Fund managers all need a unit registry. A record of their transactions, to do reporting and income distributions to investors. There is no dominant system for this, hence it’s done with a combination of software, manual spreadsheets and black-box solutions. At CXi Software (CXi) we want to streamline and automate this work.
Bain Capital Ventures suggests a way to build a billion-dollar SaaS company is to build a system of record. “A system of record (SOR) is software that serves as the backbone for a particular business process. By definition, it’s very sticky and hard to rip out for many reasons.” As mentioned in this article, CXi stores proprietary business data. It’s also used on a daily basis, as it’s a core function. CXi is building a system of record.
One of the key problems that CXi solves is automating much of what is done manually, especially client on-boarding in regards to AML/Know Your Customer (KYC) and Foreign Account Tax Compliance Act (FATCA)/CRS. This mitigates a significant amount of the operational and regulatory risk that Fund Managers currently experience. It also gives the Fund Manager a solution that enables it to scale up its offerings very quickly without increasing both its operational and regulatory risk profile.
CXi is built on AWS. It uses API’s (Application Programming Interfaces) to integrate with other datasets to automate manual processes, like ID verification and payments.
We launched the CXi-Registry product in 2017. It has taken a lot of work, money and time to get traction. The friction is in the implementation process, which is getting better. The competitive advantages are in significantly better technology, high switching costs, economies of scale, at maybe half the price.
Greylock Ventures argue that a system of record can be a new moat: a defensible business model.
There is a gap in the unit registry market which is worth $2 billion per year. The market is split between funds that manage their registry, or outsource it to fund administrator’s. Fund managers and administrators currently use a combination of: Bravura (legacy), Paxus, 7G, Link Market Services, OneVue (bought by IRESS), RBC (which is leaving Australia), and MainstreamBPO.