There is a new world of online platforms to serve alternative investors, which may be the result of Congress passing a 2012 bill called "Jump Start Our Business Start-ups," or JOBS. The intention of this law is to encourage the funding of small businesses by easing various securities regulations.
Thomas Foley, President of Venovate, says the business of alternative online platform business is evolving rapidly. When they go to their investor base, Foley says they're not interested in going to a site for just one thing, which is what they expect when they go to Venovate's site. They get to see the whole range of investment opportunities out there, Foley adds.
Some of these platforms are individual businesses, such as Venovate, while others are specialized divisions of more traditional brokerage firms. Troy Vanderburg, CEO of the Alternative Investment Store, part of brokerage firm Benjamin and Jerold, has forecasted the bullish growth of alternative investments in the near term based on a well-respected study of large endowments done in 2013 by NACUBO, the National Association of College and University Business Officers. They have found that stock ownership is at an all-time low, bond ownership is at a record low and the remaining 50% is in alternative investments, says Vanderburg, indicating a lot of room for growth with the RIA community.
Todd Ryden, CEO of FNEX, says that they're the only online platform that does not list their own product. A lot of investment banks are listing their own product on an online platform but FNEX is trying to "democratize the entire industry," making themselves a centralized marketplace for investment banks to list their deals, Ryden explains. They are also transactional and integrate with custodians' self-directed IRA platforms and the like that manage over $40 billion, allowing them to find a deal, pay for the transaction and direct the flow of funds all from a centralized platform. Ryden spoke with Alternative Investment News earlier and for that full interview, click here.
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