Today marks the exciting debut of AGM Studio.
AGM Studio is brought to life through a partnership between Alt Goes Mainstream and Broadhaven Ventures. Its purpose? To incubate, invest in, and accelerate the growth of companies and funds within private markets.
Citywire’s Selin Bucak has captured the essence of today’s launch in Citywire Selector. Selin, a respected journalist known for her insightful coverage of private markets, has delved into the motives and mechanics behind AGM Studio.
To truly grasp what is happening in private markets, one must understand the transformation of alternative asset managers into full-fledged businesses.
Take Blackstone as an example. Forty years ago, it was just a budding idea with $300,000 sourced from founders Steve Schwarzman and Pete Peterson to pursue leveraged buyouts. Fast forward to today, and Blackstone has evolved into a robust private markets investment platform covering everything from private equity and private credit to real estate, insurance, secondaries, GP stakes, growth equity, and more. With $1 trillion in assets under management (AUM), Blackstone’s market capitalization has exceeded that of financial giants like Goldman Sachs and Morgan Stanley, earning it a coveted place in the S&P 500.
But Blackstone is not the sole giant in this realm. Other industry titans include KKR, Apollo, Ares, Carlyle, EQT, Blue Owl, TPG, Partners Group, CVC, Brookfield, Hamilton Lane, StepStone, and many more. The evolution from mere funds to formidable firms is undeniable.
These organizations are not only leading investors in and owners of some of the world’s largest private companies, but they are also pivotal players in financing major global trends, from digitalization to decarbonization. Private markets managers have their sights firmly set on the $40 trillion credit market hidden in plain sight, as Apollo CEO Marc Rowan puts it.
The common thread here is clear: these firms are multi-strategy private markets investment platforms that have amassed hundreds of billions in AUM. The ranks of firms nearing the $100 billion AUM milestone are growing, and many aspire to become multi-hundred-billion-dollar asset managers.
The expansion has been bolstered by market dynamics and the substantial, yet still untapped, allocation potential in private markets within the wealth channel.
The interesting twist is that both alternative asset managers and traditional asset managers are vying to be the dominant forces in private markets. The fee compression crisis and the surge of passive investing effectiveness have taken a toll on traditional asset managers. Yet, their extensive relationships in the wealth sector have spurred them to make a push into private markets.
On traditional asset managers, they certainly cannot be underestimated. Their history, branding, scale, and wealth channel distribution relationships offer substantial advantages. However, it’s impossible to ignore the exponential growth of alternative asset managers, who are rapidly carving out new dimensions within the financial services ecosystem.
Currently, private markets boast $15 trillion in total assets. Projections from Preqin suggest this figure will soar to $30 trillion by 2030, with Bain predicting it could double by 2033.
The scale of the opportunity is staggering.
Tikehau recently shared a compelling graphic illustrating the substantial potential for revenue capture.
At $15 trillion in total assets, with an estimated 1.5% average fee, annual management fee revenue capture stands at approximately $225 billion. If and when the market reaches $30 trillion, this revenue figure is estimated at $450 billion annually. The allocation of a portion of these fees is expected to enhance operational efficiency through tech expenditures.
With around 12,500 private market funds (as per Russell Investments’ research), the potential revenue stream is enormous. Increasing fee revenue will allow alternative asset managers to reinvest in technology to bolster their operations. This need looms especially large for the largest alternative asset managers due to the operational strain of managing more investors within the wealth channel.
While alternative and traditional asset managers forge ahead to expand their capabilities in the wealth channel, they are grappling with complex technical and operational challenges that are pivotal to their business evolution.
The distribution revolution is being driven by technological advancements in the private markets’ market structure (refer to my June 2022 article on how evolutions power revolutions).
Private markets, as an industry, are in their early stages of development. This is why it’s in its nascent phase of transitioning from the Stone (Excel) Age to the Digital Age in terms of technology, automation, and across the life cycles of alternative investments.
With the commencement of the distribution revolution, spearheaded by companies like iCapital who are committed to empowering asset managers’ entry into the wealth channel, it is crucial to develop data, operations, and infrastructure solutions. These developments will assist firms in managing their operations effectively from front office to back office and across both institutional and individual investor channels.
Private markets serve as a unique space where “fin” and “tech” are intricately interconnected. This interdependence is a key reason why three intertwined themes and innovations are driving the industry’s growth: Distribution and Product Innovation, Technology Innovation, and the Intersection of Alternatives with Wealth.
