Investing Billions - E41: How Everyday Investors Can Access Blackstone, Apollo, and KKR?

Starting point is 00:00:00 iCapital really started 2013, launched our first product to the wealth channel in 2014, and has grown assets to over $170 billion by the end of 2023. So massive growth in scale. And the reason why is it's really become the infrastructure and the connective tissue or operating system that enables the wealth channel, that's both private banks, as well as independent wealth managers to efficiently access private markets. That means serving two different types of customers, right? There's GPs, so the large GPs, think Blackstone, Apollo, Warburg Pincus, KKR, Carlyle. They want to efficiently work with the wealth channel. On the LP side, you have private banks, wealth managers. They want to find ways

Starting point is 00:00:40 for their clients, particularly at lower minimums, 100K, 200K, 500K, million dollar checks to access many of these funds. But many of these funds have had historically 20, 30 plus million dollar minimums. That's because they were catering to institutions. iCapital has created the infrastructure from all the way from pre-investment to post-investment to be able to efficiently manage, execute, and track an investment. Michael Sijmoor, we've been going back and forth, and I'm excited to chat. We were introduced, we had lunch in Miami a couple years ago, introduced by our good friend Kendrick Nguyen, CEO of Republic. So it's been great to get to

Starting point is 00:01:22 know you, and I'm looking forward to this podcast. Thanks for having me. I'm a big fan. Enjoy listening to it. And it's nice to have the tables turned on me. Thank you. So you know a little bit about the show. You know, I'm going to go through your bio real quick. So a little bit on you, your co-founder and partner of Broadhaven Ventures. You've done over 122 investments. Most notably, you have 15 exits. So you have some DPI, which is great. You helped build the FinTech juggernaut iCapital, where you were the eighth employee. And you're also a venture partner at Goodwater, which is a $5 billion consumer tech VC. And of course, you have your own podcast. So maybe you could start by telling us a little bit about your podcast. Yeah. So in the pandemic, end of 2020, and then launched early 21, founded a podcast called

Starting point is 00:02:08 Alt Goes Mainstream, which is a combination of both a podcast and written content. I've written a bunch of thought pieces. And then more recently, I've now done 32 editions of a newsletter as well, talking about private markets. And really, this stemmed from my time at iCapital, where I thought it was really important to educate investors, particularly the Wealth channel, which was becoming more and more interested in investing in the alternative space or private markets, as well as the GPs who were looking to work with this new burgeoning channel looking to get into private markets and saw that there was a need to create an independent platform that could connect the dots and be the connective tissue between the GP world and the LP world. So started a podcast over 85 episodes in now, really trying to educate both GPs on how they can work with the wealth channel, and then LPs, particularly the wealth management channel, as well as the family office world on how they can

Starting point is 00:03:01 navigate private markets as the space itself grows. And by the wealth channel, you're talking about the RIA channels. Yeah. Tell me about, A, how quickly is the RIA channel growing? And two, why is the RIA channel growing? Yeah. So I think I'll start with the second part first, which is the RIA channel is really growing in large part because there's been this move away from wirehouses, UBS, Morgan Stanley, Merrill Lynch, et cetera, to go independent. That's happened for a few reasons. One, I think a lot of advisors want to own their own businesses. As a result of owning their own businesses, they end up owning more of the enterprise value themselves versus giving a large portion of it to a wirehouse. RIA assets have been growing faster

Starting point is 00:03:41 than wirehouse assets in recent years. And I think that's been a combination of you have infrastructure and platforms that have enabled people to break away and go independent. So names people may have heard of, Focus, Hightower, Dynasty. There's newer ones like Rx, which is backed by Redbird Capital, that are really enabling advisors to go independent, still have an infrastructure to be able to run their business and importantly have access to private markets. So that's where firms like iCapital come in, where they're providing these independent advisors who've left the wire houses, had menus of product, particularly in private markets. So they could get Blackstone funds or Apollo funds or Carlisle funds. Now they can do that in an independent forum, working with Dynasty, Focus, Hightower, et cetera, and still have access to private markets. And these Dynasty, Hightower, et cetera, and still have access to private markets.

