Top Technology Trends in the Private Markets Part II
At the end of 2023, we spoke with Head of Technology Solutions Griff Norville to discuss notable technology trends spanning the private markets. We recently caught up with Griff to get a mid-year update on what’s being dubbed the new age of digital investing (or at least that’s what we’re calling it).
Q: What’s your 30-second elevator pitch for why it’s important to stay up to date on the latest technology trends changing how investors approach the private sector?
A: The private markets are finally at a point where investment firms, channel managers and investors are consistently embracing and implementing tech-enabled innovations across their investment processes. Perhaps one of the most exciting outcomes has been the way in which technology has enabled a newer set of investors to participate in the value creation opportunities of this asset class. I think that clocked in less than 30 seconds…
Q: What is one of the prominent challenges still facing investors within the private markets?
A: Lack of transparency. Last time we sat down, I talked about our firm’s approach to countering this challenge. We offer technology solutions to help clients capture meaningful data and apply those insights to make informed investment decisions. Now, let’s take Hamilton Lane out of the equation for a moment. Institutional investors, even those equipped with large teams and operational processes to manage their organization’s investment allocations, struggle with straight-through data processing. While the private markets have significantly increased in size and complexity over the past five decades, we do not yet have an industry-wide, standardized structure and format that fits all (or even most) use cases. This means General Partners (GPs) and Limited Partners (LPs) are reliant on sifting through a combination of email, PDF and Excel. All-in-all, it’s a highly laborious and inefficient process for investors to get access to their own portfolio data, let alone timely, high-quality, transparent benchmarks and other industry information. Fortunately, there are a couple tech providers making significant in-roads in this area (some of which we partner with as part of our HL Innovations initiative). As key challenges like this are addressed, we believe institutions and individuals will significantly increase exposure to the private markets.
Q: Back in December, we lightly touched on how Hamilton Lane is approaching artificial intelligence (AI). What else can you share on this topic?
A: We can probably all agree that AI is a key technology trend that has the potential to shake up how firms operate and do business within the private markets. For us, it’s more personal; we are committed to identifying, investing in and building the best tech-enabled toolkit for ourselves and our clients, so AI is yet another exciting tool for us to work with. Enter Helix by HL: an AI assistant (we co-developed with TIFIN) designed to help investors navigate the private markets with greater confidence. Using natural language, Helix is able to provide experienced investors with best-in-class insights and diligence efficiency tools. For newer investors coming from the wealth market, Helix can guide on best practices for benchmarking, portfolio construction, investment selection, etc.
Q: Can you explain a bit more about the kinds of data and information fueling the AI interface?
A: At Hamilton Lane, we have an abundance of private markets data and expertise, specifically in the form of written research, as well as the massive set of raw data needed for assessing investment allocation decisions. In building Helix, we are pulling from our firm's existing data fabric and using AI to bring that data to potential and current investors. Here’s one way to think about it: This is taking much of the same data that is already available in our Cobalt platform but changing the interface to one powered by natural language.
Without giving too much away, we are pursuing three angles:
- Advice: Helix is built to screen the collective intelligence of Hamilton Lane's knowledge base and answer specific questions on industry mechanics, benchmarks, and trends – in the Hamilton Lane voice.
- Diligence: Helix can read a GP’s offering documents, such as a PPM or pitch-deck, and write a memo that summarizes the offering, including the organization’s history, investment strategy, key terms and track record.
- Distribution: This area is particularly exciting. The objective is that financial advisors use Helix to create content that guides clients on available opportunities and how private markets add value to an existing portfolio.
To wrap up, I’ll leave you with this: Innovation isn't easy, but the effort is worth it. The biggest challenge we face is inertia and resistance to change. Hamilton Lane values our employees, clients and partners that keep the big picture in mind and share our commitment to driving the private markets forward.
Interested in seeing Hamilton Lane’s data and technology in action? Learn more about our Technology Solutions or contact us to schedule a demo of Cobalt LP, our proprietary analytics, forecasting and diligence platform.
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As of July 24, 2024