FinTech Goji + Euroclear equals Greater & Easier Access to a World of Private Market Investments

Do you want easy, seamless access to an evolving set of private market investment opportunities at the click of a button? Well, if so, London-based David Genn, CEO of FinTech Goji, can deliver their private assets investment platform, designed to improve investor access to private funds. Goji was founded in 2015 to develop, implement, and operate private markets technology and services, and provides the infrastructure to give investors a digital investment journey into the world of private markets. It is now just over six months since the purchase of Goji by Euroclear, the global provider of Financial Market Infrastructure, and Hubbis spoke with David just recently to hear of the developments since the deal passed regulatory approvals, and the plans ahead. He outlined the many advantages of having Euroclear’s power, brand and infrastructure to help Goji build its network and its proposition. He also reported that Asia’s adoption of private assets is increasing faster than in any other region, and therefore remains an integral part of the firm’s expansion plans.

David first explains that private markets include everything from private equity, private debt, venture capital, real estate, and infrastructure assets, and that these are the fastest-growing combined asset class in the world. He reckons that even with the downturns in the listed global markets since early 2022, there is likely to be USD30 trillion of assets or more within the private markets umbrella by 2030, according to data he cites from Partners Group.

He reports that institutional investors remain the lion's share of investors within private markets and have been constantly increasing their allocations. Nonetheless, he highlights how private investor wealth is allocating into private markets at an even faster rate nowadays than amongst institutional investors.

Private clients buy into private markets

David says that as a result, private banking clients the world over, and especially in Asia, are increasingly looking for opportunities to invest directly in private market funds, and therefore wealth managers really need to think about the kind of products they are offering to their clients if they wish to remain competitive and help their clients meet their investment goals.

“Private market asset managers are increasingly designing products that are specifically aimed at the wealth management sector,” he remarks. “In fact, we are seeing a very large number of European and US managers that are bringing private wealth-focused funds to market and looking to able to distribute them to the private wealth markets.”

But access hurdles must be overcome

He nevertheless points to the operational challenges that need to be addressed to achieve this, noting that there are several high-level issues that wealth managers face.

Typically, most private equity and private market funds are set up to onboard institutional investors; hence there are some challenges concerning KYC and AML. Second, suitability must be considered and subject to regulatory considerations. Clients should also expect comprehensive digital data and digitised, simplified reporting of their exposures. Market neutrality and objectivity are both essential. And exponents need a robust operating model to match the types of models they employ for mainstream markets and mutual funds, in order to distribute these kinds of private fund opportunities efficiently and at scale.

Seeing the logic

The Euroclear deal and the new partnership with Goji are designed to address these issues, opening Goji’s doors to over 2000 of the world's largest financial institutions and helping deliver the infrastructure that will help Goji deliver their proposition to the private wealth community.

Indeed, Euroclear offers an extensive funds network that connects fund managers to distributors. By acquiring Goji, Euroclear can give clients access to all fund types, mutual funds, ETFs as well as alternative funds, including hedge and private market funds.

Building confidence

David says that information is the catalyst for rising access and confidence and that Asia’s private clients are increasing their participation more rapidly and enthusiastically than clients from any other region. The result is that more and more private markets asset managers are turning to Asia to raise new capital for their new funds or for follow-on funding.

“One of the really big trends is the fast-expanding diversity of investors that are looking for access to these kinds of assets, with private wealth set to double its allocation to private markets by 2025 since 2020,” David reports.

“The better the technology and the easier the access, the more rapid this expansion will be. With our technology married to Euroclear’s mighty cross-border network to access a global universe of funds, we anticipate very rapid growth ahead.”

The momentum continues

But are private markets performing well amidst global uncertainties and dislocations in the public markets arena? David says ‘yes’ and that the momentum has not been hindered by global volatility in the listed assets markets.

“Private companies are staying private a lot longer than they did historically, and even more so with weakness in the listed markets,” he reports. “More and more of the true value creation is taking place privately, and more of the very large opportunities, for example, major infrastructure investments driving sustainability and net zero, are in the private arena.”

A shrinking public asset universe

He pointed to World Bank data that shows that since 1996, the number of listed companies within the US had halved. He noted that in the US, there are 230 times more private companies than listed companies, albeit some listed enterprises are the giant listed beasts such as Apple, whose market valuation breached USD3 trillion earlier this year.

“All this means that wealth managers seeking access to good high-growth companies can no longer rely on just investing in listed companies,” he elaborated. “We need to give clients access to privately owned companies, companies that are indeed staying private for much longer, and that are much more reluctant to IPO. There are significant valuations available from private equity sources.”

