Ten years ago, Nicole Sherwood was working for a real estate investment firm when another career opportunity came up. Jeffrey Altman, founder of the hedge fund Owl Creek Asset Management, was in the hunt for someone to help him manage his personal real estate projects as well as investments. Those demands required a full-time employee and Sherwood took the job.
Not long after joining Altman, Sherwood realized they needed more services than the typical family office. Much of Altman’s wealth was tied up in his hedge fund and he smartly had diversified the rest of his personal portfolio. But like other investors, the two felt drawn to the growing opportunities across private markets. They wanted to allocate more to real estate, private equity, and venture capital funds, and to invest directly in companies when it made sense. There was only one problem: Who was going to manage all the paperwork that comes with that?
Sherwood, the managing director of Altman Family Holdings, turned to Arch, a software company founded in 2018 that helps limited partners organize documents related to private investments and improve their operations. Arch effectively puts all the necessary communication from general partners and companies — K-1s, capital calls, distributions, financial statements, and other investment updates — in one place for an investor. It’s a task that sounds easy but is burdensome for the limited partners receiving those documents from hundreds of different sources and doing it themselves.
Arch, which is backed by Menlo Ventures, Craft Ventures, Quiet Capital, and others, has gotten good at reducing the repetitive, manual work for limited partners. For family offices that can’t hire and throw people at the problem, software like it is necessary if they want to grow and diversify their private asset portfolio, Sherwood said.
“Why you see companies like Arch popping up is because you very quickly realize that if you have more than a handful of these investments, tracking them manually in Excel and then reconciling them across systems becomes very time consuming and tedious and, in my experience, it started to distract from really where I need to be spending my time and energy on a day-to-day basis, which is thinking through investment decisions and portfolio management,” Sherwood said.
Still, Sherwood is passionate about better time management and her investment process. The family office is among the beta users helping Arch develop artificial intelligence tools, some that rolled out this week. While helping limited partners manage the documents in one place, Arch has created a growing treasure trove of information that it’s now helping users leverage.
The latest is called Portfolio Insights, which distills documents and updates into summaries that save time but are still actionable. Arch is also now delivering up-to-date performance from incoming statements that investors can look at individually and in aggregate, meaning the quarterly calculations someone once had to manually update are done for them already. It’s a key development for the software company that will help investors not just track decisions they’ve already made but inform future ones, Ryan Eisenman, co-founder and CEO at Arch, said.
Insights presents updates and categorizes them on a timeline that continually updates, similar to a social media feed. If an investor is presented with the most relevant information in a timely manner the impact could be huge. For example, a company could be raising more capital and want those interested to get in touch within a week. A family office employee might not be able to properly consider the opportunity, present it to their principal, and invest if they see the notice the day before a deadline. Arch is also working on other features, such as the ability to compare their individual investments and parts of their portfolios against benchmarks.
“I think where we need Arch to go, and where Ryan is moving, is not only providing a system that modernizes antiquated workflows, but really a system that uses all of the data that’s being collected and provides a system of intelligence,” Sherwood said.