Austin, Texas-based Harmonate, a private equity software firm, has agreed to license private capital data operations software to Mainstream Fund Services, a global fund administrator.
Harmonate specializes in automating complex private capital documents, such as subscription agreements, freeing managers from cumbersome, error-prone legacy systems that often feature manual entry. This approach is commonly called the maker/checker system. Automation reduces error and speeds up the passing of information between funds and their stakeholders.
Harmonate’s purpose-built services streamline middle- and back-office processes, simplifying complex transactions and ensuring security through each step of the investment process.
The firm prides itself for being able to automate a wide range of private capital documents and workflows with the aid of a machine learning engine that can read process large numbers of variables, or dimensions, per document. Further advances are in the works, the firm said.
“By the end of the year we hope to be able to have in place automation that can read past the first two pages of K1s, and even further automate handwritten sub-documents,” Kevin Walkup, CEO of Harmonate, told Private Fund CFO.
Mainstream Group Holdings, based in New South Wales, Australia, was the subject of a takeover bid earlier this year. Apex, a global provider of independent fund services, won the contest, eager to expand its presence in Asia.
Meanwhile, Mainstream Fund Services, its subsidiary, has adopted automation as a key part of its strategy, aiming to dominate the fund administration market.
Mainstream focuses on what it calls the “no friction switch” to expand its client roster. The firm claims that it has the experience to seamlessly engineer the transition from antiquated systems to its own platform.
Investors want fund sponsors with robust systems of reporting, and compliance, so they look for funds with reliable and scalable back-office systems, Mainstream argues. But to date many sponsors have resisted the idea of switching because of the perceived costs or friction.
Nevertheless, Mainstream reports that growing numbers of dissatisfied fund managers are considering a move. “The current pandemic and its associated operating complexities have brought many deficiencies in service and operations from our competitors to light,” according to one company release.
Mainstream claims to be an old hand at transitioning firms to more advanced processes, saying it has done so for more than 750 funds. They claim experience implementing data from Investran, TNR, Equitrak, eFront and numerous products used in the alternative fund arena.
This “game changing” promise of seamless transition makes Mainstream Fund Services a promising stage to demonstrate Harmonate’s capabilities, said Harmonate’s Walkup. “The breadth of document types our software processes, the dimensions we can pull in from each document type, and the speed with which we continue to add to each axis of our high-performance product sets us apart.”
Also, Harmonate’s Conductor platform constantly checks itself for errors, and so delivers unprecedented accuracy levels not currently available, Walkup added.
The result is data intelligence and efficiency tailor-made for a single-source solution, especially since Harmonate limits the need for multiple solutions in its own specialty area. Also, its product roadmap is only accelerating the edge delivered to high performance fund services, Walkup said.
“We are able to process fund accounting data in hours rather than weeks,” he said. “Firms that fail to automate will be out of business in short order. Right now, there are a lot of dinosaurs out there.”
Apex is slated to consummate its offer for Mainstream Group Holdings next month at a shareholder meeting in Australia.
Mainstream, founded in 2006, with only seven employees, now has a worldwide network of 330 employees.