Liquid Holdings: Modern Technology Meets Order Execution, Risk Management

Jul 10 2015 | 11:25am ET

There is no shortage of execution platforms for investment managers out there, but the folks at Liquid Holdings have developed a cloud-based solution that combines several facets of the process into a single, seamless platform integrating real-time order, execution, and risk management with reporting and other middle-office functions. 

Company: Liquid Holdings Group, Inc.
Technology: The Liquid platform
Locations: Hoboken, NJ; Aventura, FL
Sector: Execution, Risk Management, Reporting, Outsourced IT, Middle-Office Services
Year formed: 2012
Employees: 90
Stage: In revenue

Pitch: Liquid Holdings Group provides a modern order, execution and risk management system, which we augment with outsourced IT and middle-office services. We exist to simplify success for today's institutional investment manager.

Tell us a bit about your company’s main technology and what it does? 

Liquid is a real-time order, execution and risk management platform that facilitates multi-strategy investing for hedge funds and other asset managers.  It allows traders and portfolio managers to trade listed instruments and continuously monitor market and liquidity risks, P&L, performance and shadow NAV statistics from a single, cloud-based environment.  Liquid goes a step further, backing its front-office capabilities with managed services to transform manually intensive middle-office processes into an automated, seamless experience. 

How is this different than others in the same space?

Compared to all of the advances in the industry, the technology supporting alternative investments hasn't changed all that much over the last 15 years. Liquid is changing that.  Our platform not only synchronizes front-office capabilities in a single real-time environment, but we manage key elements of a fund manager's infrastructure. This includes IT, middle-office processes and connectivity to counterparties. By eliminating multiple points of failure and milliseconds of latency throughout the investment management process, we arm our clients with a single and accurate version of real-time portfolio data and investment tools to run their business.

Liquid is put into practice when a CIO receives a call from its largest investor and needs to communicate how the portfolio is reacting to today’s market events; which holdings are contributing to or detracting from intraday performance; and the impact of liquidating the portfolio over a seven-day versus ten-day time horizon.  Liquid was built on this premise—synchronizing a single source of accurate, real-time portfolio data with cohesive workflows across trading, portfolio and risk management, and investor reporting, all through a unified database architectures. 

What is your revenue model? How will the company make money?  

Asset managers subscribe to our technology and services through a SaaS revenue model.  On average, a fund manager will pay $50,000 per year to access the Liquid platform. Our model takes into account the solution set licensed by our clients as well as the size of their business.

Who is your target market? How big is the opportunity? 

We serve the global hedge fund industry. Today, there are approximately 10,000 hedge funds competing for nearly $3 trillion in assets under management.  Across the board, hedge funds require technology and services similar to what we offer to raise and retain capital, and effectively monitor the health of the business.   

Fund of funds, managed account platforms, Commodities Trading Advisors (CTA) and traditional asset managers such as Registered Investment Advisors (RIA) are opportunistic targets.

Why are you and your team capable of succeeding? 

We are the first technology company to crack-the-code on a unified database architecture that synchronizes once-siloed front-office functions onto one real-time platform. We have continued to innovate by launching new solutions such as LiquidMobile, which allows managers to see real-time analytics including the ability to model how the portfolio would react during historical market conditions such as the Asian Crisis, from a mobile device. 

Our ability to win and retain larger, more complex hedge funds is strong evidence that we are on to something. Human capital is one of our biggest reasons for believing in our company. Our A-list team of developers, financial engineers and customer-facing professionals do extraordinary work to personalize our technology and services to meet our clients' unique needs. Clients and investors alike care that we get that right. 

What is your company’s next target/milestone? 

Our milestone remains building a profitable business by winning market share in the alternatives industry.  Doing so requires the right mix of modern technology and services, and innovation.

In terms of innovation, we continue to expand the compliance and investor reporting capabilities in our platform so our clients can satisfy the most unique transparency requirements.  We continuously roll out new analytics, dashboards and reports that make displaying and presenting fund data even easier from any mobile device. From there, we will continue to work with our clients to see how we can use technology and services to make their lives easier.

Can you give us one unusual fact about your company? 

A few months after launching our company, we mobilized our sales team to build the business.  As we began winning deals against competitors operating in our space for the better part of 15 years, we wanted to signify to the rest of our organization that another deal was won because of our cohesive and capable team, and shared vision.  ‘Banging the Gong’ was created—today the Gong is on full display in our sales bullpen and is ripe for another hit!

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