Unsexy Arch again proves irresistible to 'RIA' VCs, who buy $52 million stake and see it as the 'Stripe' between RIAs and alts providers-- eliminating hundreds of alt investment portal log-ins

If an RIA can't count it, then it's hard-pressed to manage it – and that best explains why a New York City startup just raised another $52 million and why ‘RIA’ investors keep coming. See: Three 'RIA' executives headline $20-million VC raise.

Arch, which digitally administers private investments to mimic publicly traded securities, raised the haul just two years after raising $20 million – and turning down an additional $20 million. See: Three 'RIA' executives headline $20-million VC raise.

It's building “one-click, end-to-end alternative investment management," says co-founder and CEO Ryan Eisenman, who notes that the average alts investor has to click 5,500 times just to buy one fund.

"We’ve solved for 84% of the 5,500 clicks required to manage an alternative investment today, and are now focused on the remaining 14%,” he explains, in an email exchange.

Again, as in the case of the firm's 2023 ‘A’ raise, Arch's new backers have an RIA flavor.

Prior investors include Jason Wenk (Altruist), Steve Lockshin (Vanilla), Marc Spilker (Merchant Investment Management), with new investors including Menlo Ventures (a Betterment investor) and Ethic-backer Oak HC/FT.

Although more established firms like Canoe, or Accelex provide similar services, Arch has also convinced investors that it has a sightline on the alts Holy Grail: One portal that can provide pure, manageable data flow, ending investor reliance on hundreds of log-ins to gather information.

Obsession

Arch is also in a much stronger financial position today than it was when it last tapped venture capital (VC) markets.

It administers $275 billion of assets (AUA), up from $8 billion in 2022; its client count has jumped from 200 in 2023 to 470 today – with 100 joining this year. See: Arch's assets soar, after RIA-intensive raise.

Arch also just announced a new client advisory board, distinct from its board of directors, and loaded with leading RIA executives from firms like HB Wealth, OakRidge, and AltI Tiedmann Global.

Announced Sept. 30, the new board includes 15 RIA industry executives, from research heads, operations (ops) directors and chief financial officers (CFO) to technology chiefs, founders, CEOs and one undisclosed member who is an investor.

All 15 work for financial institutions, software platforms, RIAs, family offices, and asset managers that already use Arch.

The board's job is to ensure Arch improves its software when, where and as it’s needed.

"Customer obsession is at the heart of Arch’s culture … The best solutions are built in close collaboration with the people who use them," Eisenman explains, in a linked release.

Great expectations

Yet, Arch's stellar growth also underscores just how far it still has to go – hence the need for fresh funds.

“We raised $52 million to double down on product … [and] we only raise what we need each round, just as we did with this latest round,” Eisenman continues, in the email.

“We’re seeing a higher rate of switching to and adopting Arch ... but our clients are asking for more," he adds.

Expectations run high, too.

Will Trout of Celent has long noted that Arch's software design "stands out." Addepar co-founder Joe Lonsdale described its niche as "annoying" and "worthy of solving well."

“I view it as much like a Stripe or Plaid for alts," said Wenk, founder and CEO of RIA custodian Altrist, in a 2023 RIABiz interview.

"It solves a huge need for me personally, and so I suspect it does the same for advisors,” he added.

Wenk is one of a number of RIA industry luminaries, who invested in Arch's 2023 ‘A’ raise. 

More than 10 investors offered to invest a combined $40 million in the firm before Eisenman turned them down and accepted just $20 million.

Cool cucumber

New investors are cooing over the company's recent growth run.

“In our diligence calls, Arch clearly stood out,” says Oak HC/FT general partner Matt Streisfeld in a release. “Only Arch clients showed a clear enthusiasm for the product … [which] was lacking across any peer solutions."

Yet Eisenman coolly rebuffs the idea he might feel a degree of well-earned vindication, now that Arch has access to a lot more dry powder on better terms than the $20 million in ‘A’ round funding.

Indeed, Eisenman has conviction because of Arch's software; it does more than simply gather, then “clean-up” alts data.

It is creating a “one-click processing chain” that has turned more retail-focused data firms like Stripe and Plaid into $91.5 billion and $6.1 billion-valued unicorns, respectively.

Arch has also been widely praised for how it uses “AI” to solve the tedious task of taking shoe-boxes full of disparate alts forms, digitizing them, and easing the administrative pain of managing them.

Transformative spending

Arch survived on half-a-million dollars for its first three years, and less than $5.5 million for the following two.

Yet, to truly transform itself into the “Plaid-of-alts,” Arch needs fresh funds.

“We raised $52 million to double down on product … [and] there are still many unaddressed problems in our clients workflows that touch alts," Eisenman explains.

"With this new capital … we’re expanding our suite of CIO tools, developing new features within our client portal and enhancing reporting capabilities for limited partners (LP),” he adds, in a linked release.

Arch also has $7.5 million previously raised from VCs, the company confirms.

Surging burn rate

Arch, which moved to a shiny new Manhattan headquarters in 2024, has also ramped up spending on both software development and headcount.

It added 60 staff in the past year – 100, since 2023 – and a number of new product lines, including alts payment services, and capital call analysis software, for which it can charge a top-up to its subscription-based fees.

As a result, Arch's VC burn rate has surged, albeit at a rate broadly in line with its 2023 estimate. It predicted that increased spending would reduce its run-rate to three years, and, it follows, its burn-rate to around $7 million a year. 

In the last 22 months, Arch has spent somewhere between $12.5 million and $18 million to cover its operating costs and product development, according to an RIABiz estimate based on public data.

Growing, growing, growing …

Arch, which has yet to reveal its post-raise valuation, also recently scored a major win, poaching family-office accounting shop RSM from rival data company Canoe Intelligence. See: With AI (partly) to thank, Canoe Intelligence tripled in value in one year and raised $36 million.

Other notable Arch clients include $2.3 billion (AUM) RIA GC Wealth; $25 billion AUM HB Wealth, formerly Homrich Berg and $76 billion AUM, AlTi Tiedmann Global.

In fact, keeping up with client growth is another big driver of Arch's latest raise, according to the firm.

"The funding will support Arch’s ongoing expansion and development, with a particular focus on meeting the needs of institutional investors, large private wealth teams and established family offices,” the release states.

Prudence

Global alts assets are also on a tear, with scores of companies launching new alts funds and partnerships – including Vanguard and State Street. 

Alts data shop Preqin forecasts that the value of global alts AUM will surge 74%, from $16.8 trillion in 2023, to $29.2 trillion in 2029.

Yet prudence is key to Arch's future success, Eisenman told Modus Journal, Sept. 14.

“We've been really capital efficient, and we plan to continue to be," he said.

"In the family-office space, no one wants to change providers, especially if they like a solution. You need your providers to be financially and fiscally conservative, so that they'll be around for a long time,” he said.

* Oak HC/FT led Arch’s latest funding round. Menlo Ventures, Craft Ventures, Quiet Capital, and other undisclosed investors also took part, according to the linked release.