π The AGM Q&A with 73 Strings CEO & Co-Founder Yann Magnan
Conversations with private markets leaders
Today we are introducing the AGM Q&A, a long-form written interview with private markets leaders.
AI is a buzzword thatβs capturing our collective attention across industries. And private markets is no exception.
We sit down with 73 Strings CEO & Co-Founder Yann Magnan, who, along with his Co-Founders Abhishek Pandey, Vinod Vijapur, Sambeet Parija, and team, has spent years thinking about how to perfect portfolio monitoring and valuation of assets in private markets.
73 Strings has met the moment. They've built a critical function in the lifecycle of an alternative investment by remodeling the post-investment process historically defined by spreadsheets and manual work to a solution built for todayΒ that featuresΒ automation, digitization, and efficient ways for funds to conduct portfolio monitoring and valuations.
73 Strings is trusted by some of the world's largest asset managers and investors, which includes Eurazeo, Sofina, amongst others not yet disclosed. They just announced a Series A round led by Blackstone Innovations Investments and Fidelity International Strategic Ventures, with participation from Broadhaven Ventures.
Read below to hear Yannβs answers to AGMβs questions about the transformation thatβs occurring in private markets.
What is 73 Strings?
73 Strings is an AI-powered, modern, integrated and holistic data collection, monitoring and valuation platform powering the private capital industry. The company has developed a next generation platform to assist alternative investment funds in streamlining their middle-office processes. The platform enables funds to collect and seamlessly structure portfolio company data, monitor these companies and estimate their fair value at the click of a button. 73 Strings supports clients globally across multiple strategies including Private Equity, Growth Equity, Venture Capital and Private Credit.
Since inception, 73 Strings has added clients with combined assets under management of more than $2T. The company is headquartered in Paris and has a global presence across New York, London, Paris, Toronto, and Bengaluru to support its growing customer base. The current leadership of 73 Strings has extensive professional expertise in private assets and the team is supported by a global network of highly seasoned advisors with a combined 300+ years of financial advisory and private markets experience.Β
How did your background in the consulting and corporate finance industries inform how youβre building 73 Strings?
This is our secret sauce: the founding and management team of 73 Strings have years of experience advising or working at alternative investment funds on financial and valuation analysis matters. We know first-hand what the key pain points for our clients are, hence we are best placed to solve them.
Why is valuation the toughest digital problem to crack for private markets?
Valuation is such a tough digital problem to crack because there are so many parameters, data points, and nuances that get factored in a valuation analysis, and on top of that, human judgment is a key component of the equation. So you want a platform to offer the relevant level of flexibility and nuances while creating efficiencies by automating everything that can be automated. That is the toughest problem to crack.
How do you automate data collection? Why hasnβt it been done before?
We use OCR and have overlayed that with proprietary Natural Language Processing algorithms, so that our algos can βunderstandβ the document that is being parsed. That means that our algos work on any type of document. It does not matter if a certain document looks different from one quarter to the next. Our algos still understand it and parse it with the highest accuracy level.
How much can you leverage AI and NLP to drive efficiency?
Leveraging AI and NLP is a key component of our business. Our product team is constantly evaluating where AI and NLP can create efficiency in financial analysis and the reporting process.
How do you balance speed without sacrificing quality when it comes to portfolio monitoring and valuation?
Our product team has spent weeks and months and years defining what part of these process can be automated versus what part must remain manual / human led to ensure the proper level of intelligence can be extracted out of the process.
What will technology unlock in private markets thatβs yet to be uncovered?
Efficiencies, easier quality control, more transparency, faster turn around of these processes and better time to market, will inform the stakeholders in the industry better (GPs, LPs, Secondaries). In return, I trust this will facilitate transacting on the underlying assets and allocation of capital to the Private Markets.
Market infrastructure evolutions generally happen in layers. What had to be able to be built in order for 73 Strings to be able to exist?
I would put secured cloud infrastructure top of the list. That enables us to develop and get features to all our clients very fast, while still maintaining the highest level of security. That enables clients to benefit from extensions and new features developed with others in a very simple way. Azure, Snowflake, just to name a few, have been key in our development.
Lower cost of developing AI and NLP algorithms has been instrumental as well.
Where does 73 Strings fit in relative to other companies in the post-investment space in private markets? Map out the market for us and how 73 Strings partners with other service providers in the space.
We cover natively within the same tech stack 2 segments in the post-investment space in private markets, data collection and monitoring / valuation. We are the only solution of that kind. What does that enable for our clients? Seamless flow of information from A to Z and from Z to A with enhanced auditabilty capabilities, and much easier maintenance.Β
We are an API-first company and welcome partnerships with complementary solutions. We have a partnership with LemonEdge and are discussing others as we speak.
What's the atomic unit of value for funds?Β
The valuation process in an alternative investment fund is one of, if not the, process that requires the most significant data points from the portfolio company if you want the process and information to LPs to be correct. The recurring collection and contextualization of these data points is what I believe is the atomic unit of value for funds.
How do you think about company level data vs fund level data?
Fund level data is informed from company level data. The more robust the company level data, how you analyze it, use it to come up with a value of your holdings, the more robust the fund level data will be. What technology is going to change is that our clients will be able to change one assumption at one place for one company and automatically get the impact at fund level. Massive efficiencies. Massive as well in terms of better managing your/your LPs risks.
How much data is enough to have a meaningful data lake to leverage in order to create rich analytics for funds?
We look at this differently: the valuation process requires lots of data points. These data points are integrated and structured into our platform to help deliver the valuation analysis. Hence, we can also help our clients with further analytics.
How much are fund managers asking for climate / ESG monitoring?Β
ESG monitoring has become a common theme in the alternative investments industry. Our data collection algorithms help collect, structure and visualize all type of ESG metrics from the documents and information that our clients receive.
What is the single most product or feature in demand by funds?
From what we can see, the vast majority of investment funds are getting equipped with data collection and monitoring, as we speak. This is a fairly well known space.Β
Valuation technology is more nascent and we still need to inform the market that it exists now. But what we are seeing is that the vast majority of our prospects who are aware of our progress on the valuation side usually come to us first for that, and data collection and monitoring is a part of the package.
Why are strategic investors so important for your business? What advice would you give to founders who are trying to partner with strategic investors?
Strategic investors are of the upmost importance to us because we want to see and have access to as many use cases as possible to continue to add new features and capabilities to our platform. We are very excited that we have closed our Series A recently and even more so that we have done so with Blackstone Innovations Investments, Fidelity International Strategic Ventures and with participation of Broadhaven Ventures. With the backing of such prestigious investors, we will only accelerate on our path to deliver the industry standard for post-investment analysis technology.
Easier said than done: capital is very good, smart capital is fantastic!
You can learn more about what Yann and his team at 73 Strings are building here and, if youβre interested in working at 73 Strings, you can find some of their job openings here.
Alt Goes Mainstreamβs work is provided for informational purposes only and should not be construed as legal, business, investment, or tax advice. You should always do your own research and consult advisors on these subjects. Alt Goes Mainstreamβs work may feature entities in which Broadhaven Ventures or the author has invested in.