There’s a continuous stream of data that’s coming in various forms for the alternative investment universe whether it’s information from capital calls, distributions, monthly and quarterly reports, emails, investment decks, and unstructured data sources. In order to make this information actionable and insightful it needs to be integrated seamlessly and organized into a firm’s workflows. Canoe is an intelligence platform for the alternative investments industry, serving institutional investors, wealth managers, capital allocators, and asset-servicing firms. The cloud-based platform leverages machine learning to ingest, categorize, extract, validate, and deliver insights in seconds, eliminating the need for manual data entry and costly dedicated back-office operational teams. By automating the process, firms are also able to reduce lags in reporting, synthesize more data to maximize returns, ensure compliance with regulatory requirements, improve risk management, and establish a competitive edge through digitization. Canoe, originally incubated within Portage Partners, currently is in use at hundreds of top institutions that currently have hundreds of billions of dollars in assets under management.
AlleyWatch caught up with Canoe Intelligence CEO Jason Eiswerth to learn more about the business, the company’s strategic plans, recent round of funding, and much, much more…
Who were your investors and how much did you raise?
We raised $25M. This was our Series B round of fundraising, led by F-Prime Capital with participation from Eight Roads Ventures and other strategic investors.
We completed our initial Series A round in February 2020, which included investments from strategic partners and advisors including Hamilton Lane, Nasdaq Ventures, and other alternative investment leaders. Our Series A extension took place in September 2021, led by Blackstone Innovations Investments and Carlyle with participation from existing investor Hamilton Lane.
Tell us about the product or service that Canoe offers.
Canoe powers alternative investment intelligence for institutional investors, capital allocators, wealth managers, and asset servicing firms. Our technology helps firms invest in alternatives to streamline their data management processes, reducing the time and costs associated with collecting and reconciling documents and enabling them to act on the information they need to make more informed investment decisions. The platform leverages artificial intelligence and machine learning to automatically collect and categorize documents from investor portals and email inboxes, and to extract, validate, and deliver clean data to downstream systems, eliminating the need for manual data entry.
We currently offer two products, Canoe Connect for automated document retrieval and Canoe Intelligence for ongoing data extraction, validation, and delivery to downstream systems. More than half of our client base uses both products.
What inspired the start of Canoe?
In 2013, Canoe was incubated within a private investment firm, Portage Partners, and evolved into the firm’s operating backbone. To this day, Portage does not employ any middle or back-office professionals, and instead relies solely on Canoe. In 2017, Canoe spun out and began offering its scalable solution to managing complex alternative investment documents and data in 2018. Since the beginning, we’ve maintained a focused, client-first approach to building and enhancing our technology and will continue to do so.
How is Canoe different?
We offer first-of-its-kind AI technology that is powering the future of alternative investments. Canoe has reimagined the alternative investment processing workflow with cloud-based, machine learning technology for document collection, data extraction, and data science initiatives. We transform complex documents into actionable intelligence within seconds and empower allocators with tools to unlock new efficiencies for their business. We offer clients unparalleled access to their alternative investment data, covering over 20,000 funds in our fund master and extracting over 20 million data points. Additionally:
- Pioneers in Alternatives Technology: Canoe is purpose-built for industry experts by industry experts. Our experience and know-how drives our ability to successfully automate every manual task related to alternatives document and data management.
- The Alternatives Ecosystem: Whether it be connecting with GPs and portal providers to automate document collection or integrating seamlessly with reporting systems to streamline analysis, Canoe’s ecosystem elevates the practice of alternative investing for all.
- Shared Intelligence: When clients use Canoe to automate their alternatives data management, they are actively contributing to a stronger and more connected industry. The data within every new fund document introduced is mapped, speeding onboarding and improving data extraction accuracy.
- Backed by Innovators: From clients to investors to partners, our network is full of industry changemakers who are united in advancing the state of alternative investments and trust Canoe to power the evolution.When clients use Canoe to automate their alternatives data management, they are actively contributing to a stronger and more connected industry.
What market does Canoe target and how big is it?
Canoe targets investors with allocations to alternative asset classes. An alternative investment is an asset that doesn’t fall into a conventional investment category such as stocks and bonds. Alternative investments may include private equity, venture capital, hedge funds, real estate, and others.
Investments in alternative asset classes have grown from $4.6T to $13.3T over the past decade and are expected to grow to over $23T by 2026 globally. There are an estimated 5,850 firms that could be candidates for alternative data management products and services. With Canoe’s current product suite, this is a total addressable market of over $1B.
