AtomInvest aims to democratise investment in alternatives
The summer saw the launch of a new investment platform, AtomInvest, which is designed to democratise access to alternative investment funds across private equity, venture capital and hedge funds.
Founder and CEO of AtomInvest Hemal Mehta explains that he has a background in financial services and private equity and had increasingly realised that while these funds have consistently delivered high returns to investors of around 10 to 25 per cent over the last half century, they were pretty much designed for large institutional investors.
“Alternative investments are great manufacturers of returns in up markets and down markets,” he says. “However, the privilege of investing into these funds was reserved for big institutions such as pension funds, endowments and insurance companies. On an individual basis you need to be a billionaire to participate.”
The team at AtomInvest felt that was a huge opportunity in making alternative investments available to the wider market.
The new platform is a digital platform through which high net worth investors and smaller institutions can invest in what Mehta calls ‘the best in alternatives’ but with minimum investment sizes starting from USD100,000.
“The mechanics is that we don’t buy the funds. We are execution only and like any other platform we have 10-15 funds on which we have done the due diligence every year and qualified investors can pick and choose which to invest in.”
AtomInvest sets up a feeder fund which pools an individual investor’s commitment along with others. The time frame is a window of opportunity for private equity funds of three to four months during their fund-raising process.
Investors are charged a flat fee for the service and infrastructure of 1 per cent of what they are investing. “This makes us the lowest cost provider in the markets,” Mehta says.
He reports a strong response from both fund managers and investors, with some 4,000 investors signed up already.
“From the fund managers, we are working with some of the biggest names in the industry, the who’s who in the private funds space across private equity, private credit, liquid credit, hedge funds and there will be a few other opportunities in venture capital and the real estate space.”
The ticket size is proving varied at the moment with the take-up dominated by individuals at 80 per cent, against institutions at 20 per cent but those figures reversed in terms of assets invested because institutions have more assets to deploy.
“Our conversations with smaller institutions have been very encouraging because it is a way for them to access some of these funds they don’t have access to and investing through us is very straightforward.
“We feel that what we are providing is fairly unique,” Mehta says. “Especially given that we are doing it with a core focus on technology – we feel that there is huge opportunity to scale both within the UK and outside.
“The global market of investors hasn’t been scratched in terms of opening up access to alternatives and a platform like this can do it in a more streamlined way.”