In 2016, Rob Sanders teamed up with an American business partner and left a well-paying job at an asset manager to ‘fix’ the due diligence exchange process. His erstwhile employer aided the entrepreneurial move, he tells Nick Fitzpatrick.

Exchanging information for due diligence and fund research was a process that hardly changed in 20 years, according to Rob Sanders, who started his career on a Deutsche Morgan Grenfell team that handled due diligence information. Later on, when he was head of group marketing at Aberdeen Asset Management, his involvement in a 12-month due diligence data project showed Sanders the process was archaic.

“Asset managers’ clients issue literally thousands of due diligence questionnaires to asset managers each year. And the questions are often the same but asked in a different way,” says Sanders – adding that data can be out of date within a month if, for example, there are personnel changes.

“No asset manager asks for the DDQ [due diligence questionnaire] back to update it. They update their clients bilaterally over email or in meetings. It’s very hard for clients to identify and keep track of information changes if it’s not centralised. It brings risk into the process, particularly when regulators are increasing scrutiny and showing more readiness to act.”

Due diligence – or ‘DD’ – covers a multitude of risks that must be identified, managed and monitored when firms agree to do business together. In the past, this focused on investment risks but soon spread to operational and business risks, environmental, social and governance (ESG), diversity and more.

The UK’s Financial Conduct Authority (FCA) now requires firms to implement the ‘Consumer Review’, which went live in 2022, into due diligence practice to minimise the risk that investors will be sold unsuitable funds.

“DD has one of the biggest risks associated with it, yet never makes an asset manager CEO’s top-ten list of priorities,” says Sanders.

A second career

At Aberdeen (now ‘abrdn’), Sanders helped coordinate how information could be streamlined for clients. It was while Aberdeen pitched for work with an insurer that Sanders realised some competitors were undertaking similar projects, but the formats of information differed between asset managers. Saying a whole-of-market approach was needed to fix it, Sanders was given an enviable boon that would lead to a second career as an entrepreneur.

In 2016, the then-senior management – including Martin Gilbert, CEO and Campbell Fleming, global head of marketing and distribution – allowed Sanders to spend half his time developing a due-diligence fix. The end-game for Sanders was a centralised, global platform where due diligence information could be simplified and digitalised. Door Ventures grew out of this.

Lightbulb moment

Roland Meerdter would the same year become Door’s co-founder. Meerdter had a background as global head of fund manager research at Deutsche Bank but by now was an independent consultant. Meerdter saw the problem for fund distributors of organising and tracking information. It was while the two discussed the difficulties of due diligence that the ‘lightbulb moment’ came for setting up Door, says Sanders.

“We realised that asset managers would benefit from having a single place where they could update all of their clients at the same time and reduce the huge cost of updating clients bilaterally – yet we knew this was something they could not do by themselves,” says Sanders, who argues that asset managers must help lead distributors into transformation.

Sanders launched Door with Meerdter in September 2016, positioning it as a central digital repository for live due diligence questionnaires.

Still at Aberdeen when Door launched, Sanders left two months later in November 2016, taking Aberdeen as a client. Other fund managers, such as M&G Investments and Schroders, were also important in getting Door off the ground, says Sanders.

“DD has one of the biggest risks associated with it, yet never makes an asset manager CEO’s top-ten list of priorities.”

Leaving a no doubt well-salaried role at Aberdeen, Sanders based Door in Stratford, East London, at a time of urban regeneration for the area following the 2012 Olympics.

It was a daunting time. “I had a good job at Aberdeen, and business was going well, and the brand was punching high, from my point of view. Clearly, my first challenge was to bring my family along for the ride. Then it was about bootstrapping Door. We were running off fumes at that time.”

Cheap office space in Stratford, with a printer donated by a nearby charity that was moving offices, characterised humble beginnings. But the march of due diligence regulation after the 2008 financial crisis boosted the market for vendors. Eventually, Door moved back into the City of London.

Co-founder Meerdter was in Baltimore the whole time, which Sanders describes as a time-zone challenge – although it did mean they had “a transatlantic business instantly!”

Systemic risk

Entrepreneurship comes with its peaks and troughs, he says, but Door now works with Hargreaves Lansdown, one of the UK’s largest fund platforms and wealth managers, along with Bank of America Merrill Lynch and Envestnet in the US. The onboarding of these firms was “a real scale moment”.

FE FundInfo, a tech and data firm, recently invested in Door’s Series A funding. The firms plan to develop new information services, including a UK-wide solution to support Consumer Duty regulation.

The regulatory focus on customer protection has been a key driver of due diligence volume in recent years. More recently, reporting on ESG and diversity and inclusion (D&I) have “broken the camel’s back”, he says, particularly with greenwashing fines for inaccurately reported information.

In the UK, the FCA also sees culture as a systemic risk, says Sanders.

“The old in-person DD distribution model meant fund selectors would meet with portfolio managers to get insights into their minds and processes. This still happens, but regulations are pushing the in-person model further apart to replace face-to-face information exchange at corporate events with data dissemination. Distribution is becoming more data-informed.”

He adds: “The Consumer Duty is a big piece of information exchange – and it will probably extend to the continent at some point.”

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