Bill Crager leaps back into the RIA fray with 'moonshot' bid to Envestnet-ize alts backed by WestCap and Laurence Tosi

Bill Crager is back with a plan to one-up his Envestnet supermarket for SMAs by creating a grand Kayak-like overlay for alternative investments.

Call it a supermarket of supermarkets where, for example, iCapital itself becomes a component.

Officially, Crager is partner, senior advisor and lead operator of New York City alts software roll-up, iAltA Holdings. The firm is a May-launched spin-off of WestCap, a $6 billion of managed assets (AUM) private equity investor. See: Addepar finally confirms massive 'G' raise co-led by WestCap.

Crager is also a (minority) owner-operator in the firm – with baked in funding and a running start – a roll-up of alts-data-related firms formerly incubated by a big-time private equity force that also backs Addepar.

It's "a repeat of where we were back in '99, when we started Envestnet ... The RIA is absorbing all the fragmentation. When you put the pieces together [with] a layer of technology … the investment dollars we have, and the things we know, we can be a community builder,” Crager explains in an interview.

“It’s a strategy where we make investments, then I’ll step in and start to operate those businesses and bring these pieces together,” he adds.

Data roll up

“There’s a crying need for someone to come in and simplify this and make it easier to for RIAs to leverage alternative products in their client portfolio’s in a way that they can feel completely comfortable,” says Andrew Besheer, principal of Albany, N.Y. consultancy, Besheer & Associates.

“I absolutely applaud the idea behind what Bill is looking to do with iAltA,.”

“I can certainly see him getting a hearing from many stakeholders, but the challenge does seem to be a pretty steep mountain to climb," he adds.

The co-founder and former CEO of Envestnet left the $5-trillion-plus, Berwyn, Pa., platform in January last year. His new venture wraps up the roughly six-months Crager spent working in his garage, figuring out his vision for a new connective software layer for the alts industry.

The process ultimately concluded with an offer from a long-standing friend, WestCap founder and managing partner, Laurence Tosi.

WestCap seeded iAltA Holdings with $20 million in May, and Crager kicked in an undisclosed sum after that.

Bootstrapping

Now, he's simply shooting bigger to become a normalizing force – a big task in an alts world where being uncorrelated and exotic is half the point.

iAltA will roll-up alts software companies with a specific focus on alts data and research, then deploy Crager to oversee their merging and harmonizing into one unit.

“We boot-strapped, and worked in the garage ... [then Tosi explained] he wanted to build a fund underneath WestCap, with a private equity structure, investing in [alts] businesses to enable more scale and connectivity in the [alts] marketplace … and now I'm going to lead the effort,” Crager says.

"It’s not a pure private equity – invest and sit on the board – we’ll make investments and operate those businesses," he adds.

Community building

‘Incubated’ inside WestCap from 2018 until earlier this year, iAlta has already acquired two firms – both what Crager calls ‘AI’-native –  alts data analytics software shop Betterfront, and Verivend, an alts data, communications and document aggregator and management software company.

“I've been camping out sitting next door to those firms ... but suddenly, this week, I'll be employed … I'll be full-time as of tomorrow [Oct. 9] … [and] I can be helpful around the table,” says Crager.

“There'll be other steps we'll take over the next few months that will add to those pieces and [this will be] how the community gets built."

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Precisely what those steps will be remains unclear, but iAltA has no intention of launching, or acquiring a competing business to either Addepar in performance reporting, or iCapital and CAIS in alts marketplace provision, he says.

“Alts data is more of a focus, definitely … [and] we're looking at investing in business that are AI-native, capable of partnering and building a community around things already exist," he explains.

“This won't be a copypaste of Envestnet … it's a moonshot … [because] private markets have no product master … How do you create normalization, so something talks to one platform in the same way it talks to another," he adds.

Cash is king

Whether $20 million of seed funding will prove enough, however, remains to be seen, says Besheer.

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Crager “has a great deal of experience in what happens when disparate applications are, and aren't successfully integrated … I wonder if this isn’t a problem that’s going to take a geometric multiple of the $20 million that was invested in iAlta," he says.

Yet, cashflow, rather than an endless cycle of raising funds for growth that's expected in five-to-seven years will be iAltA's modus operandi, Crager says.

iAltA is “super well capitalized to go do something ... [in fact] I believe when you have too much capital you’re compelled to spend it, and that’s not a situation I ever want to be in. I believe in cash flow, in getting to [being] an operating business; it’s essential,” he explains.

"Then you can invest with conviction ... through a cycle where we can acquire or merge with firms, bringing [various] pieces together [to] generate cash flow, and I want to do it in the next 12-to-18 months, so [iAlta] won’t be a cash hungry, capital hungry exercise."

Funds will also be available when needed, says Tosi, in commentary provided below this article, after it was published.

“The $20 million was the seed investment, [and] given the opportunity set and clear process and momentum, you can be sure this industry changing business will attract all the capital it needs to win. This is just the beginning,” he explains.

Smart move

Crager's role and input into the management of the firms iAltA buys will remain advisory, however.

So too will any support offered by iAltA's co-founders, including former Ipreo exec. Bill Sherman, now iAltA president; former WestCap partner Scott Ganales, now iAltA CEO and Tosi, who will serve as an advisor.

Crager "can advise and can influence, as all the founding partners have,” says a company spokesperson, via email.

Landing Crager as a founder is a smart move, says Besheer.

