[The “democratization of financial services” is a major war cry and strategic goal for many fintech companies. This endeavor allows a much broader base of investors the access and ease of transacting across all investment opportunities. These opportunities now include alternative investments that were exclusively offered to hedge funds, institutions and high-net-worth accredited investors. While alternative investments have seen extraordinary growth over the last decade, there now exists a massive opportunity for further growth of the asset class and marketplace and the next generation of alternative investments.
According to The Future of Alternatives 2025 research by Preqin—a leading provider of data, analytics and insights on the alternative assets community—alternative assets are expected to grow on average 9.8% per year and surge to $17 trillion by 2025. Feeding this growth is not just increasing investor demand for volatility dampers and new sources of return opportunities, but also the strategic deployment of new technologies and business model innovations to automate and streamline much of the industry’s processes. This will expand the marketplace to more alternative managers and provide them with global distribution.
To better understand the evolution and mechanics behind this positive disruption, we reached out to new Institute member Perrin Quarshie, founder and CEO of Realblocks—an end-to-end technology platform that connects financial advisors and investors to the best alternative investment managers globally. Their goal is to position alternatives to become a more varied and mainstream asset class.]
Bill Hortz: What was your thinking and motivation behind creating RealBlocks?
Perrin Quarshie: During my time at Barclays, I saw a huge opportunity for an online solution in the alternative investment space to provide more efficient subscription, scalable compliance and access to the global market.
After completing my graduate studies at MIT, during which I conducted research on the implications of Blockchain technology for capital markets, I connected with our co-founder, Naman Srivastava. From there, we developed the concept of RealBlocks to provide the best investment experience for alternative and traditional investment managers and product distributors within retail and institutional channels.
Hortz: What do you think are the biggest changes needed in the alternatives market?
Quarshie: The biggest changes needed in the alternatives market come from the fact that fund managers do not have a scalable online solution for their clients. Much of the process was paper-based, non-scalable, and limited by geography. We want to unlock the alternative investment market and offer a truly global solution that allows fund managers to securely and efficiently distribute their products around the world.
Additionally, most of the current sales processes we see are manual in nature and require printing and faxing to complete transactions. Our system is designed with the modern investor community in mind. It is fully digital and uses automation and scalable practices so that we can evolve seamlessly with our clients’ businesses.
Hortz: What were your first development steps and processes in creating a technology platform to specifically address these industry issues and limitations?
Quarshie: It is extremely important to have a clear vision of what your business is trying to achieve. We have worked closely with our first customers to ensure that we are addressing market concerns. Too often, companies build things without fully considering the problems they solve for their customers. We quickly identified three issues in the market: 1) many fund managers did not have access to an online solution, 2) distribution was primarily limited by geography, and 3) the market was largely illiquid. From there, we developed RealBlocks to address these issues.
Hortz: What are the key components of your end-to-end platform and network offering that you have created and what tangible benefits do they offer to alternative managers and financial advisors?
Quarshie: RealBlocks is a technology platform that connects advisors and investors with the best alternative investment managers. Today, many real estate and alternative investment managers limit themselves to raising capital locally. However, thanks to our technology platform, these managers can now raise capital on a global scale through the connectivity of our platform with institutional and intermediary channels. Our online distribution platform cuts installation costs from $ 2 million to about $ 50,000 and cuts installation time from two years to just over a month. One of our larger clients was looking to distribute their US fund globally, but did not have the required connectivity. We were able to help them access new geographies and markets, while exceeding their fundraising goals by 5 times.
For financial advisors, RealBlocks provides a better back office experience so you can give your clients better access to alternatives. The main reason retail investors struggle to access the alternative investment market is the high initial minimum amount. We provide the technology to create feeder funds that help bring retail investors together so that collectively we can enable them to meet those minimums.
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