Starting point is 00:04:25 And these Dynasty, Hightower, these companies are essentially like the backend. From what I understand, they help compete head on from a similar offering to what you would call the wirehouses, the UBSs, the JP Morgans. Is that correct? They're definitely trying to take market share from the wirehouses. They're trying to grow their own platforms, providing independent advisors with the ability to build their business, but either under their own brand. So the focus brand or the Hightower brand, or under their own independent brand dynasty provides the ability for an advisor to have their own brand. They're just using dynasties infrastructure, Hightower and focus have slightly different models, but the, the intent is the same. It's really to enable

Starting point is 00:05:04 these advisors to run their own businesses, be entrepreneurs, but still be able to have all the infrastructure that they would have been afforded with a private bank, just in completely independent, open architecture way. So independent advisors would argue why it's better to be independent and why they think it's better for clients is because they're not charging fees to clients that are based on the incentives of the bank. One of the big issues is by the time the scalability issue, by the time a large wire house, a JP Morgan, a Goldman Sachs, a UBS,

Starting point is 00:05:33 by the time they put a fund on their platform, they're on fund 15, they have $20 billion under management and the alpha has essentially been already absorbed from that product. Yeah, to some extent. Look, I think there's the right product for different investors. has essentially been already absorbed from that product. Yeah, to some extent. Look, I think there's the right product for different investors.

Starting point is 00:05:48 Sure, I think private markets, it does depend on the type of fund you're investing in that will determine the type of return you're gonna get. So certainly smaller funds in a category like venture capital tend to outperform larger funds. Now, there's reasons why people may allocate to larger funds too. So if it's an institutional investor, maybe they have to put $100 million to work in a single fund.

Starting point is 00:06:09 They can't invest in $100 million fund. I would think of wire houses or even large wealth management platforms in somewhat of a similar way in two contexts. One, they may have a lot of capital to put to work. Sure, it may be five or $10 million increments from individual clients, but collectively they have to put $100 million to work. They have a team that's charged with looking at all the different funds, and it may not be efficient for them to put $5 million into 20 funds because that may be hard to find. And they may also want to be able to put every client into that same funds. They may have to put $100 million to work as well. So I wouldn't necessarily say that it's a bad thing that people are investing in bigger funds. And then private equity, sure. I mean, look, there's

Starting point is 00:06:49 lower interquartile dispersion between first and fourth quartile performance in private equity than there is in venture. That's why in venture, we always talk about manager selection really mattering. In private equity, sure, you want to be in the best managers, but at the same time, the larger firms, kind of like large cap stocks, right? You're not going to have a huge variability in performance and you're going to get what you paid for, which is a brand. So I don't necessarily think it's a bad thing. It's just different strokes for different folks. You mentioned about RIA growth. Give me some numbers. Yeah. So look, the independent channel has grown massively. I think, you know, when you think about

Starting point is 00:07:25 what's been happening over the last few years, it's really been due to private equity, pumping money into this space because these are good businesses. They're, they generally continue to generate, uh, fees on, on assets managed. And as markets go up, that grows as, as firms grow assets, either through acquisition or organically through client acquisition, they can be nice, steady, solid businesses. So the wealth management space has grown pretty massively over the last 10 years or so. So advisor managed assets at hybrid and independent RIAs, it grew like 13 plus percent. And wire houses were losing headcount.

Starting point is 00:08:00 So one and a half to 2% and only gained about seven and a half percent of assets in that same timeframe. So I think what you're seeing is large growth in the independent channel because advisors know they can go independent and have the infrastructure now to do so. And I think private markets are a big part of that. I think these things go hand in hand. And that's another piece of kind of going back to why I started Altgoes Mainstream. It's really at the intersection of wealth and alts. And I think wealth is transforming in two ways, in large part due to the alts world. So one is private equity is investing into the wealth channel. That in and of itself is an interesting private markets opportunity. You're seeing a lot of private equity firms invest into these large platforms,

Starting point is 00:08:39 the Rockefellers of the world, which is a hundred billion plus, the Serides of the world, 80 billion or so, give or take depending on where the market is. And these large firms that are able to grow their business and become great private equity investments. So let's talk about iCapital, your employee number eight. How is that growth at the company? And what is iCapital up to today? Yeah, so iCapital really started 2013,

