Arch Debuts AI Tool For Family Offices Swimming In Private Investments

Ten years ago, Nicole Sherwood was working for a real estate investment firm when another career opportunity came up. Jeffery Altman, founder of the hedge fund Owl Creek Asset Management, is looking for someone to help him manage his personal real estate projects as well as the investments he has made as a limited partner. Those demands required a full-time employee and Sherwood took the job.

Not long after joining Altman, Sherwood realized they needed more services than a typical family office. Much of Altman’s wealth is tied up in his hedge funds and he has wisely diversified the rest of his personal portfolio. But like other investors, the two felt drawn to the growing opportunities in the private markets. They want to allocate more to real estate, private equity and venture capital funds, and invest directly in companies when it makes sense. There was just one problem: Who was going to manage all the paperwork that came with it?

Sherwood, the managing director of Altman Family Holdings, turned to Arch, a software company founded in 2018 that helps limited partners organize documents related to private investments and improve their operations. Arch effectively puts all necessary communications from general partners and companies — K-1s, capital calls, distributions, financial statements and other investment updates — in one place for an investor. It’s a task that sounds easy but is overwhelming for limited partners who receive those documents from potentially hundreds of different sources and do it themselves.

Arch, backed by Menlo Ventures, Craft Ventures, Quiet Capital and others, has excelled at reducing repetitive, manual work for limited partners. For family offices that can’t hire and throw people into trouble, software like this is necessary if they want to properly grow and diversify their private asset portfolio, Sherwood said.

“Why you’re seeing companies like Arch pop up is because you realize very quickly that if you have more than a handful of these investments, tracking them manually in Excel and then reconciling them in systems become very time-consuming and tedious and, in my experience, It started to interfere with where I have to spend my time and energy on a daily basis, thinking through investment decisions and portfolio management, Sherwood said.

However, Sherwood is passionate about better time management and his investment process. The family office is among beta users helping Arch develop artificial intelligence tools, some of which are being launched this week. While helping limited partners manage documents in one place, Arch has created a growing wealth of information that it doesn’t help users use.

The latest is called Portfolio Insights, which cleans up documents and updates summaries that save time but are still actionable. Arch also now delivers up-to-date performance from incoming statements that investors can view individually and aggregated, meaning quarterly calculations that previously had to be updated by someone was made for them. It’s an important development for the software company to help investors not only track the decisions they’ve made but inform the future, said Ryan Eisenman, co-founder and CEO at Arch.

Insights displays updates and categorizes them in a timeline that is constantly updating, similar to a social media feed. If an investor is given the most relevant information in a timely manner — instead of having it buried in an email inbox or elsewhere — the impact can be huge. For example, a company may raise more capital and wants interested parties to contact each other within a week. A family office employee may not properly consider the opportunity, present it to their principal, and invest if they see the notice the day before a deadline. Arch is also developing other features, such as ways users can compare their individual investments and components of their portfolios against benchmarks.

“I think where we need to go with Arch, and where Ryan is moving, is to not only provide a system that transforms old workflows, but really a system that uses all the data that is collected and provides an intelligence system,” says Sherwood.