What iCapital’s $820M Funding Means for Private Markets

There’s a reason why they’re called private markets: Most clients aren’t welcome. However, iCapital just got a lot of fuel to help change that, raising more than $820 million in new financing last week. Not only is this good news for the fintech firm, which specializes in alternative investing, but it’s the next step in making private assets more accessible to a wider range of clients.

“Think of it as a validation of a fundamental shift that’s been building for years — the democratization of alternative investments that were once exclusively available to pension funds, ultra-high-net-worth investors and the like,” said Will Trout, Datos Insights’ director of securities and investments.

I Need My Privacy

Private markets are standard fare for pensions funds and endowments, but they’re increasingly becoming part of wealthy clients’ portfolios. Almost a third of advisors plan to allocate at least 20% of their book to private markets this year, according to a Hamilton Lane report released in January. Another 29% said they would allocate 10% or more to alternatives. 

The wealth management industry is witnessing the early stages of private market allocations becoming as routine as traditional asset classes, but with a few caveats, Trout told Advisor Upside. While they might become as easy to access as international equities for high-net-worth clients, mass-affluent investors will likely see simplified, evergreen fund structures that behave more like mutual funds, he said.

iCapital has been strategic in becoming an “essential infrastructure layer” connecting asset managers who create private products and wealth managers who use them in client portfolios, Trout said. “Another way of putting it: iCapital is positioning itself as the ‘plumbing’ for this transition, much like how Stripe became essential infrastructure for e-commerce payments,” he said.

The firm has big plans for its latest fund raising:

• The money will go toward new acquisitions, global expansion and tech innovations, according to a release
• It brought the firm’s valuation to more than $7.5 billion.

Bridge the Gap. The new financing is almost like a treaty between the old and new world of investing, and came from some of the top financial firms on the planet, Trout said. “T. Rowe Price, Apollo, Blackstone, and BlackRock recognize that the future of wealth management requires seamless integration of public and private markets, and they’re betting heavily on the infrastructure to make it happen,” he said.