Jacob Miller is co-founder and chief solutions officer for Opto Investments, a private market investments platform. He talks about how technology can help family offices and other investors make better investment decisions:
How did you get into this business?
Before I co-founded Opto, I was an investor at Bridgewater Associates, the macro hedge fund. I saw firsthand that private markets were growing in both size and importance, but very few people had the tools to systematically approach this space. It’s large, complex and opaque.
How does Opto work?
The platform is built for allocators to be able to have visibility into this broader space, to make better decisions based on what they currently hold and what’s out there, to conduct diligence more efficiently and to build solutions that scale more with their businesses.
We are primarily working with funds — venture capital funds, private equity funds, real estate funds, private credit funds, infrastructure funds — but may add co-investments alongside those if our partners wish. So as interesting deals come from those funds that make sense from a co-investment and strategy standpoint, those can be added to the vehicles that our clients build.
Who is your target audience?
We have workflows for three specific personas within any investment firm.
Chief investment officers need diligence workflows. If you’re an allocator, you’re probably getting emailed between 15 and 1,500 decks a week on different funds people want you to put money into. Most aren’t worth doing, but you’re still getting a lot of valuable data that’s sort of dying on the vine right now. We use artificial intelligence to create a proprietary database of everything you have seen, so you can automatically score opportunities and cut down on diligence time and resources. You can also turn this information into actionable items: You can estimate capital calls and distributions. Then you can see if the family has the liquidity they need or if you need to make portfolio adjustments.
The second persona is client facing. At an RIA, that might be an advisor. This role varies in a family office. They need to take huge amounts of diligence work and communicate it to beneficiaries effectively.
The last piece is the operations team. We have automated the fund formation process. If you want to create a special purpose vehicle (SPV) or a fund of funds to service a group of families, you can do that. It can use a single sub doc for the whole year, and a single K-1 at the end of the year, so it simplifies tax reporting.
Those three personas all come together in the software: the investment decision, making the delivery to the beneficiary and then the operations to actually get that done.
How do you work with family offices?
We work with a number of family offices. Some are single family offices around people who made their wealth in technology. They might have great access within the venture capital community, but are looking for investments to complement that.
We also work with large multifamily offices who are starting to hit real scale problems: Maybe they had 15 families five years ago, and now they have 75 families. Managing that at scale is extremely burdensome.
What role do you see in this for artificial intelligence?
I think we’re in really early innings on this technology in general.
Services delivered without technology won’t scale. But something like due diligence still has a human component. We’re not going to be having AI do a final check on funds anytime soon. But if that person who is truly excellent at diligence can do 50 funds in a week instead of five because of the tools they have, you can provide that service much more effectively.
How are you using AI currently?
I think for most people, AI so far is kind of a novelty, but hasn’t proven real value. I do think we have bucked that trend in a couple areas. One of them isn’t flashy or exciting: SPVs are all pretty similar to each other. They have an investment objective. They let in a certain kind of investor. It has some term, or it is evergreen. There’s a limited set of options.
So, we used AI to look over scores of offering documents to highlight what tended to vary, what didn’t and what the best practices were. We applied what we learned to create a module we call Recorder, where, based on a couple key inputs and fundamentals provided by our institutional partners — including what the economics are, what the strategy is, what the fund is targeting for investment and which types of investors are qualified to invest — we can, in a matter of minutes, generate a first draft of legal documents quickly at no internal cost instead of in several weeks for $10,000s. Now it’s a first draft. The output is not at the point where we could send it out without review by an experienced and established team of fund lawyers. If not overly complex, this solution generally yields a few hours of drafting and polishing time instead of 25+ hours of drafting and review time at significant expense. That is one use that has helped us realize a lot of efficiency and savings.
The other thing we are using AI for is quite a bit cooler: automated screening. Right now, our clients can forward or drag and drop a two-pager, a marketing deck, even just the URL to the website, and the tool will scrape what it can to build an entry, and what we call a security master. It will take every fund that you know something about and associate it to fund families, those fund families to managers — and then have a network graph of who invests with whom and how these things relate to each other.
How can having this information help family offices?
When you think about the multiple goals that family offices have, one goal can be to structure the private markets approach to really bring G1, G2 and G3 together around a key set of goals and make everyone a bit more involved.
It can also help avoid the situations you hear about where people feel left out: There was a deal two years ago and one family member was in Europe and they didn’t get their signature in time and missed out on the investment.
If you structure it so all co-investments this year will be in one bucket and people can just subscribe in January, you’re not chasing 18 people who all need to sign different documents. You’re not chasing capital calls. It’s all in one place.
