Almost one year ago we published our first blog on InvestTech. Over the past year we have seen significant development in this dynamic space. The universe has consolidated as some firms have been acquired, others have merged, and a few have ceased operations. Salient strategic transactions include:
- Blackstone, CPPIB and GIC form a consortium to acquire 55% of Thomson Reuters finance & risk business
- Nasdaq acquires eVestment as a foray into private markets
- BlackRock, MSIM and UBS make strategic investments in iCapital to strengthen distribution
- Addepar acquires AltX to realize synergies in the alternatives space
- Artivest and Altegris merge to build a stronger tech-enabled platform for alternatives
- Solovis acquires Madrone to extend analytical capabilities
- Imagineer and Synap merge
2018 InvestTech Map
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Internal Initiatives and Open Architecture on the Rise:
Custodial banks are employing technology to improve internal operations and enhanced client engagement. Such initiatives are underway at BNY Mellon, Northern Trust and State Street (Beacon). In the investment consultant space, Mercer is opening architecture with MercerInsight. Overall, the tech firms themselves are recognizing the need to integrate, creating an empowered ecosystem solution. In the past year @ DiligenceVault, one of the most powerful discussions have been around integration, with our users technology and with select firms on this map.
Innovation Themes on the Rise: The biggest areas of investment from front to back office have been Digitization, Automation, and Analytics and Presentation. Data Visualization and Business Intelligence tools are becoming mainstream with Tableau taking the lead followed by MicroStrategy and Sisense, especially in the areas of structured data. Narrative Science is making inroads in aiding the narrative around the data in the presentation layer.
Artificial Intelligence R&D on the Rise: Tech and data forward asset managers are incubating ideas to improve internal businesses as well as provide client solutions. Key technology investments focus on developing AI capabilities.
Strategic Investment on the Rise: Last year, we posed the question of whether the VCs managing the investor money would serve as the catalyst of capital enabling industry wide adoption? Or whether the catalyst would come from the collaboration among investors themselves? One year forward, we have seen very limited PE/VC participation in terms of actual capital invested, with the financing gap being filled by strategic industry players themselves.
One unusual observation is the absence of Bloomberg Beta in this investor map, especially given their relationship with investment management players. Another fact is that the majority of the VC firms on the map have participated in single deals, and there doesn’t appear to be a specific InvestTech mandate. Strategic investors dominate the magnitude of investment, but these tend to be growth stage investments. Early stage firms seem to have limited capital to scale. Time for a new GP to launch an InvestTech fund?!
Overall, we are in an exciting phase, where the industry is transforming, and there are multiple catalysts of positive change. We are looking forward to tracking 2018 with our clients and partners and seeing how this landscape transforms by 2019.
Disclosure: We are at the center of the universe here simply as authors of the industry map, and make no claim to having solved the integrated tech puzzle, not just yet! 😊