Q&A: How fundcraft is revolutionising fund administration

fundcraft CEO Julien de Mayer talks about how the company is changing the face of fund services within private equity and other alternative investments.

fundcraft offers a digital infrastructure for asset managers active in the alternative assets space, such as private equity, venture capital, debt and funds of funds. Its digital infrastructure combines cloud-based software, regulatory licenses and top-level expertise of fundcraft’s in-house operations team. The company launched in January 2021 and became fully licensed in January 2022. Today, the company has assets under administration of over €5 billion and 80 employees spread equally between offices in Luxembourg and Spain.

What is fundcraft’s story?

De Mayer: Before fundcraft, I was working on the client side of fund services and was not very satisfied with the service I received. I realised there were many shortcomings and systemic issues in the industry.

Traditional service providers work in silos and different operating units that all process broadly the same information. But they don’t use common tools and databases to process this information. I found this frustrating because we had to provide the same information again and again to different people within the same service company, and we had to reconcile and consolidate the pieces of information we received back.

I was sure there had to be a better, more scalable way to do this, especially with technology. And that’s how fundcraft started. We went on a journey to create a platform that actually centralises all back-office operations and fund stakeholders in one place and promotes a new way of working with asset managers.

Describe your value proposition. How does it set you apart from other options in the market?

De Mayer: What sets us apart is that we offer real transparency, control, and efficiency for the back-office operations of asset managers.

We achieve this through the perfect integration of a cloud-based cross-functional platform, regulatory licenses, and top-level experts cooperating with our clients.

Most asset managers end up with several agreements, numerous contact persons, little insight into what happens on the admin side, and an entire in-house team just to coordinate and control the back-office work of service providers.

“We went on a journey to create a platform that actually centralises all back-office operations and fund stakeholders, in one place, and promotes a new way of working with asset managers.”

Our platform is the cross-functional single source of truth for all stakeholders, information, communication, and processes related to the operations of alternative investment funds. Asset managers can view their alternative investment fund’s information, trigger processes, such as a capital call, and provide data or documents on the platform any time from anywhere. Third parties are integrated with the platform via API or our user interface access.

Moreover, we revolutionise the pricing in the industry. Most service providers charge for their services item by item, with a base fee that covers a certain number of services and additional fees per document or operation. At fundcraft, however, we charge a single fixed fee applied on a fund’s deployed capital throughout its lifetime. This substantially increases the transparency and plannability of costs for asset managers.

How do you keep up with industry changes and technological developments in the field of fund administration?

De Mayer: We are a digital-first company that is driving technological change in the industry. We are able to research and adopt new technologies swiftly because we have an in-house team and control our own software development.

One of the benefits of having the entire fund operations digitalised is that we can adapt to new forms of digital assets or new ways to dematerialise assets. We are following these trends very closely.

On the regulatory side, our specialists are screening the environment continuously. Our big advantage with a fully digital platform is that we can create new regulatory reports extremely fast, as it is usually just another way to present the data we already have digitally on our platform.

How does fundcraft drive innovation in the operation of a fund management business?

De Mayer: Let me give you an example of how we are delivering more efficiency for clients than our competitors. With the tools we’ve built, we can process the onboarding of an investor in a few minutes because we have integrated all the KYC verifications, document collection, and all the different actions that need to happen from a back-office standpoint. We have onboarded more than 1000 investors in a week with a team of just two or three people.

Done manually, a KYC officer can onboard around 20 to 25 investors per day maximum if the information is provided in a very standardised fashion by the customer, which is rarely the case. They will not have the capacity to take the process from end to end completely digitally.

“What sets us apart is that we offer real transparency, control, and efficiency for the back-office operations of asset managers.”

This is particularly important as private equity assets become increasingly accessible to more “retail” investors. The big challenge is to deal with the sheer volume of investor onboardings while being 100% compliant. fundcraft is uniquely positioned for this rapidly growing segment in the industry because, on our platform, there is no lead time between the closing and the moment when you start getting the money from investors.

We promote an innovation mindset internally and have a unique way of operating. Half of our employees are technology and product experts developing software and integrating the different aspects of the operations. Our tech development adheres to agile Scrum methodologies, which involve working in small teams with clearly defined objectives. We are adapting these methodologies within our fund operations team to increase responsiveness and time to delivery.

Who is an ideal client for the company? And what makes fundcraft a compelling choice for them?

De Mayer: Generally, all asset managers in the PE, VC, fund of fund or debt space are a great fit, but we are particularly attractive for two groups: First, asset managers with large portfolios or a large investor base, as we have the tools to manage these in an easy and efficient manner. Second, asset managers with a digital approach. We are the only ones to provide a fully digital “front-to-back” integration for them.

“We achieve this through the perfect integration of a cloud-based cross-functional platform, regulatory licenses, and top-level experts co-operating with our clients.”

It is further remarkable that we get immediate positive feedback from asset managers who have already gone through the pain of launching and operating a fund for a while. These are usually experienced multi-asset managers who have worked with one or several asset servicers in the past. They really see the value of having all their structures digitally deployed in one place, managed with full transparency and in cooperation with our experts. They are curious to adopt this new way of working.

© 2023 funds europe



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