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Opto Investments was quietly founded in 2020 with the same intent as many companies: to make private equity, venture capital and other alternative investments accessible to more investors by way of financial advisors.
But while it has pursued and partnered with large private wealth management businesses, such as EP Wealth Advisors and Mercer Advisors, Opto’s backers and early clients were family offices, and it expects to work with more of them as they professionalize their investment portfolios.
In 2022, Opto emerged from stealth mode and announced that it had raised $145 million in a Series A financing round led by Tiger Global. “I co-founded Opto with top talent from the technology and financial world to open up private markets to top investment advisors and their global clients like never before — and unlock new capital for the world’s greatest innovators building for the future,” Joe Lonsdale, co-founder and chairman of Opto, said at the time.
The Series A round included investors from 8VC, Lonsdale’s venture firm, Michael Dell’s MSD Capital, Clocktower Ventures, FinVC, HOF Capital, and others.
Unlike some fund-of-funds strategies, which often build a large, evergreen portfolio to serve the needs of many investors, Opto builds smaller bespoke portfolios for clients. The firm says this customization helps them build better portfolios and opens up co-investment and direct opportunities while still benefiting from Opto's collective scale. In addition to sourcing, diligence, and subscribing to funds, Opto also helps investors monitor positions and capital call schedules and does performance reporting.
Jacob Miller, co-founder of Opto, told Modus that single-family offices, multifamily offices and other private wealth management firms are drawn to Opto for different primary reasons. Most wealth managers need better technology and operations to scale their alternative investments across dozens, hundreds or many thousands of households. They also might lack the expertise to confidently help clients invest in those asset classes or get access to the best opportunities.
Miller explained that multifamily offices face similar issues, if not today, then eventually. Some start managing a huge portfolio for only a handful of families. But as those beneficiaries have children — who want to invest more in alts in pursuit of better returns — and their number (and investment accounts) grows, the office’s old system for investing in alts requires evolution.
Single-family offices might have a good system for investing in alts, but they are turning to Opto because they want someone else to manage bespoke sleeves of their portfolios. As family offices try to professionalize their investment programs, they are getting better (or more honest with themselves) at picking and choosing their spots.
For example, Miller said that some family offices that invested in Opto were already investors in Lonsdale’s 8VC, based in the San Francisco Bay area, and their wealth was created in the technology sector. They weren’t interested in or didn’t need something like Opto to find and manage the venture capital slice of their portfolios — but they were eager for Opto to help them build private equity and private credit strategies.
The same concept can be applied to, say, family offices in Texas that want help making venture and private equity investments in technology. A credit hedge fund manager in New York probably doesn’t need Opto to manage that allocation in their portfolio, but they might want it to handle their venture investing.
“If you have an SFO with $50 billion and a headcount of 50, you are probably using people to do what our technology does today, and they're probably doing a good job. Maybe we could replace it, but that's not our place right now. Either you have a scale issue or a small team, and you wouldn't want to hire portfolio specialists for certain areas,” Miller said.
How family offices share investment opportunities with each other has wide degrees of formality. Opto also leverages its network to uncover and get ahead of the curve on investment opportunities. The company doesn’t get paid by fund managers like some fund-of-funds; most of the money it makes is based on performance fees.
Right now, Miller says that Opto’s tech is delivering on its promise of helping investors better scale their alternative investing and that there is plenty of runway to grow. The company expects to help investors, including family offices, allocate $1 billion of capital this year and that its network has several times that looking for supply.
“We're in the first innings of what I call family institutionalization, of their home investment program level,” Miller said.
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