Starting point is 00:09:02 launched our first product to the wealth channel in 2014, and has grown assets to over 170 billion by the end of 2023. So massive growth and scale. And the reason why is it's really become the infrastructure and the connective tissue or operating system that enables the wealth channel that's both private banks, as well as independent wealth managers to efficiently access private markets. That means serving two different types of customers, right? There's GPs. So the large GPs think Blackstone, Apollo, Warburg Pincus, KKR, Carlyle. They want to efficiently work with the wealth channel. On the LP side, you have private banks, wealth managers. They want to

Starting point is 00:09:39 find ways for their clients, particularly at lower minimums, 100100K, $200K, $500K, million-dollar checks to access many of these funds. But many of these funds have had historically $20, $30-plus million minimums. That's because they were catering to institutions. iCapital's created the infrastructure from all the way from pre-investment to post-investment to be able to efficiently manage, execute, and track an investment. So I actually look at this very similar to the way that other market structure evolutions have occurred. Equities, market structure evolution from pre to post trade, fixed income derivatives. Those were markets that at one point were not electronified. iCapital and others in this space have made it so that efficiently and cost

Starting point is 00:10:19 effectively, you can electronically invest in and process an investment trade in private markets where people can actually access these funds at much lower minimum. So I think iCapital is providing a core piece of infrastructure for this space. And it's not surprising that this is helping the space grow and why iCapital has grown to 170 billion plus of assets and has participation from many of the large GPs, NLPs, private banks, as both customers and investors in the business. Is iCapital too big to cater to venture capital managers? Does it have relevance for VC? It's a great question. I think, sure, we can talk about private markets as kind of bifurcating. And I think this gets to some of the thought process around why we're getting involved

Starting point is 00:11:00 in the GP staking space as well. I think there's an evolution of asset managers as businesses. And some VCs have gone that route too, right? You look at Andreessen, 50 plus billion AUM, Sequoia, massive business, like 80 plus billion AUM, General Catalyst, 35 billion AUM. It's not that VCs can't become really large asset management platforms, which some are becoming. But I think the majority of private equity firms are going the route, particularly at large cap scale, of becoming these massive multi-strap platforms, going public. In some cases, Blackstone passed a trillion of AUM. Apollo is not far behind at almost 700 billion of AUM. And these are large multi-strap platforms, ton of different strategies. They benefit from that, certainly with their

Starting point is 00:11:39 valuation, because multi-strap managers tend to get valued better than single-strap managers. But the venture space tends to have smaller fund managers. And that makes sense because there's only so much returns to go around. So, you know, I think these are differences. And sure, iCapital's business has in large part been focused on working with large GPs because those are the firms that are looking to raise large amounts of capital and also work with the wealth channel. They're more developed and sophisticated in terms of working with the Wealth Channel. Blackstone is a 300-person team. $250 billion of their trillion of AUM

Starting point is 00:12:09 is focused on the Wealth Channel. Now, that started from zero about 10 years ago or so, but iCapital can still work with the venture space. They launched a product called iCapital Marketplace, which enables all the users on their platform, over 100,000 wealth managers, private bankers, can look at different funds. And if they want to allocate to those funds, kind of like a listing site, if you think about eBay or Amazon, that's my analogy for it, not necessarily iCapitals.

Starting point is 00:12:32 But people can go on, look at the platform, see what's on there, and then they can allocate to some of those funds more on their own. So I think there's certainly a place for working with the venture world. And then these bigger funds, I think, will become attractive to the wealth channel. So you could easily see the wealth channel deciding to work with large venture funds as well. Who should venture capital firms be working with at iCapital? Who are some of the entrepreneurial people at iCapital? So the team that's running iCapital Marketplace, if they're a smaller fund, that's probably the right fit because those small funds now have the ability to access and see and potentially work with large number in the wealth channel. I've always said that a lot of venture capital firms, even the large ones, they don't know it yet, but they're going to be working with the wealth channel.

Starting point is 00:13:15 So they need to understand what that channel is. Certainly the best firms, the benchmarks, the axels and non-exhaustive lists. There's plenty of them out there who have never really needed to work with the wealth channel, save for maybe some high net worth individuals or family offices who they've had longstanding relationships with. I think that's going to change as many of these venture firms get larger and realize that they need to expand their LP base. They're going to start working with the wealth channel. I think the wealth channel wants to work with the venture world. They just need to know how they can efficiently access it. They can efficiently understand which funds are the right ones to work with. And then you need the infrastructure, which is where iCapital and other players come in to help the wealth channel navigate the whole venture space.