“It’s a great idea, he’s passionate, he’s credible, he’s a really smart and experienced operator, and he’s also learned some hard lessons, so I think it’s really a coup for [iAltA] to have brought Bill into the frame,” he explains.

“Bill is a true visionary ... we couldn’t be more pleased,” adds Ganales, in a linked release.

Connecting the dots

Crager may also be the right man for his new job, according to Alois Pirker, founder and CEO of Marblehead, Mass., consultancy Pirker Partners.

“I’m not surprised that Bill is getting active again,” says Pirker in an email.

"He has such a broad knowledge and experience across all aspects of wealth management, that his talent around how to integrate the various pieces into an efficient platform will be a huge asset,” Pirker explains.

"I could see Bill being instrumental when it comes to closing the gap between the ecosystem that's used to manage the assets of wealth management clients, and the newly created platform, making it seamless for firms to enable clients to participate in [alts] funds – basically institutionalizing the process.

Crager "knows extremely well how to connect these dots,” Pirker concludes.

Moonshot

Creating a single lingua franca for alts has also long been a moonshot dream of many would-be alternative asset platforms, given the disparate ways in which alts are reported on, traded, and administered.

Previous attempts to create frictionless data and a unified alts trading and management platform include iCapital's own "moonshot" bid following its $440 million 2022 raise. See: Fresh off a $440 million raise, iCapital CEO Lawrence Calcano is ready to dream the impossible.

iCapital's case revolved around the large block of overwhelmingly influential investment firms that backed the bid, including BlackRock, Apollo Group, and Blackstone, where Tosi got his head in the business.

Other protocol-building efforts include the Standards Board for Alternative Investments (SBAI), formerly known as the Hedge Fund Standards Board, and the Depository Trust and Clearing Corporation's (DTCC) roughly 200-page Alternative Investment Product Services (AIP) protocol.

‘Diplomacy’

Crager says iAltA has three major aces in its hand as it bids to better connect the different fiefdoms of an alts industry expected to manage $24.5 trillion by 2028.

The first is “diplomacy,” and the sheer breadth of the iAltA founders' contacts.

The second is the fact that alts asset managers are fast reaching the point where they have more product than they can sell, so they need to compromise and accept greater standards, or RIAs simply won't invest.

In other words, alts firms are no longer big fish in a little sea and need to conform to standards to compete.

“The projections for private credit and markets overall [are] extraordinary, but [growth] is not going to happen unless you get normalization," Crager explains.

"Either the industry decides to do it ... [or you] go out to sell to the RIA market, knock on the door, and [they] will shut the door.

“RIAs are hustling, their organic growth is flat, their operating costs are super high, so are they really going to open their allocations to do more private credit, which is even harder to [manage]?” he asks.

Crager's third "ace" is “AI,” not only because of its power to manage complexity, but also because he's taking off as AI is taking flight.

There's “a break that’s occurred, in that artificial intelligence can begin to look at multiple data sets ... [it can] create more liquidity … but I understand a moonshot. That’s okay," he adds.

Shakespearean times

Before he signed on with iAltA, Crager wasn't sure he'd return to the full-time fray.

He stepped down as CEO Envestnet, Mar. 31, 2024. He then fully ended his 27-year tenure at the firm, which included 20 years as its president, when he relinquished his 'senior advisor' role, following the firm's Nov. 2024 sale to Bain Capital. See: Bill Crager is dropping CEO role after multiple shoes dropped.

Having considered writing and academia as potential careers in his youth, he took time out to write and read, but he eventually realized the semi-retirement of board roles wouldn't cut it.

"Honestly being a public CEO, all the Shakespearean things that occur, it takes a toll, and I needed space, and I took it," he says.

“It was a great period, but my brain started to kick in, and I can see so clearly what’s missing [in alts markets] ... So I began to think about the pieces that could come together.

"I talked to advisors and wealth-techs, and providers, and they went ‘no, this isn’t crazy, what you’re talking about is what we’re missing.'

“People reached out with board seats, but … I didn't go gently into the night … I made a decision I wasn’t going to do that, I’d stay focused and true to what I think I’m good at,” he adds.

Asked if the freedom of working for a private company also played a part in his decision to join Tosi et al. at iAlta, he laughs.

“Oh yeah! Oh yeah!,” he says.

Looking back

After stepping down as an advisor to Envestnet following its sale to Bain Capital, Crager says it was job done, and time to move on.

“We said ‘we're going to level the playing field for advisors against Wall Street, and we did ... I get a little tweaked when people say ‘these guys are great thinkers’ ... try operating Envestnet for 30 minutes – I challenge anybody to,” he says.

“We'd transitioned … into a real operating company … [With] Bain the buyer – a world class operating blue chip – I felt very proud to have landed that business where it's at – Envestnet is really in great hands.”

Leaving "was a conscious decision … I'm a builder, a creator … You don't need the old guy looking over the shoulder,” he adds.

Yet when asked if he has any regrets over his time at Envestnet, Crager, is sanguine. (He still holds a board seat at Envestnet-backed company FidX – a role he took on, Mar. 4)

“It’s funny, I wake up in the night sometimes, and I think, ‘I really screwed that up, but the outcome was phenomenal," he says.

"On the path, there are different choices we could have made ... but it’s a great businesses and I’m so proud to [have been] part of it.

But “culture, people, and all that, it matters so much more than I used to think in the old days," he says.