The Digitization Mandate, KPMG, Sept. 2018
“Digitization is shaping the alternative investment funds industry—but adoption is slow. Fund businesses that dawdle are missing opportunities to advance in the marketplace by cutting costs, accruing operational benefits, and most of all, satisfying investors who have shown little patience for businesses that move slowly.”
It’s ironic that alternative investments, typically marketed to a firm’s top investors, come with some of the worst investment experiences. The alternative investment subscription process is notoriously painful – a back-and-forth hassle of emailing, scanning, and faxing of documents. It seems out of place in the current financial services landscape, where we can do most banking functions on our phones and buy and sell stocks from anywhere.
Thankfully, alternative investments are undergoing a digital transformation that promises to bring much-needed efficiencies and improve the experience for investors, as well as fund managers and placement agents.
The Harbor platform offers an end-to-end digital experience for the lifecycle of alternative investments, including investor onboarding and verification, investment subscriptions, investor communications, and secondary transfers.
In this post, we are reviewing the digital subscription process. The example below is a commercial real estate fund, but the flow can be adapted to many types of alternative assets including debt funds, single-asset REITs, venture capital funds, private equity and more.
Offering Page –After onboarding and verification, qualified investors are invited by an issuer or placement agent to review the offering. The information is securely accessible from the investor’s account within the issuer or placement agents branded portal. The offering page contains typically marketing information about the offering, including images, projected returns, pricing, background on the team behind the investment, etc.
Data Room – The offering page includes a secure data room for sharing invest-related documents with qualified investors.
Non-Disclosure Agreement –If applicable, investors can be required to sign a non-disclosure agreement before accessing investment-related documents.
Order Page –Once an investor decides to participate in an offering, they can access the purchase flow.
Document Tracking and Online Signatures –No more faxing and emailing documents! Electronic signatures are integrated into the investor experience for simplifying the signing the disclosures and agreements. Documents are organized and securely stored online for future access.
Online Payment – Investors can process payments directly through the platform, including bank wires and Automated Clearing House (ACH) payments. Digital currencies are also supported, including Gemini Dollar, Bitcoin and Ether. Harbor partners can convert digital currencies into USD as needed.
Order Status –Investors can easily track the progress of their investment from within their account.
Dividends and Distributions –Investors can enter their bank information to streamline future distributions, including dividend payments.
Tax Documents –Investors can easily generate tax documents, which will be routed to the issuer for review and approval.
There are many types of alternative investments and the Harbor digital subscription process can be adapted for your specific requirements. Please reach out to our team with questions or to schedule a more in-depth demo.