Starting point is 00:13:57 What are the pros and cons for a VC to work with the wealth channel? So I think the immediate con right now, without a platform to efficiently work with and adjudicate what the different firms are that are out there is it's really difficult to figure out who the right VCs are and how to get access to them. I think historically, wealth managers may see certain VCs. And I should say that there are some wealth managers who are very sophisticated in doing this. I had one guest on my podcast. I think you did as well, Crescent, who has built their own venture fund of funds, right? So they've gone out, dedicated an effort and a team to working with some of the top venture funds, brand names, as well as some emerging managers in the space.

Starting point is 00:14:38 And they've built a fund to do that. There are other examples of that out there. So it's not that there aren't wealth managers who haven't been focused on this area or trying, but I think generally speaking, it's really hard for, you got to remember these wealth managers, even at some of the larger firms, they are tasked with evaluating an entire ecosystem of managers. That's not just venture, there's private equity, private credit, hedge, infrastructure, real assets, real estate. These people have to look at the entire market, allocate assets across different asset classes and strategies based on a client's ideal portfolio construction. It's hard to efficiently adjudicate which firms are the ones to work with, how and when.

Starting point is 00:15:18 And you really have to be in the ecosystem, specialize, spend time in it, know who the right venture managers are. So I think the hardest part right now is how do you understand who the right venture firms are, and then how do you get access to them? The other thing related to that is many of the top funds are hard to access or completely access constrained, right? If you haven't had a relationship with them in the past, they don't necessarily need more capital from additional LPs. How do you get access to those managers? Because historically, there has been data to show that there's persistence and performance. So you want to be with the best firms. The challenge is how do you get into Benchmark? How do you get into Sequoia? In many cases, that's really hard. You mentioned access being an issue in the space. A lot of people call it an access class for that

Starting point is 00:16:01 reason. How do wealth and RIA channels compete? In other words, if I'm a GP and I'm raising and I have the ability to have the Michael Kims, the Beezer Clarksons, the Jamie Rhodes, the single family offices in my platform, why would I ever choose a wealth channel over somebody that's been in the asset class for many decades? So I'm going to answer this a different way. I'm going to say that most family offices should probably access venture through a fund of funds. The reason why is you get access to a diverse set of managers. You're relying on a fund of funds manager who knows the ecosystem really well and has the ability to find and pick the right fund managers and can provide diversification across a different set of fund managers that gives people hopefully a great return while also more limited risk

Starting point is 00:16:49 and then access to co-invest, et cetera. I think that's how most investors should probably access the asset class. Now, many people may want to do it themselves. I think a trend you're seeing, particularly with these, I call them super RIAs. So RIAs that are on the path to $100 billion plus platforms. So that's the Rockefellers, the Crescets, the, you know, the Serides, et cetera, of the world. I'm a non-exhaustive list. But those firms have the teams in-house to build out an ecosystem and a set of relationships in the venture world with their CIO and team there. I think that's going to continue to happen. a set of relationships in the venture world with their CIO and team there. I think that's going to continue to happen.

Starting point is 00:17:33 I think a trend you're seeing is those platforms in the RIA space are going to go and do that and build their own investment products focused on VC. So they're going to work to build relationships in the space. I think outside of that, many people should probably work with fund of funds. Absolutely. And even those super, you call the $100 billion wealth channels, those in themselves are almost becoming fund of fund of sorts. So moving on, as I mentioned, you're a co-founder and partner at Broadhaven Ventures, you're a VC firm, but you also do quite a bit of LP activity. By last count,

Starting point is 00:17:57 you're in roughly 20 funds. Tell me about your strategy there. Yeah. So at Broadhaven, it really stems from prior business that my partner built that's still running and we're built on top of that. So my business partner, Greg Phillips, he built and sold a derivatives broker for a few billion dollars back in 2009. His banker was the head of FinTech M&A at Goldman at the time, Jerry Von Dolan, worked a lot with the capital markets and exchange world. So sold his business. They wanted to build a boutique financial services focused investment bank. They did that fast forward to 2023. We have about 75 people, 13 partners, a number of ex Goldman partners and MDs from the investment banking world, vice chairman of Morgan Stanley's

