The Exchanges

Q As you're building this up, I'd love to hear some about how this all comes together. How does your team reach 850 managers and a thousand allocated?

A A significant percentage of all of that activity comes from our sponsors. So we have some of the best sponsors in the world. Jeffries, Goldman Sachs, Carlisle, Galaxy. These are firms that are connected to everyone in the industry. So from the start, really our first stop when we created iConnections and we were building the company was to sign up as many of those top tier firms as sponsors and supporters of ours, because they are the people that everyone in the industry goes to To find out who are the people they should partner with? What are the events they should attend? ProSec partners, Jen ProSec, obviously a friend of ours, her firm is absolutely at the center of that group as well. So by winning over the hearts and minds first of all the service providers in the industry, it helped us extend our reach far beyond what probably made sense for a startup in April of 2020. And then from there, It then becomes all about the allocators. Winning over the institutional investors, the endowments, the foundations, the pension funds, the consultants, the family offices. By winning them over and winning their confidence that we were going to throw a high quality event, that we would have top tier managers. By winning over the hearts and minds of the institutional investment community, the managers then see that list of attendees who they're going to be able to take meetings with. It …

AI assessment note: “A significant percentage of all of that activity comes from our sponsors.”

Q How are you thinking about the iConnections business beyond just this big event in Florida?

A A big opportunity for us is if you think about what we do in this event, We are really good at bringing this community together, letting them find each other, discover each other, and learn a little bit about each other in our tech platform, and then ultimately schedule a meeting with each other. That same activity takes place for everyone at this event all year round, except they're just not doing it in one building, and they're not doing all the meetings on the same day. Most of the industry operates through what we call roadshows. A manager will visit a city, and they'll book 10 or 20 meetings in that city over a course of maybe three days or four days. We are adding to the iConnections platform a roadshow module, which will enable all of that activity to happen outside of this event. So it'll have a calendar feature that you'll be able to sync with your calendar, and it will also calculate the travel time in between meetings, so that when you make your calendar link available to an allocator, it will know Can I provide 10 o'clock to an allocator who's uptown? If my 9:30 meeting is downtown, I probably can. So it'll make sure that it factors that in. And then behind that roadshow module will be a whole concierge team that will help our fund manager clients while they're actually on the roadshow. Both setting it up, but also on the roadshow, because when you're traveling arou…

AI assessment note: “We are adding to the iConnections platform a roadshow module”

Q And once you've brought all these people here, you mentioned there's 15,000 meetings, and they're all one-on-one meetings. How do you match up all these people so that they can figure out who they want to meet?

A One of the things we learned early on was it was best to create a tech platform that enabled the attendees to really select each other. At other cap intro events, one difference is many of them are multiple investors to one manager where we are primarily one-to-one. And oftentimes the group that's organizing those events will select the Who will meet with home? We realized early on the investors in particular would much prefer to choose which managers they're going to meet with. And in these large portfolios, they have needs across every imaginable investment category. So it would be really hard for us to know what is the best fit for them. And we asked them lots of questions and they tell us here are the things we're looking for. But those things change over time and market shift can really impact that. So we found it's really best to let the attendees choose each other. So our platform has a tremendous amount of information that all the attendees fill in about their firms. And then that gives everyone the ability to search and refine their searches and identify who were the best fits for my meetings. No one actually books a meeting time in this event. Everyone just tells us, these are my open meeting times. And then we run an algorithm about a week before the event, and that algo will then book 15,000 meetings. It runs for about two hours, and then it slots all of these meeti…

AI assessment note: “we run an algorithm about a week before the event, and that algo will then book”

Q the volume of meetings in macro right now or digital assets coming on the rise. Then you also had this thought leadership day yesterday. I'm curious from all of the data that you see, from all the activity of these allocators, from the things that are of interest to the thought leaders that come speak, what are some of the trends that you see playing out over the next year?

A So the thought leadership this year was absolutely our best ever. We had an incredible lineup of venture investors in particular, and I think venture is on the cusp of really breaking out. Venture has had one of the toughest times over the last year raising capital, and everyone has talked about it. There haven't been enough exits that LPs have benefited from so that the cash flows are there to fund those future commitments. I feel like a lot of what I heard this week from conversations with guys like Brad Gerstner and Bill Gurley and Gavin Baker, first of all, I think they believe this is one of the best times to be a venture investor because the portfolio companies have really become much more fit. Brad in particular talked about this yesterday. Portfolio companies are much stronger than they were a few years ago when valuations were at a peak. And I think as investors, hopefully we're starting to see the IPO markets open up a little bit here. We heard news this week that Reddit will be going public probably in the month of March. If the IPO market starts to open and the M&A market gets going, I think you're going to see a huge wave of interest in venture, and especially in those funds that I think were very smart and didn't go crazy when things were at a peak and are now taking advantage of what's probably one of the best Venture markets of our lifetime.

AI assessment note: “I think venture is on the cusp of really breaking out.”

Q What was the original Context Capital Partners business?

