Goji CEO David Genn on Re-inventing Optimised Access to Private Assets & Markets

David Genn is the CEO of Goji, an investment platform technology provider based in London, UK. Goji’s mission is to improve investor access to private funds. Goji develops, implements, and operates private markets technology and services, and provides the infrastructure to give investors a digital investment journey. In December 2022, Goji was acquired (subject to regulatory approval) by Euroclear, the global provider of Financial Markets Infrastructure, to build market-neutral infrastructure that will bring straight-through processing to private funds. David joined Goji as employee number one in 2015, to lead the technology build of the platform, before taking over as CEO in January 2019. He is genuinely excited about the next phase of their journey, spreading the word and access through Euroclear’s vast network. He gave a lively presentation to delegates at the Hubbis Thailand Wealth Management Forum in Bangkok on May 24.

Genn opened the talk by explaining that Goji is a FinTech that digitises access to private markets. Still subject to regulatory clearance, the partnership with Euroclear will open the doors to over 2000 of the world's largest financial institutions that work with Euroclear to settle both domestic and international securities and for custody of over EUR37 trillion of assets on behalf of those clients. 

Euroclear also offers the world's largest funds network that connects fund managers to distributors.  “By acquiring Goji, it now means that Euroclear can give clients access to all fund types, mutual funds, ETFs as well as alternative funds, including hedge and private market funds,” Genn told guests.

He explained that private markets include everything from private equity, private debt, venture capital, real estate, and infrastructure, and that these are the fastest-growing combined asset class in the world.  He said that by 2030, Partners Group estimates there will be USD30 trillion US of assets within the private markets umbrella.

Armed with an excellent slide show, Genn highlighted some key trends from the past decade that point to the future evolution of the market. He said institutional investors remain the lion's share of investors within the private markets and have been constantly increasing their allocations. Meanwhile, private wealth is increasingly allocating into private markets at an even faster rate now than amongst institutional investors.

A rising tide of demand

“Private wealth clients are increasingly looking for opportunities to invest in private markets, and therefore wealth managers really need to think about the kind of products they are offering to their clients if they wish to remain competitive and help their clients meet their investment goals,” Genn stated. “Secondly, private market asset managers are increasingly designing products that are specifically aimed at the wealth management sector. In fact, we are seeing a very large number of European and US managers that are bringing private wealth-focused funds to market and  looking to able to distribute them to the private wealth sector.”

He explained that information is the catalyst for rising access and confidence and that Asia’s private clients are increasing their participation more dynamically than any other region.  “This means that asset managers as you all well know, they're increasingly turning their attention to Asia looking for ways to raise capital in this part of the world,” he reported.

Back to the future

Somewhat of a misconception, he said, is that private markets often get lumped within the alternative sector, whereas he referred to a report from Harvard University where they termed private markets as the new traditional asset class. He also highlighted World Bank data that shows that since 1996, the number of listed companies within the US had halved. He noted that in the US, there are 230 times more private companies than listed companies, albeit some private enterprises are the giant listed beasts such as Apple, Google and others, although those are few.

“All this means that wealth managers seeking access to good high-growth companies can no longer rely on just investing in listed companies,” he concluded. “We need to give clients access to privately owned companies, companies that are indeed staying private for much longer, and that are much more reluctant to IPO. There are significant valuations available from private equity sources.”

He turned to the returns available, remarking that the appeal of private markets is closely linked to the ability to achieve superior returns. He pointed to a chart highlighting the gradually improving returns and reduced volatility from typical hypothetical portfolios as they shift from a traditional 60-40 allocation to equity and bonds, and slowly increase exposures to private equity and private credit. 

The case is clear

“There is a very strong case for wealth managers helping their clients increase access to private markets,” he reported, at the same time acknowledging the operational challenges that need to be addressed to achieve this. He explained that are six high-level issues that wealth managers face.

Typically, most private equity and private market funds are set up to onboard institutional investors; hence there are some challenges around KYC and AML. Second, suitability must be considered and subject to regulatory considerations. Clients should expect comprehensive digital data and digitised reporting of their exposures and positions in ways that are easy to understand and enhance the client experience. Market neutrality and objectivity are essential. And sixth, exponents need a good operating model to match the types of models they employ for mainstream markets and mutual funds, in order to distribute these kinds of funds efficiently and in scale.

For the typical UHNW clients, wealth managers will be able to personalise access to some of the best opportunities, as those types of investors have the financial clout to get into the very top opportunities available.

Scaling up the proposition

But for any wealth manager who wants to scale their participation in private markets, digitised systems and protocols are vital. Along with the smart use of existing settlement networks that they might use for mutual funds, wealth managers can then open up and scale access to the global universe of private market funds for many more clients. “They can build a highly curated, and very diverse portfolio of private market opportunities that they can offer to their clients, because this approach sidesteps the very high setup costs for each individual fund,” he explained. “In turn, scale means the operational costs of onboarding a client into a fund are much reduced, and therefore you are serving a much larger percentage of the client base.”

He concluded that Goji’s rationale was built on the firm belief that private markets are the future, and the combination of Euroclear will now truly scale and open up greater access to those private markets. 

“We firmly believe private markets are no longer an optional part of a client portfolio,” he stated. “They need to be a standard part of every sophisticated investor’s portfolio makeup.”

“This is something we are incredibly passionate about at Euroclear, and being one of the largest financial market infrastructures and providers in the world means that we are now really well-positioned to bring this infrastructure to market.”