Starting point is 00:18:35 investment bank, and a number of other senior operators, advisors who understand financial services really at the top end of the market. So Broadhaven has done about 90 billion or so of M&A transaction volume working with the likes of Franklin Templeton. And that's 90 billion with a B, correct? B, yes. It's M&A transaction volume. So we're advising clients like ICE or Franklin Templeton. We help Franklin Templeton buy Lexington Partners, the secondaries firm for almost $2 billion, $1.75 billion or so, I believe. We just recently helped advise Angelo Gordon on their $3 billion sale to TPG. So do a lot in capital markets, asset management, wealth management as well. So that business has been

Starting point is 00:19:17 going for 13 plus years at this point, have great relationships in financial services. So I met Greg while I was still at iCapital, and we decided we had a very similar view on the world of fintech, which was end of 2016, early 2017. You saw great firms like QED and Rivet starting to grow their fund size and moving upstream. So we thought there was a real opportunity to help early stage fintech companies, particularly in enterprise financial services, navigate that complex ecosystem, regulatory environment, large incumbents, and then how do you sell into many of these financial services firms? Because if one of these enterprise FinTech companies could get

Starting point is 00:19:53 their first or second or third big financial services firm as a customer, it might take a while. If we could help short circuit that sales process or help them get those customers, because we know many of the large financial services firms and C-level head of strategies, et cetera, we could really make a material impact in a lot of these businesses. So we decided to start a fund off Broadhaven's balance sheet. So investing our own capital into early stage FinTech companies. We do both consumer and enterprise, but a large portion of what we do is focus on enterprise financial services businesses. We invest across all areas of FinTech, but a big part of what we've done in large part because Broadhaven, one of Broadhaven's early investments was in Carta. One of our partners who was the president of ComputerShare is still on the board

Starting point is 00:20:32 of Carta. So we were early investors in Carta. And then my experience at iCapital as both an early employee and a seed investor is that we believe that the alt space is undergoing this market structure evolution, similar to the way equities fixed income derivatives did. So we want to invest across the life cycle of that investment from pre to post investment and find the right companies that are helping to build out this space. So that's a big part of what we focus on, not all, but a big part of what we focus on. And then that's kind of opened up the aperture for us of saying, okay, not just invest in companies, but we can invest in funds that give us exposure to other things. So we've invested in 20 funds, mainly outside of FinTech to give ourselves

Starting point is 00:21:10 exposure to different geographies, different stages, different sectors. So it's things like lower carbon and climate, things like Goodwater and Consumer Tech. Like you mentioned, I'm a venture partner there as well. And sometimes we'll partner with some of these managers or we'll share deal flow. So we're helping in a number of ways. And then the third bucket of what we do, in addition to investing in companies, in the fintech space directly, and into funds, all with our own capital, is incubate businesses. So the two businesses we're incubating now are one is my content platform, Alka's Mainstream, both podcast and newsletter, as well as a GP Stakes fund that we're building with one of our partners, who is a former Goldman partner. We're doing that in partnership with BTG Pactual, who's the seed investor in the business as well. Exactly where I wanted to go to next, GP staking. Let's talk about GP staking. Why should GPs consider selling a stake? Yeah, look, there's a lot that goes into this. I think

Starting point is 00:21:56 what I will say as a trend that I'm seeing happening in private markets, and I think will continue to occur, is that asset managers, the founders of those businesses happen to be founders too. They just happen to be founders of asset management businesses. So just like we as VCs end up investing in founders and helping them build their business, we help them with hiring, we help them raise money, we help them get customers. How is it much different, right? So I think what you're seeing is certainly at the top end of the market, you've seen it, right? The likes of General Catalyst, NEA, Industry Ventures, and a number of private equity firms have taken stakes from some of the large GP stakes firms. So Dial, Peters Hill, which is affiliated with Goldman, are two of the notable names in the space.