Distribution and Product Innovation:
The drive for distribution revolution is catalyzing product innovation. Products such as evergreen structures are being developed to cater to the evolving demands and unique requirements of the “new institutional LPs,” the wealth channel, and insurance companies.
Technological innovation is propelling the transformation to better serve a burgeoning and diverse investor cohort. Operational complexities are on the rise as more investors enter private markets. The rewards justify the effort due to the immense opportunity for AUM expansion. Hence, alternative asset managers need a new set of tools to handle the challenges posed by the wealth channel.
The Intersection of Alternatives with Wealth:
The wealth channel is increasingly emerging as a significant LP for alternative asset managers. Wealth management is also turning into a compelling investment opportunity for private equity firms. Private equity investment and industry growth are accelerating the wealth management business model’s evolution. Consequently, this is spurring the adoption of alternatives from the wealth channel as wealth management firms evolve into platforms requiring private markets offerings to lure and retain clients.
The evolution of tech and the asset management industry is symbiotic. Transformation and innovation, both in technology and asset management, will propel alternatives into the mainstream.
Investing in one trend reinforces the other. This is precisely why we are committed to both.
We possess a deep understanding of tech innovation and distribution strategies in private markets because we invest in asset managers through our ownership and investment in Cantilever Group, a GP stakes fund established in partnership with BTG Pactual.
Our comprehension of asset managers’ pain points and business needs allows us to invest in technology that enhances their efficiency and effectiveness through our 21 investments in private markets ventures like iCapital, Carta, Republic, 73 Strings, LemonEdge, AltExchange, DealsPlus, bunch, Brassica, Allocate, and more. This includes my experience as an early employee and investor at iCapital, helping to build the sales team.
Tech startups and funds tailored for private markets require distinct expertise and networks for success.
Challenges unique to private markets can pose hurdles for entrepreneurs aiming to establish significant businesses without the necessary elements.
Companies developing technology solutions for the private markets must be built to collaborate with the industry’s titans.
Scale fosters further scale: Key industry players such as Blackstone, Apollo, and KKR shape the industry and dictate its trajectory. However, navigating partnerships with them can be challenging.
Teamwork with pivotal industry players is key to success, but it can prove challenging to open the right doors.
This explains why Apollo partners with Motive to incubate companies exclusively dedicated to private markets, such as Vega, and hold a minority stake in Motive Partners.
This is why Blackstone invests in private markets leaders that align strategically with their business, like iCapital, 73 Strings, LemonEdge, Canoe, and others, where they can serve as customers as well as investors.
Similarly, BlackRock invests in leaders within private markets like iCapital, acquires private market data businesses like Preqin, and secures alternative asset managers like GIP. Additionally, they establish partnerships with the Partners Group for model portfolio creation.
Knowledge and Networks:
Justice getting in the door is pivotal, the right executor being the time and expertise to make critical connections must also possess industry insight and relationships.
Education:
Educating investors represents one of the most arduous challenges for funds building a brand and fostering a connection with prospective LPs. This challenge is pronounced for funds without the sheer scale of major platforms, which can allocate substantial resources to marketing, branding, and distribution.
Constructing the right communication, marketing, and branding strategies that underscore differentiation and an edge is vital but challenging.
Modern media evolution necessitates direct approach from firms and their executives. However, not every firm possesses the capacity to handle the demands of developing a content business in-house.
The distribution revolution, fueled by technological advancements, underscores the need for companies and funds creating a presence in private markets to gain support and perspectives from diverse angles.
A singular focus on enterprise software knowledge is insufficient; understanding fund operations and how wealth channel LPs assess and acquire private market investment offerings is quintessential.
The mere ability to manage a fund and invest LP capital is not enough. Garnering the knowledge and network necessary to extend firm operations and connect with LPs is crucial.
Our firsthand experience within private markets grants us access to trends and transactions from multiple perspectives:
Operating:
Our experience operating at a pioneering technology company in private markets, iCapital, as an early employee, and our firm’s expertise at Broadhaven in capital markets equips us with insights critical to crafting technology solutions at the forefront of market structure evolution.
Investing:
Our early investments in over 20 private markets businesses equip us with both asset management acumen and an understanding of the technological requirements that will make private markets mainstream.
