StashAway has publicly landed a multi-family office that is using it to source a variety of asset classes, including private equity and venture capital.
The deal with Aument Capital Partners, a new Singapore-based multi-family office with nearly $500 million of client assets under management, shows how wealthtech businesses are expanding beyond their origins as robo advisors catering to middle class needs.
Last year, StashAway launched a service aimed at high-net-worth individuals (HNWI) in Singapore, called Reserve. It provides access to private-market funds, angel invests, and crypto, along with a relationship-manager service.
The private-markets side is the biggest piece: “It’s a discretionary mandate in private markets, with a low minimum ticket,” said Michele Ferrario, CEO and co-founder of StashAway (pictured, left).
He would not detail the wealthtech’s current assets under management, which exceeded $1 billion in early 2021. Ferrario says HNWI accounts for roughly one-third of AUM. His goal is to get them to allocate up to 10 percent of total assets to private equity and VC.
Automating family wealth
Dominic Schacher, CEO of Aument, says he was attracted to StashAway’s platform because of its easy access to private markets, as well as because it’s fintech (pictured, right).
He says he launched Aument last year exclusively to serve younger technology entrepreneurs. “There’s a lack of transparency around financial products, but we know what they should cost, and which providers to use,” he said.
Aument is unusual in that it insists on managing all aspects of a family office’s needs, from concierge services to investments. It is normal, especially in Asia, for wealthy families to spread their investments among multiple private banks, but Schacher says younger heirs and founders are more willing to partner with someone who can simplify their affairs. The families in his business (including his own) may continue to have multiple financial relationships, but Aument oversees these.
The average client has assets of $50 million to $70 million, he says. Families with net worth above $150 million are big enough to run their own office, whereas multi-family offices have emerged to socialize the costs of running a full-fledged investment business.
He is eager to work with partners that are highly automated in order to simplify processes – which can be hard serving family offices, which are idiosyncratic in terms of what the owners want and how they do things.
“We’re drawn to StashAway’s being a tech company, because the only ways to scale are either through standardization, or by being tech-enabled and automating everything, from reporting to managing capital calls,” Schacher said.
From robo to private markets
The main attraction, however, is the PE/VC platform. StashAway isn’t inventing something new: iCapital and Moonfare are other fintechs that offer low-ticket access to private funds. PE and VC managers, traditionally serving large institutional investors, are eager to tap the huge pool of family money.
Typically a KKR, Silvergate or Khosla Ventures will require an institution to put up $5 million to $10 million to get access to a fund. Family offices can’t meet that. The other way to access private markets is via private banks, but they too will require a steep amount, usually minimum $250,000, that will be invested in just one fund. Even if the family office can afford such sums, it will not have a diversified exposure to private assets.
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StashAway makes it possible for its accredited investors to write tickets as low as $50,000. It operates a multi-manager system, pooling its HNWI clients so it can make large-scale commitments across a variety of private fund managers (including the ones named above).
It takes a fee on top of what the underlying managers charge.
“Clients give us an annual budget of $50,000, and we make six or seven commitments per year. After four years, you’ll have around 25 managers worldwide, across venture, growth and buyout.”
The tech comes in to manage the operations of this, notably capital calls. A fund will typically require investors to put in money twice a year. “Across 25 managers, that’s a capital call every week, which would be a nightmare,” Ferrario said. StashAway manages it so each Reserve client only has a biannual capital call. It requires clients put up a portion of capital up front, to ensure it’s managed smoothly.
The tech aspect is straightforward, though. There’s a front end for the RM service, but the back end is mostly just a ledger to keep track of commitments and calls among the clientele. The tech for StashAway’s core retail business is more complicated, as it has to handle transactions and portfolio rebalancing.
Schacher says the service complements his own view of asset management, which is to put the core portfolio in low-fee passive investments. “There’s not much out there, just private banks and some asset managers, and they’re often mediocre,” he said. “Now there’s also StashAway.”