A The original concept, which still continues through today, was to get into the seeding business, and then over time we realized doing accelerator deals were probably more interesting to us. But the original concept, this was oh five, so you're talking pre-crash, it was pretty simple. We had lots of evidence of really smart PMs who would leave a shop, and they'd go start a lot of times with five or ten million dollars in their own account, Build a track record over a year or two. Fund to funds money would come flooding in if they put up good numbers, and then the institutions would pick up on it once they crossed 75, a hundred million dollars, and then the money would really flow. So back in those days, we thought of it really as mostly just writing a check. We didn't think of it beyond that. It was just pick the right horse, give them the capital they need to get started. They'll build a track record. If they do well, the money will find their way to any solid PM. And post crash, it completely changed.

AI assessment note: “The original concept, which still continues through today, was to get into the seeding business”

Q And what was the size of it back in 2013?

A So in 13, we had in total, I think it was about 320 managers and right around 300 investors. But we've gotten much more sophisticated over the time we've run this thing. The Investors are now vetted very heavily by an investor relations team that we built out. So we have four people who are dedicated to nothing but speaking to investors, understanding what their needs are, what sort of strategies are they interested in, and making sure that they're legitimate and actively investing in alternatives. And over time, the event has also started to shift a little bit towards private equity and less liquid strategies. So As it's become harder to make money in the liquid stuff, there has been more and more interest on the part of private equity funds and attending and in investors meeting with those funds. When we did this originally, we've only focused on the capital introduction function, which means this is a set of one-on-one meetings that takes place over two days. This year we'll facilitate somewhere between 11 and 12,000 meetings, if you can believe that, in just two days. But we've also added a day of content because we found that it was interesting to managers and to investors to experience some component of thought leadership. So this year we're really excited to have some terrific speakers lined up. We have Mohamed El-Aryan moderating a panel on global economics. We have Eil…

AI assessment note: “in 13, we had in total, I think it was about 320 managers”

Q When you look at the matching of meetings and the interest in meetings as the input, the output ultimately is dollars for the managers, a return on investment for a manager who's coming to spend money to come here, a return on time for the allocators. How do you think about measuring outcomes for the attendees on both sides?

A This is something we're paying a lot of attention to in 24, and we're going to be running a few pilot experiments to Better capture that data. The truth is, this business is such a long sales cycle. You can come here and have 20 or 30 meetings. You may not get an allocation from any of those investors for years. If you're a really big, well-established manager, it's probably less than 12 months. If you're an emerging manager running a 100,000,200 million, it can easily be two or three years. What we are trying to do is to create Mechanisms to incentivize the entire community to provide this data as it comes in. I can tell you anecdotally, the stories we hear coming out of Miami over the next six months after the event ends, it's generally XYZ fund raised fifty million. This fund raised a hundred million. A few weeks ago, I heard a story from a really large fund of funds in the hedge fund space. That told us they had allocated five hundred million to managers they met here last year. So we've also run surveys, and we know based on all of that information, billions of dollars are being transacted as a result of this event and the meetings that start here, and hopefully next year we'll be able to talk about how we're capturing more of that data in a more systematic way, but because of that long tail, it is a challenge.

AI assessment note: “we're going to be running a few pilot experiments to Better capture that data”

Q Are there particular strategies that you focus on within the ecosystem?

A Yeah, I would say as a company, we've always leaned more towards quantitative strategies. We've never been big on strategies that involve a human doing fundamental analysis and supposedly doing it better than the rest of the world does it. I think in liquid markets, that's an incredibly difficult thing to do, and it's never something that we've really focused on. We have Made those bets in, I'd say, niche areas, and one of our most successful funds actually is in one of those niches, but it's a niche that is difficult for big pools of capital to access, and for that reason, even a human can still maintain some edge there, but for the most part, we're looking for things that are using some form of quant to really find edge. We just believe it's too difficult for humans in most cases to really do that.

AI assessment note: “we've always leaned more towards quantitative strategies”

Q And where does that fall through? I mean, you just can't do both, right? You can't sit there and focus on performance and at the same time be out trying to build the business.

A It's very difficult. Ideally, it's better if you can separate it, but ultimately the PM owns a big chunk and they need to own a big chunk of that business. So of course, as you'd expect, they're going to have an opinion on cutting fee deals with big investors who show up early and Do I want to go do that marketing trip in California because it's going to take me out of the office for a few days? And the reality is when you're small, no one really wants to talk to anyone except the PM who's driving the strategy. So it's really a tough balance to strike in the beginning and having someone in that partner seat with us who has good business instincts is really, really critical because we've seen in a lot of cases, we found ourselves struggling to pull our partner along To execute in a way that we thought was necessary for the business to succeed. So I think pre-crash, as I said, you really could put up great numbers, and money would find its way to you. But post-crash, investors shifted so dramatically to just capital preservation and thinking, I just don't want to make a mistake. I'm okay giving up that upside. If I can just keep my nest egg where it is, maybe I'll grow it a little bit. But I don't want to take too much risk, and they really focused on the operational and business risk of small managers. So if you were a small manager not thinking about that dynamic and not workin…

AI assessment note: “It's very difficult. Ideally, it's better if you can separate it”

Q How about on the summit side? Are there stories of success that you've seen from someone who attended the conferences and then some months later you get a thank you email and you wonder why you didn't charge them a multiple of what you did to show up?