Hundreds of institutional investors, asset servicers, capital allocators, and wealth managers leverage Canoe Intelligence to automate their most time-consuming manual alternative investment processes, gain deeper access to their data, and scale their firms for sustainable growth.
What’s your business model?
Canoe Intelligence generates revenue by selling web-based annual licenses to its technology platform and its standalone Canoe Connect document retrieval product. Additional services fees are generated through onboarding, implementation, and professional services contracts.
How are you preparing for a potential economic slowdown?
During times of economic uncertainty, allocations to alternative investments are often viewed as more attractive and more stable investment options. The vast majority of our client base expects to see an increase in capital flows and fund commitments to alternative investments even if the greater economy slows. That, and Canoe allows its clients to manage greater numbers of alternative investments with the same number of people through increased speed, efficiency, transparency, and accuracy. So counter to many industries, a possible macroeconomic slowdown can actually benefit our growth.
What was the funding process like?
Our funding process was typical of most high-growth, SaaS-based, businesses with a strong product-market fit, and world-class clients and investors. We saw a great deal of interest from both late-stage VC investors and growth capital investors. We were thrilled to receive multiple term sheets and be able to partner with David Jegen at F-Prime and Alston Zecha at 8 Roads.
What are the biggest challenges that you faced while raising capital?
Even when it goes well, capital raising is a massively time-consuming process. And, as CEO, my days are always full. Balancing the demands of the capital raise process while staying fully engaged with the continued rapid growth of Canoe certainly required significant additional effort.
What factors about your business led your investors to write the check?
F-Prime Capital and Eight Roads Ventures believe in Canoe’s vision of powering alternative investment intelligence. F-Prime Capital believes Canoe is ideally positioned to address the need for investment infrastructure and become an industry standard. Eight Roads Ventures believes Canoe can solve the data challenges associated with alternatives in Europe more completely than any of the local solutions currently available.
“Alternative investments, such as private equity, hedge funds, and real estate, have become essential for investors seeking higher returns and diversification. However, managing the data associated with these investments is challenging for asset managers and institutional investors. Canoe has significantly improved the way firms manage alternative investment data. Not only has it greatly increased efficiency, but it has also improved the accuracy and completeness of alternative investment data. Canoe is ideally positioned to address the need for investment infrastructure and become an industry standard.”
David Jegen, Managing Partner at F-Prime Capital
“Canoe’s platform has rapidly become a crucial solution for the alternative investment industry in North America, with a proven track record of impressive customer results. The EMEA alternative investment industry is nearly the same size as North America and its data challenges are identical, yet today there is no comparable local solution. Canoe has a significant opportunity to deliver customer value in Europe first where it already has a presence, as well as other regions in future.”
Alston Zecha, Partner at Eight Roads
What are the milestones you plan to achieve in the next six months?
As alternative investments continue to gain popularity amongst institutional and individual investors, the new injection of capital will allow us to further serve our customer base and streamline alternative investment data globally. This funding will be used to accelerate our expansion into European markets, grow our team in key functional areas, enhance our product offering for enterprise clients, develop new data products, and strengthen our core platform. Specifically:
- Geographic expansion (EMEA and beyond) – Opening new London office in February
- Product development (New data products)
- Private market data is a valuable asset allowing asset managers and investors to:
- Have a deeper understanding of their portfolio
- Better oversight to meet governance and regulatory requirements
- Make better-informed investment decisions
- Audience expansion (GPs)
- Partnerships and integrations (Deeper integrations) – More bidirectional integrations with leading software providers like Addepar (completed in 2022)
- Team growth (commercial and technology)
- Branding and new website development
- Private market data is a valuable asset allowing asset managers and investors to:
As alternative investments continue to gain popularity amongst institutional and individual investors, the new injection of capital will allow us to further serve our customer base and streamline alternative investment data globally. This funding will be used to accelerate our expansion into European markets, grow our team in key functional areas, enhance our product offering for enterprise clients, develop new data products, and strengthen our core platform.
Where do you see the company going now over the near term?
This funding will be used to accelerate expansion into European markets, grow the team in key functional areas, enhance enterprise product offerings, develop new data products, and continue to strengthen Canoe’s core platform. As alternative investments continue to gain popularity amongst institutional and individual investors, the new injection of capital will allow us to further serve our customer base and streamline alternative investment data globally.
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- Source: https://www.alleywatch.com/2023/03/canoe-intelligence-alternative-investment-intelligence-data-management-platform-jason-eiswerth/