How two women vaulted over stereotypes to launch a game changer for investors
For all the progress women have made, they remain a rarity in the finance world, partly because of the impression that they are second-best when it comes to crunching numbers, analysing data and understanding the fine nuances that, oftentimes, make all the difference. Women starting up in the finance world is even more rare, for it means manoeuvring their way through a sea of uncertainties.
But every once in a while come outliers who shake up the stereotype that the fair sex has been saddled with.
Monel Amin and Hansi Mehrotra's is one such story.
A finance professional heading alternative assets and investment risk at Citibank, Amin realised that due diligence remained an extremely cumbersome process. (For the uninitiated, due diligence is an audit of a potential investment to confirm all material facts with regard to a sale.)
"I was at the receiving end of fund managers. I could see that a lot of information was being sent out and there was too much manual work," says Amin.
The vantage point she was at, it was a problem that needed to be solved—transactions took several months, sometimes even a couple of years.
In 2014, Amin founded Diligence Vault LLC, a database that connects the buy and sell side across asset classes, including long-only funds, hedge funds, private equity funds, and alternative mutual funds. The venture operates on a marketplace model and charges both parties (buyer and seller) a fee based on the number of due diligences conducted.
Such was Amin's conviction in the venture that she bootstrapped it.
The fact that she had set up Arthance, a buy side advisory firm based out of New York, a year ago, helped, for it gave her an even deeper insight into the inefficiencies plaguing the industry.
She also roped in Hansi Mehrotra, who serves as the firm's Asia-Pacific partner and oversees the India team and local operations. "We have a common contact in New York and she introduced us, saying you both sound like you're doing something similar. I was looking for a partner. She had already built a prototype so I decided to simply join her," explains Mehrotra.
Mehrotra is founder and editor of Money Management India Network, which offers content on investments, wealth management and financial communications. She also runs a financial literacy and investor education blog, The Money Hans. Mehrotra earlier led the investment business and wealth management operations at Mercer Investment Consulting across the Asia-Pacific.
Funding, scaling up Diligence Vault was part of an accelerator programme at London-based global investment management and data technology firm Winton. The three-month programme is aimed at early-stage firms that have applications in the data science domain.
Currently in the process of closing its Series A round, Diligence Vault secured seed investment from an undisclosed investor, one of its customers, in 2016.
Though Amin and Mehrotra are now focusing on scaling up the venture through marketing and branding initiatives, a large part of their growth happens organically, through word-of-mouth. Often, when they pitch the product to investors, they, in turn, inform fund managers about it, making the team's job easier to sell the product.
How it works Diligence Vault is a cloud-based platform that provides users with a template on each asset class. Mehrotra says the firm has 40 templates in place. Data is first collected from fund managers (buy side). For example, say, Canadian Pension Fund wants to invest in real estate in India.They pick up the real estate template and send it to a real estate developer. However, before sending it to them, they might want to check out 10 others—so they will send the template to all the shortlisted managers they want. The customised template offers questions related only to real estate, which managers fill out and send back to the buy side or, in this case, the Canadian Pension Fund. Managers also can devise their own rating system.
Typically, in a database model, fund managers do not want to reveal their insights. "The manager no longer has control over who that database gets sold to, so most of them don't answer detailed questions," Mehrotra says. What Diligence Vault does is merely act as a facilitator between the buy and sell side.
Once the data is in, it can be reviewed through the data analytics built into the system. This ensures all the data sharing happens on a single platform, and both sides can keep track of the compliance.
"All the back and forth that happens over email and phone is avoided. People can customise their questions and follow up," explains Mehrotra. The buy and sell side conduct their own research because the cost of collecting and analysing data is reduced, she adds. It usually takes two years for the buy and sell side to agree on transactions, but Diligence Vault can compress that process to three months, Mehrotra claims.
The product has two versions: the buy side can customise the template while the sell side (funds) can only answer questions.
Differentiation Diligence Vault is not the only player in the space—there are others like Prequin, which provides database for the alternative assets industry, and Albourne, a consultant firm advising on alternative asset classes.
However, Amin says that despite these firms' success, due diligence remains a painful exercise. "Besides, a lot of investors say that when you put information in a database, they don't know where it goes," she explains.
Through its analytics, Diligence Vault can bring efficiency to their processes. In fact, Albourne is already a live prospect for Diligence Vault, Amin claims.
India play So far Diligence Vault has been selling only the investor version, but it now wants to roll out the fund version, and it will do so in India first. "We will set up a destination India button. We can't pull off a database model in the US because the market is huge. But India is a small market with up to 40 asset management companies and 100-200 alternative investment funds," explains Mehrotra.
However, the firm's India operations are currently at the experimental level. Mehrotra says that they have started a few trials, where they sent the product to a mutual fund house, alternative investment fund and a wealth fund. The idea is to get user feedback from Indian managers. Once they get inputs from 4-5 managers, then will launch the product in India.
Diligence Vault has some customers in the US, too. "We have a few buy side (clients) and those people have sent it to hundreds of managers," says Mehrotra. She is also talking to clients in Australia.
Mehrotra says that in India, managers and investors are more focused on sales while, in the US and Australia, they are more focused on data and operations.