The alternative investing ‘universe’ of private equity, venture capital, or other illiquid assets has long struggled with two problems: It’s expensive to enter and difficult to navigate.
Henderson was trying to find a “broader and more expansive investable universe” for his own investing needs and wanted to evaluate potential funds more efficiently.
That can be difficult to do given the sheer volume of funds out there.
“When you’re investing in private markets, there’s typically a long investment lifecycle. So you need to make sure you’re investing in top-performing managers,” he told Hypepotamus.
He couldn’t find a platform to help him navigate the space, so he built Gridline to do just that. And it is set to open private markets to more potential investors.
AN ALTERNATIVE LOOK AT ALTERNATIVES
Gridline users fall into three main categories: Individuals who want more control over their investment portfolio, independent investment advisors who want to build “client-centric portfolios,” and family offices looking to build an “emerging manager program.”
The goal, Henderson said, is to help these people “access the products that endowments and sophisticated institutional investors have access to and leverage to drive superior returns.”
Gridline works as a marketplace for users to “discover, deploy and manage alternative investments.”
After filling out an investor questionnaire and going through an automated validation process, users can search for early-stage, late-stage ventures, or other products based on individual investing goals. Investments can also be filtered by asset class, geography, and other metrics.
“It’s a self-directed process, but you’re doing this from a curated portfolio. It’s not everything under the sun,” added Henderson. “It’s not anyone who’s out there trying to raise capital. We engage with all the fund managers and perform due diligence. We make sure that the team and the managers are capable of executing against the stated strategy.”
In addition, Gridline looks to make the space less “cost-prohibitive and inefficient” to enter.
Traditionally, the entry point in private markets could be upwards of $1 million.
Gridline lowers that to $100,000. That minimum might continue to drop, Henderson added, as regulations continue to relax.
The marketplace also opens up new opportunities for traditional funds. As Henderson puts it, ”Gridline provides [firms] with a wider investment audience and ultimately a wider pool of capital, but they’re still engaging with Gridline as a single LP. Then we take care of the administrative tasks like treasury management, capital calls distributions, performance reporting, tax reporting.”
WHERE GRIDLINE GROWS FROM HERE
After officially launching last month, Gridline just announced a $9 million funding round of its own. The list of local investors involved reads a bit like a “who’s who” of the local tech and wealth management ecosystem.
Atlanta-based investors include David Dorman (former CEO of AT&T), David Cummings (founder of Atlanta Ventures and Pardot), Edwin Marcial (founding CTO at Intercontinental Exchange), Kyle Porter (founder and CEO of SalesLoft), Garrett Langley (founder and CEO of Flock Safety), Tim Kopp (CEO of Terminus), and Jon Hallett (board advisor or director to 30+ venture-backed companies).
Atlanta funds Tech Square Ventures and BLH Venture Partners also joined the round.
The Gridline team is currently 14 employees, mostly concentrated on the engineering and product side. The marketing team is focused on making the startup a go-to resource for those looking to better understand the alternative investing space.
Henderson is uniquely positioned to lead such a team. He previously served as CEO of Salesfusion (acquired by SugarCRM) after doing M&A work in the technology space.
80 percent of the team is based in Atlanta, which Henderson said is a nod to the city’s FinTech and enterprise software scene.
“Most people would say, why would you not build this in New York? Well, we see building in the Atlanta market as a competitive advantage,” he added. “Many [competitors] come from banking or private equity. But where they fall in short is the technology needed to support this business model. So coming from a really strong enterprise software background gives us a competitive advantage to deliver something that, frankly, people have tried and failed to do in the past.”
Henderson added that the team plans to double over the next 12 months.