Our minority stake and strategic partnership with Cantilever Group, a GP stakes firm concentrating stakes in middle-market asset managers, enhance our understanding of asset managers’ business evolution and provide a channel for our technology enterprises to venture into when suitable.
Advisory:
Broadhaven’s independent investment bank has been actively engaged in over $90 billion in M&A transactions within private markets. Including landmark deals like Franklin Templeton’s $1.75 billion acquisition of Lexington Partners and Angelo Gordon’s $3 billion sale to TPG. Our understanding of industry consolidation and M&A trends empowers us with the unique ability to strategically guide companies and funds at any stage of their journey.
Media:
Reaching and amplifying education, brand, and messaging is pivotal for funds and companies looking to penetrate the private markets space. With more than 130 podcasts, 79 weekly newsletters, and over 22,500 followers and subscribers across platforms like Substack and LinkedIn, Alt Goes Mainstream has enabled companies and funds in private markets to reach the critical people at the opportune time.
Being in the right room is a cornerstone of success in private markets.
AGM Studio places companies and funds in the right place at the right time.
AGM delivers a full-spectrum solution that helps companies and funds flourish in private markets.
The three essential pillars of Alt Goes Mainstream — Content, Community, Capital — culminate in the AGM Studio.
AGM ensures that companies and funds find themselves in the right rooms — whether physically or virtually — across content, community, and capital.
Regarding content, AGM’s podcast portfolio has exceeded 130 episodes, which are now curated into four distinct shows covering a range of topics.
Simultaneously, AGM’s newsletter has crossed 79 weekly editions, offering written content, space data, job listings, and links to prior podcasts and newsletters.
Community initiatives have moved offline, hosting luncheons between GPs, LPs, companies, and clients. Moreover, live podcasts have featured collaborations with asset managers and industry collectives, creating valuable connections in the private markets space.
Capital, overseen by Broadhaven Ventures, has led to over 20 investments in private markets ventures driven to innovate from pre- to post-investment. AGM Studio members have access to capital from Broadhaven Ventures to embark on incubation, construction, or scaling aspirations.
The Studio’s bespoke nature enables it to cater distinctively to every enterprise or fund engaged in private markets development. Each find unique requirements at different stages of their journey. Similar to Savile Row suitmakers, AGM Studio ensures a personalized touch aligning with the specific demands that fuel the success of businesses in private markets.
Thus far, the impact has been felt by early Studio members such as Cantilever Group, AltExchange, and DealsPlus, demonstrating the transformative power of the AGM Studio.
AGM Studio is for companies and funds alike, beyond just venture-backed start-ups. We recognize numerous self-funded opportunities in private markets, akin to AGM itself.
AGM Studio welcomes:
– Founders working within private markets technology.
– Seasoned private market executives proposing ventures or businesses.
– Founders lacking private markets experience, seeking network access, and industry navigation help.
– Pre-existing business ventures and companies gaining specialized access to customers and brand amplification through the AGM pillar alongside Broadhaven support with advice, intros, strategy, and capital.
Fund managers aiming to establish or scale their enterprise can also benefit from:
– Connections to engage LPs.
– Content strategies to educate the market on funds’ strategies and differentiation.
– Community-building of relationships with LPs, companies, and other GPs.
– Capital access through Broadhaven, either catalyzing fund LP investments or spurring GP growth initiatives.
At AGM and Broadhaven, we are unique in our approach.
We invest our own capital.
We possess specialized industry knowledge.
We assist from incubation to exit or IPO.
We retain exceptional content, distribution, and networks.
We leverage our investments into asset management and services ventures in private markets to expedite private markets tech company growth — and vice versa.
As builders within private markets, doubling our efforts with Alt Goes Mainstream, iCapital, and Cantilever Group.
We are enthusiastic about the impending era of private markets, where innovation across technology and asset management unlocks responsible and conscientious access to private markets.
Having built pivotal companies in private markets, we eagerly anticipate further stimulating their mainstream evolution.
Our private markets business ideas span various categories, and we invite anyone interested in private markets to connect with us through AGM Studio’s website.
In conclusion, none of this would have been achievable without Zach Hagen, Cassie Braun, and the Hagen Creative team. Their fusion of institutional aptitude with trending creativity enabled the creation of the AGM Studio—a reflection of where private markets stand today: institutional yet innovative, and quickly transitioning from insular to inclusive. They have been and continue to be, truly exceptional partners.