Starting point is 00:22:39 And they're doing it because they either want help growing their business, they want help recapitalizing the business, maybe exiting retiring partners, putting an equity valuation on the business for succession planning. So those are all reasons why firms may want the help of a GP staker to invest in their business and then help them continue to grow their business as an asset management founder. I think in the middle market, which is where we're focusing, there's also the real ability to help on distribution. So one of the things we're excited about with Cantilever, the business that we're helping one of our partners at Broadhaven, Todd Owens, build is that we're partnered with BTG Pactual. BTG is a large Brazilian bank. They have a wealth management business. And you can imagine a world where distribution ends up being important too. So between our work and network in the wealth channel, from my experience at iCapital and outside of that, as well as BTG,

Starting point is 00:23:29 many of these mid-sized asset managers, they want to grow their AUM and distribution ends up being a really important part of that, particularly with the wealth channel. So I think you're going to see more and more firms think about how do we find someone who can help us grow our business? And I think that's why you're seeing this rise in GP staking. And then for investors, it's a really interesting and different return stream and way to get exposure to private markets without investing in the fund as an LP necessarily. It's still relatively nascent. Sure, at the top end of the market, about 30% or so of the really large GPs have taken stakes. The ones like I mentioned, large private equity firms.

Starting point is 00:24:04 At the middle market, there's 1,800 firms in the US, kind of between 500 million and 8 billion in private markets who 1,700 of them really haven't taken any stakes. So only 3.5% or so have taken stakes. And there's a huge opportunity to work with many of these managers, help them grow their business. It just depends on what they want to use it for and how they want to grow their business. I think the other component of GP staking, if you think about the business of asset management, there's management fees and there's performance fees to carry. And you value both when you're evaluating a manager and underwriting what the cash flows will ultimately be. Obviously, management fees, very easy to

Starting point is 00:24:41 underwrite. They're contracted over the life of the fund, and you can underwrite what that revenue will look like for the firm, and then what your return stream can look like. The carry is a little bit harder, particularly in cases like venture and private equity. So it's a little more nebulous as to what that may look like. Penultimate question. What do you think about emerging managers as we go into 2024 and 2025? Particularly as it relates to venture, I think emerging managers are in a really interesting spot. I think it goes without saying that the past two years have been extremely challenging for fundraising. So end of 22, 23 for sure. I think 24 will also be a really challenging

Starting point is 00:25:16 year for fundraising for the most part, in large part because you have a lot of LPs, particularly on the institutional side, who've already committed to funds that they have existing relationships with, they're probably going to spend most of their remaining allocation and venture re-upping. So there's not going to be a lot of room for new managers who they work with. I think that's really challenging when you think about new managers coming to market and trying to raise or build new relationships with net new LPs. So it's going to be a really challenging fundraising environment. But when you think about dynamics of that from a capital imbalance, there's going to be more managers trying to raise less capital to go around for those managers.

Starting point is 00:25:54 I think that's going to make for some pretty interesting vintages for the managers who end up picking the right companies. So now would actually, in my view, be a good time to allocate to venture, provided that you can find the right emerging managers. And they're probably going to right-size their fund size, which also, as we both know, really important, right? Smaller fund sizes generally tend to mean better returns because it's from a math perspective, you can do better. Now, certainly not without risk. I think Dave Clark from Vencap has had some great data to show that being in the best funds really matters

Starting point is 00:26:25 because there's only a certain number of companies over the course of a number of vintages that are really going to matter and drive returns. But I think what was also important and what he said in his podcast is he's investing at a slightly later stage. He's focused more on series A focused VCs and beyond, which means he's going to trade off a little bit of potential upside with some of these smaller, more emerging managers who might really hit on one at a smaller fund size for a little bit less variability in performance. But I think what he says still stands in many regards as being in the best funds is what really matters in venture. The challenge with emerging managers, as we both know, is finding those managers. So that's what we aim to do is investing on our investing in funds activities is find managers who can really

Starting point is 00:27:07 outperform sure they're emerging managers and we are really sensitive to fund size in that regard. We've invested in a number of smaller managers, 50 million and below in size who've tended to do really well. The tiny VCs, the boost VCs of the world. We did Polychain's first fund in crypto on the hedge fund side, not the venture fund. But then, you know, Goodwater's $131 million fund one also has done really well. And that was a slightly bigger fund, but they're also building a firm.

