’ve continued to evolve with our clients. And almost everything that we’ve built has either been a client request or intuiting what a client needs, or kind of understanding what they’re trying to achieve. And that’s how we’re going to continue to build our product. So I think it’s important for us to level with our advisors. And just really tell them, hey, we are deeply motivated by solving problems and deeply motivated by making your life better, and we care. And that’s one of our biggest differentiators as a company. We care deeply and we are in this for a long time.
FP: There are a lot of big-name backers on your side and a lot of new capital at your disposal. So what’s next? What is your big focus in 2024?
RE: I think the big focus for us right now is being on a bit of a roadshow. Hearing from our investors, hearing from our clients, learning from prospective clients. Like, what are the next things that we can do to unblock you and your business to solve problems for you to deliver better data? One of the consistent themes we’re hearing is integrations. And a lot of firms are kind of trying to figure it out. Do I try to find this mythical all-in-one solution that will do everything and maybe do everything in an average way? Or do I adopt best of breed solutions that each do a great job at what they do? And we tend to think that the ideal here is the best in breed solutions, but best in breed solutions that integrate well and work well with each other. So that’s a big focus for us. Building more of the integration framework and fabric so that Arch data can be used in reporting systems and general ledgers and CRMs. And other types of systems that clients either already have or are looking to invest in, and supporting that level of interoperability across different types of systems. And so we have an API that we’ve developed and will likely publicly release either later this year or early next year. Just to say, hey, we’re open for integration. We want to empower anyone who wants to incorporate alts into their practice to be able to easily get that data from us and make that really easy and support that kind of partnership model. That’s a big thing for us. And then we think, you have other workflows that are painful for folks. And one big one is just all the process around capital calls and the issues of fraud for capital calls. And we think that a lot needs to be done there to actively talk to clients about those themes.