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For most businesses, having a website is fundamental. Not so for hedge fund managers who have preferred to reinforce their clandestine activities by eschewing a snazzy homepage. This is beginning to change as managers embrace the new era of regulation and compliance says Chicago-based Backstop Solutions Group LLC.
Transparency and clear communications are becoming key requirements. This paradigm shift is helping firms like Backstop Solutions meet clients’ demands within the alternatives space by providing cloud-based solutions.
As the firm’s global head of sales and marketing, Geoff Surkamer (pictured), explains, what makes Backstop unique is that it offers its clients – predominantly hedge funds and hedge fund allocators – two distinct platforms to enhance communications and operations: Backstop and InvestorBridge.
“At its core, Backstop is a CRM solution but for hedge funds it’s also an investor relationship management solution – it tracks and manages emails, meetings, documents and activity,” explains Surkamer. Additionally, by seamlessly integrating all quantitative data on accounts, subscriptions, redemptions, clients get access to all the data they need without having to switch between systems.
InvestorBridge is the firm’s web reporting solution. Built around a series of 256-bit encrypted log in controls and password protections it dovetails with Backstop, enabling fund managers to securely post documents and fund memoranda.
Both existing and prospective clients can access that information and as Surkamer explains: “What we like to do is have the permissions available so that prospects as well as existing investors can go and look up fund performance and statement information. Backstop creates these statements, then posts them to InvestorBridge.” Of course, existing clients only get to see information that’s pertinent to them.
In Surkamer’s view, it’s this synchronisation between the two platforms - where information can be pushed seamlessly from Backstop to InvestorBridge – that makes it such a powerful, transparent communications solution. And at a time when investor demands for due diligence are increasing, having a clear operational solution is becoming ever important, even though Surkamer admits some clients still ask “Is this something I really should buy?” “We’re hearing less and less of those questions now,” he confirms.
Importantly, clients can choose whether to buy one or both platforms. “We have clients that utilise InvestorBridge only, we have clients that utilise Backstop only. The ones that are ahead of the compliance curve are using both,” says Surkamer.
From a compliance perspective, Surkamer thinks there are two reasons that make Backstop a premier solution. Firstly, it automatically synchronises with Microsoft Exchange. This allows all inbound and outbound emails related to the Backstop platform to be tracked and managed. For privacy reasons users can choose to be selective by adjusting settings, with Surkamer adding, “All communications between managers and their clients can be tracked.”
Secondly, rather than wasting time diligently dragging and dropping emails, statements etc between one system and another, the Backstop solution does it automatically; thereby reducing the risk of human error.
The benefit of all this is, should an SEC officer pay a visit, Backstop could provide them with a temporary login and password to a client website, “and we know they’d get their work done quicker and be out of there faster if the client is using Backstop,” adds Surkamer.
Whilst the US makes up 70 per cent of the firm’s global client-base Surkamer confirms, “in the last six to nine months we’ve made a big push into the UK and Hong Kong. About 25 per cent of our hedge fund clients are start-ups and we’ve landed a few in Hong Kong which is fantastic.” Roughly 60 per cent of Backstop’s clients are hedge funds, with allocators making up the rest – these are primarily FoFs, pensions, family offices and endowments.
Faced with the need to improve communications, ‘software-as-a-solution’ providers like Backstop are proving attractive as managers navigate through the fog of compliance. “InvestorBridge hosts and manages your website as well as turning it into an intuitive reporting solution,” concludes Surkamer. “That it’s completely compatible with Backstop allows people to manage and communicate their data flawlessly in and out of the system.”
Backstop, headed up by CEO Jeremie Bacon, currently supports over 280 hedge fund managers with a combined AUM of approximately USD350Billion.
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