Starting point is 00:27:42 So I think where this is all going from my perspective is as an allocator, putting an allocator hat on, there's going to be a bifurcation of firms. So there's going to be firms that end up being really large and growing their AUM. Those are going to be great businesses, and they're going to become multi-strap platforms. They're going to grow their AUM. Those are businesses where you want to own a piece of the GP. I think some of the best funds to own are the ones where somebody is a really great investor and not a great manager, not a great asset manager, scaler. And I think that's lost on a lot of people. So, Mike, you've been an incredible guest. I've learned a lot.

Starting point is 00:28:07 I've been taking a lot of notes. What would you like our listeners to know about you, about your podcast, about Broadhaven, anything you'd like to shine a light on? Where we really focus is on the, particularly private markets related fintech companies, investing in funds, building businesses in the stake space where we're helping grow asset managers, building a podcast and content platform focused on the growth of private markets, is that private markets is really the next wave of growth in financial services. You're seeing this happen with the largest firms in the world, the Blackstones, Apollos, etc. They're encroaching on Wall Street's territory. They're doing a lot more of what banks did in the past,

Starting point is 00:28:46 and their activity looks increasingly more like what traditional financial services firms are doing. What that tells me is that private markets are going to continue to grow from that perspective and the development of these firms as businesses. I also have to give a shout out to another portfolio company, Alto, Alto IRA. I think you know the CEO, Eric, as well. They're also further unlocking trillions of dollars sitting there in IRA funds. A lot of people don't know you could invest that in venture capital and real estate. So I think that's, that's for further,

Starting point is 00:29:13 further exasperating this, this kind of reallocation to privates. You're hitting on what I think would be the massive transformation and large private equity firms have, have been calling for this as well as 401ks and certainly self-directed IRAs, which are already able to invest into private markets assets, whether it's private equity funds, venture funds, crypto, startups, real estate, et cetera. But if 401k assets could roll into private markets, which would actually make sense at its core, you have an investment vehicle that's meant to be long dated, matched with private markets exposure,

Starting point is 00:29:49 which is also meant to be long dated. If you're investing in a private equity fund, generally speaking, sure, there's ways to get liquidity in the secondary market, but more often than not, you're holding that fund for the period of the fund term. These are the right assets to be going into private markets opportunities. So if that could happen, that would unlock trillions of dollars worth of assets that would go into the alt space. And let's not forget, I mean, private markets is about 15 trillion of AUM.

Starting point is 00:30:14 That's up from like early 2000s. That was less than a trillion. So and now you have one firm, Blackstone, which itself already has a trillion of AUM. They're 38 years old. BlackRock has 9 trillion for context. They're a little bit older, but they really propelled ETFs to become this massive investment vehicle for everyone from the institution to the individual investor. I think the next five to 10 years will really be about private markets doing the same, and that's going to be the story. If you have things like 401ks, IRAs going into alts, that's going to create trillions of dollars of asset inflow into private markets. And, you know, I think it's going to create this whole reimagining of portfolio construction.

Starting point is 00:30:52 I've talked with many of the leaders in this space on the large alternative asset manager side. So, you know, people like Steph Drescher, who's a partner at Apollo, you know, she said that, you know, and not surprising and not surprising, that she thinks that the world is going to change in terms of how they think about asset allocation. There's not going to be this alternatives bucket, but there's going to be private markets and public markets. You could invest into fixed income or private credit. That's all part of your fixed income or credit allocation. Private equities are going to be private equity and public equity. So people are going to reimagine the way they think about portfolio construction. And that's also going to help push Alts forward.

Starting point is 00:31:29 There's been reluctance to expand the accredited investor bucket due to sophistication of those instruments. But I think there is a middle ground where there's some guardrails that could be put in through a regulatory body. There could be some standardized financial, standardized reporting that could help individual investors, even non-accredited to evaluate financial instruments similar to how they evaluate stocks and bonds. And well, Michael, I think we talked for a couple hours, but we'll have to leave it at this. It's been a pleasure to catch up and I look forward to meeting in person soon. Likewise. Thanks so much for having me and a great conversation. Thanks, Michael. By popular demand, the 10X Capital Podcast has officially launched our newsletter powered by Carrier Labs, a full-service content

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Investing Billions - E41: How Everyday Investors Can Access Blackstone, Apollo, and KKR?

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