A TECH UPGRADE FOR PRIVATE INVESTMENT
Some other firms already are exploring ways to use social media to bring investors and hedge funds together. Artivest links fund managers with investors who are looking for ways to enter the alternatives and private fund spaces. Chief Investment Officer David A. Levine sees the company as responding to a need that's not being met in an industry that's hidebound over technology. See Figure 37.2.
Levine knows from personal experience. A Twitter user since 2007 (@davealevine), Levine noticed that the private funds industry wasn't using technology the same way he was. Artivest employs social media in its outreach to clients and potential investors. It pushes out ideas about investing opportunities via a blog and uses Twitter, LinkedIn, and Facebook to promote and share the content.
“Every other industry has gone through a technology upgrade, and we think it's time for private investing,” Levine says. With the approval of the JOBS Act, “We think there's a perfect storm of change . . . tech changes, economic changes, and regulatory changes.”
FIGURE 37.2 Investing With Artivest
Yet adoption still lags. Levine sees three drivers that would help pick up the pace:
1. Clarification of Regulatory Changes – This will take time, he says; syncing action across regulatory bodies can make it easier.
2. Tech Adoption – Even though people are using smartphones every day, it takes time for them to adopt and become comfortable with tech changes in their businesses.
3. Industry Pioneers – Some financial gurus have taken advantage of changes in the industry to promote their ideas, such as hedge fund manager Cliff Asness and activist investor Carl Icahn pushing out tweets.
“One thing that allows the best firms in the industry to stay ahead is that they do think about ways to improve their business,” Levine says. “Using proven technologies that exist and are used in other industries is such an obvious thing, and upgrading the process of investing is a natural next step.” There's an inevitability to the process, he adds, predicting that discovering, evaluating, and participating in investment options will be much easier. “Does that mean that parts of your business that are outward-facing use those technologies? I think so. It means you can engage from any location to a broad base of sophisticated investors.”