Digital access and building scale

But what needs to improve significantly is the distribution and access, moving away from a clunky paper-based subscription and documentation model – which is fine for a small number of institutions – to a more digital model to improve accessibility for individual private clients at smaller entry levels. “Technology such as ours opens the door to private bank and wealth manager distribution around the world, and that is the message we are spreading across Asia,” he explains.

Differentiation and diversification

Goji, David elucidates, digitises the end-to-end investment journey into private market funds, and is deliverable to private banks and others as a white-label platform, thereby helping to boost the bank’s credibility and integrity in this area.

“They can deliver data on the funds, distribute documents, onboard clients, complete all regulatory and tax filings, and compress the entire process from what in the past would have been a slow and labour-intensive process,” David explains. “Then investors can be kept up-to-date digitally throughout the life of their investment, and gain access to additional opportunities ahead.”

Riding the wave

David drills deeper into the diversification of the asset base outside the traditional institutional and also family office type of investors. “Asset managers want to access more private investors but need the infrastructure to do so,” he reports.

“And the private banks themselves want to offer greater differentiation and high quality of product and service beyond their very wealthiest clients who will probably already have invested in such assets more along the institutional lines.”

Accordingly, for any wealth manager who wants to scale their participation in private markets, digitised systems and protocols are vital. Along with the smart use of existing settlement networks that they might use for mutual funds, wealth managers can then open up and scale access to the global universe of private market funds for many more clients.

“They can build a highly curated, and very diverse portfolio of private market opportunities that they can offer to their clients because this approach sidesteps the very high setup costs for each individual fund,” he explains. “In turn, scale means the operational costs of onboarding a client into a fund are greatly reduced, and therefore you are serving a much larger percentage of the client base.”

A transparent proposition

David adds that the platform aims to offer complete transparency to any investors and distributors white labelling the technology, as well as offering easy access for regulators to check on activity and practices if required.

He explains that Goji’s technology is being integrated into FundSettle, the global fund platform provided by Euroclear, with the distributors and users paying a small fee to be able to invest in private market funds via that platform. “And if we provide our technology white labelled directly to an asset manager or to their fund administrator, then we charge them a software licensing fee,” David explains. “That is a very simple SaaS model and formula.”

Key Priorities

David’s first mission is to work closely with Euroclear to make sure the acquisition proves successful for both partners. “Integrating our technology and the services into Euroclear’s FundSettle platform is our number one priority because they serve over 2000 of the world's largest financial intermediaries and giving them digital access to private markets is our real growth opportunity and our key focus,” he states.

“FundSettle has a very good presence in Asia,” he adds, “and the growth out in Asia is tremendous. There is a huge and growing demand in Hong Kong and Singapore for access to opportunities that deliver on key thematics and macro trends.”

To achieve their goals, Goji is hiring eagerly in order to be able to serve an increasingly global client base. “We are working hard to make sure that we find the right talent that we onboard and that we also continue to maintain our culture, which is very important to us,” David reports.

He concludes that Goji’s rationale was built on the firm belief that private markets are increasingly central to the future of investment allocation, and the partnership with Euroclear will now truly scale and open up greater access to those private markets. “We firmly believe private markets are no longer an optional part of a client portfolio,” he stated. “They need to be a standard part of every sophisticated investor’s portfolio makeup.”

His final word is again on Asia, noting that FundSettle and Euroclear itself are well-established, major players in the region, and being able to leverage that infrastructure to turbo-charge Goji’s expansion in the region is a truly exciting proposition. “We see the most dynamic growth globally coming from Asian markets, both from institutional sources and from private clients,” he states. “We want to ride that wave of excitement and diversification out here.”

Getting Personal

David hails from Newcastle-under-Lyme in the UK and later studied Chemistry at Oxford University. His early career was in software for the leasing sector, and then as a software engineer with IG Group, the world's largest CFT trading platform.

“I learned a lot then about building trading platforms that handle incredibly high volume and work properly in a highly regulated environment,” he reports. “I joined Goji as their first employee and became CEO in 2019. It has been an incredible eight years so far, and there is lots of excitement ahead.”

David is married with three children aged 20, 13 and 10. They live in London, where David professes to be remarkably busy on business and family fronts, but still finds time to run and hike in the great outdoors. He also reports he took up Krav Maga, an Israeli self-defence martial art, around a year ago. “And I also spend a lot of time on the sidelines trying to encourage the children in their preferred sports activities, which in itself requires a lot of patience,” he quips.

He also says a moment of madness overtook him last year when he joined the Goji finance director to run 100 miles from London to Oxford, a journey of some 25 hours that he has no plans of repeating anytime soon!

His next trip sounds more appealing – the family are off to the French Alps this summer for some mountain hiking and great local food.