This news service recently caught up with the CEO and chairman of iCapital, a business that has developed to change the way that private investors, among others, gain access to the expanding world of alternative investments. These were once dominated by big banks and other powerful institutions.

iCapital, a tech platform for alternative investments, predicts that its roster of partnerships will continue to expand, given that upside growth potential is high, its CEO says.

Lawrence Calcano, chairman and CEO of iCapital, spoke to this news service a few days after the New York-headquartered firm bought one of Citigroup's indirect subsidiaries, Citi Global Alternatives, the advisor to Citi Wealth’s global alternative investment fund platform. The financial terms of the transaction were not disclosed.

In a wide-ranging conversation, Calcano also spoke about how iCapital is working to make policymakers’ desire for greater access to private markets a practical reality. 

The growth of partnerships has been significant. iCapital has put several banks on its partnership roster, such as HSBC Global Private Banking. Other firms it works with include Goldman Sachs Asset Management and BlackRock. And there are more likely to come, given the growth potential of the alternatives area, Calcano said.

In total, iCapital has more than $880 billion in platform assets including $220 billion in alternatives, and about $480 billion in data assets reported on. It serves over 2,900 wealth management firms and 108,000 active financial professionals. To put that in context, Preqin, the research firm, estimates the total alternative AuM at more than $18 trillion, and sees that figure rising to more than $29 trillion by the end of the decade. 

All this activity produces considerable data. iCapital is looking at ways of harnessing all the data it has amassed to help clients and their advisors make better decisions, Calcano said.

Established in 2013, the firm is arguably the most prominent of all the firms that have arisen to widen access to alternatives – private equity and credit; venture capital, real estate, infrastructure and hedge funds. A word that comes up a lot when discussing this area is “access” – iCapital is part of a move aimed at widening it to HNW private investors. (Other players in the space include CAIS, a US business, and Moonfare, which is headquartered in Germany.)

That need for wider access is gaining attention from policymakers, in Europe for example. More broadly, financial industry figures say that many private investors still don't have enough exposure to areas such as private equity, venture capital, and other non-public investment areas.

This publication asked Calcano about the work that jurisdictions must engage in to bring alternative investments to the mass-affluent market, such as the UK’s Long Term Asset Fund in the UK and ELTIFs in Europe. (ELTIF is a regulatory wrapper that gives closed-ended private assets funds a single passport to be marketed to private wealth investors across the EU.)

“We are building capabilities for structures in different local markets,” he said. 

And the firm’s experience is one that Calcano is happy to share with regulators. “We are in a position to try to help regulators through what we see every day and help regulators about what’s going on.”

Growth
The firm continues to grow; it opened an office in Tokyo in 2023 and is planning to open one in Australia and the Gulf Cooperation Council collection of countries in the Middle East. The business has partnered with MPW Capital Advisors as part of its Gulf region build-out. 

What barriers remain to growth in iCapital’s sector?

Education and ease of use are two remaining barriers to entry for wealth advisors to go all in on the alternatives asset class, Calcano replied. The firm is investing heavily into technology, for example, to reduce the frictions.

Talk of technology brought up the topic of distributed ledger technology – aka blockchain technology. This is now part of iCapital’s system. In March this year, it said that since launching the first fund on iCapital DLT – its blockchain platform – in May 2024, the company has onboarded more than 100 funds onto the platform.

Artificial intelligence was, perhaps inevitably, part of the technology conversation. 

“iCapital positions itself as a technology-first company, with AI and machine learning (ML) playing a central role in its digital transformation. iCapital integrates AI, ML, automation, and data-driven insights across its platform to streamline the entire investment lifecycle – from pre-investment to post-investment,” Calcano said.

iCapital’s recent acquisitions of Mirador (see here), AltExchange and Parallel Markets (see here) are “evidence of the evolution of our data-driven insights and AI/Machine learning capabilities,” he said.  

Educating clients about what is realistic when it comes to alternative investments is important, he said, to avoid disappointments down the line. 

“It is important for people to understand what to expect. The whole industry is better served if people allocate in a measured way,” he said. 

Calcano said that using model portfolios [to hold alternatives] has become a lot more important than was the case few years ago. That seems borne out by industry research. A 2024 study from BlackRock and Institutional Investor’s custom research group found that a majority of the 500 wealth managers in the study said they would like to have private equity or private credit available to clients through model portfolios (source: Institutional Investor, 29 April).