A It would be a great business if we were getting basis points instead of charging a fee. So, without naming names, yes, we hear stories all the time about funds who attend our events and go on to raise tens of millions, if not hundreds of millions of dollars at our events. We've heard from investors, actually, there's one consulting firm who told us over the last few years they've invested over a billion dollars just at our Miami event. So, For sure, and I think this is the reason, of course, why it has succeeded to the degree it has, and it's the size it currently is, because you can't do that if people are not achieving some level of success at your events. And really, on both sides, we hear it on a pretty regular basis that it's just working.

AI assessment note: “yes, we hear stories all the time about funds who attend our events”

Q So when you started doing this in the couple of years pre-crisis, were there any big lessons that you learned, either from successes or mistakes?

A We learned very early on that the person in the seat may have been a great investor in whatever they were doing before we got together with them. But when you start one of these things, you need to be a great investor and a great entrepreneur. Because at the end of the day, you're building a business and you're building a business that then competes with some of the smartest people in the world. So this is literally one of the toughest businesses to succeed in. You're at a cocktail party, and you say you're in hedge funds. Everyone thinks you're successful, but the reality is there are thousands of funds that really never get to a critical mass, and ultimately they don't succeed. So we learned early on that you need to partner with a PM who put up good numbers, but who also is thinking about how do I build this into a going concern? How do I turn this into a business that can really compete with whoever the players are in their particular niche?

AI assessment note: “We learned very early on that the person in the seat may have been”

Q All right, I want to go into story time now. I want to start with a softball, which is among your stable of funds that you've partnered with. What story is most fun for you to tell today?

A I'd say one of the deals that I've had the most fun on is It's a deal we did recently with Troub Capital Management. So Doug and Peter Troub, who are our partners, and we're in a private equity joint venture with them. These guys have just been amazing partners to us, and the part that I've really loved is that they're just hardcore entrepreneurs. They're great investors, for sure, and you can't do a deal with someone who's not a great investor, but they get it. You can say to them, hey, I've got a meeting in London with XYZ, and You know, they're going to be hopping on a plane tomorrow to go to London to do that meeting. So it's been fun watching our business kind of evolve over time, where I think the opportunities that are presenting themselves now are just at a higher quality level. And that's been fun for me, just being in business with guys who are really aggressive and they're, you just know they're going to win.

AI assessment note: “I'd say one of the deals that I've had the most fun on is”

Q As you look out on the capital partner side, are there particular strategies that you're excited about?

A Yeah, so there's one that we're spending more time on these days, which is pretty unique, and it came from our partner who built his wealth mostly through a firm that at its core is really a liquidity provider. If you think about life as a fund manager, especially a sub 200 or four hundred million dollar fund manager, if you're putting up good numbers every year, your carry is meaningful. And it becomes a huge part of your cash flow every year. Now, depending on your expansion and what you plan to do with the business, some managers are just rolling that into the fund, but others are using it to expand their business. So it becomes a significant component of their risk that they have to manage now. So one of the ideas is to do deals with GPs to In essence, trade fixed for variable. You know, they have this variable risk. We would do a trade with them where we would, in essence, buy that cash flow stream and take the risk of the carry, not entirely, but to some degree. And I think it's something that we could expand even beyond GPs. It's the biggest problem for a GP. But LPs have this issue as well, especially on funds that have a more volatile return profile. So this is one that we're spending time trying to analyze and build a data set on, and we'll see if that turns into a new product.

AI assessment note: “one of the ideas is to do deals with GPs to In essence, trade fixed for variable”

Q Ron, I'm curious the same question specific to global alts. How do you see larger firms approach global alts? How do you see smaller firms approach global alts?

A Well, I think the larger firms are better equipped to take an approach similar to what Katie was describing. They just have more manpower. They have more experience. They know they have to make the investment upfront. I think what our cap intro events have helped all fund sizes do Is prepare well in advance, because that's really what you're talking about. At the end of the day, if you think you're going to go to a conference and show up the day of, and get the theme out of it as the person who's been working it for two months, it's not going to happen. At our events, our scheduler opened two weeks ago for the LP side, just yesterday for the GP side. We have 1500 meetings scheduled already among those participants, and These people will spend the next six weeks scheduling another 15, 16,000 meetings. So long before you get in the room, you have to be thinking about who do I want to meet? Why do I want to meet them? And planning ahead. Then the other elements that Katie described are just as important. They're not as obvious because, of course, asset managers want to meet with LPs primarily, but if there are strategic partnership opportunities If there are just opportunities to build your brand and do a dinner, all these things really need to be considered well in advance. And I have an engineering background, so I relate a lot to the PMs who run funds because they're super anal…

AI assessment note: “Well, I think the larger firms are better equipped to take an approach similar”