Ron Biscardi – Inside iConnections Global Alts (EP.367)

0:04Hello, I'm Ted Seides and this is Capital Allocators. This show is an open exploration of the people and process behind capital allocation. Through conversations with leaders in the money game, we learn how these holders of the keys to the kingdom allocate their time and their capital. You can join our mailing list and access premium content at CapitalAllocators.com. All opinions expressed by TED and podcast guests are solely their own opinions and do not reflect the opinion of capital allocators or their firms. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.

0:44Clients of capital allocators or podcast guests may maintain positions in securities discussed on this podcast. My guest on today's show is Ron Biscardi, the CEO of iConnections, whose Global Alt Conference in Miami is the largest capital introduction gathering in the industry. In addition to the annual event, iConnections hosts an annual charity cap intro event, and provides its technology platform to connect the industry year-round. Last week, I joined 6 ,000 industry peers in Miami at Global Alts. The main event at the conference was an incredible 15 ,000 one-on-one meetings between allocators and managers.

1:26As a sideshow, I grabbed Ron on the podcast stage to get a closer look at how it all comes together. In an industry that typically competes at every turn, iConnections is the opposite. They're the ultimate collaborators. Ron has provided the iConnections software to power most major industry events, including our summits, and is generous in finding ways to connect people and add value. I've been an advisor to Ron and iConnections since Ron created their first charity event, Funds for Food, in the midst of the pandemic. It's been great fun to watch their growth and success in the years since. Please enjoy my conversation with Ron Viscardi.

2:10Ron, thanks so much for joining me. Happy to be here, Ted. And thank you, Ted, for being here at Global Off. It's my pleasure. This event has really become something over the last couple of years, and I'd love to dive into what's behind it. Maybe we should start with just some of the numbers and statistics of who's here this week. This event is primarily a cab intro event that we added world-class content to the front of. So we will run about 15 ,000 meetings between today and tomorrow, between about 850 fund managers and roughly 1 ,000 investors, all institutional investors. The event really has become the biggest of its kind in the world.

2:55Clearly, there are many conferences that are a lot bigger than this. But in the investment world, in our little slice of finance, this is far and away the largest event of its kind. We'll have about 4 ,400 attendees in the actual event and then another 1 ,500 who get invited to all of the dinners and parties and cocktail hours and all that stuff that happens at night. So approaching 6 ,000 people in total. As you're building this up, I'd love to hear some about how this all comes together. How does your team reach 850 managers and a thousand allocated? A significant percentage of all of that activity comes from our sponsors.

3:33So we have some of the best sponsors in the world, Jeffries, Goldman Sachs, Carlisle, Galaxy. These are firms that are connected to everyone in the industry. So from the start, really our first stop when we created iConnections and we were building the company was to sign up as many of those top tier firms as sponsors and supporters of ours, because they are the people that everyone in the industry goes to, to find out who are the people they should partner with, what are the events they should attend. ProSec partners, Gem ProSec, obviously a friend of ours, her firm is absolutely at the center of that group as well.

4:11So by winning over the hearts and minds first of all the service providers in the industry. It helped us extend our reach far beyond what probably made sense for a startup in April of 2020. And then from there, it then becomes all about the allocators, winning over the institutional investors, the endowments, the foundations, the pension funds, the consultants, the family offices, by winning them over and winning their confidence that we were going to throw a high quality event, that we would have top tier managers. By winning over the hearts and minds of the institutional investment community, the managers then see that list of attendees who they're going to be able to take meetings with, it honestly becomes a pretty obvious choice for them.

4:56There's really no other event in the world that you can go to and take 20 meetings. Some managers are taking 35 and 40 meetings, if you can believe it. I don't know how they're standing at the end of the day, but they do. There's really no other event where you can create this efficiency for yourself. It's the equivalent of three, four, five months of roadshows and travel all baked into this one week here at Global Ault. Once you start spinning that flywheel and you have high quality investors and therefore high quality managers want to come, and if you have high quality managers, high quality investors want to come, more and more people want to come.

5:33So how does your team both reach that volume of people? And then how do you decide who's real when everybody wants to come to the event? This is an excellent point because we actually screened out over 500 people who registered as an allocator who we deemed just not appropriate for this audience. And by not appropriate, usually what I mean is they just weren't managing a large enough AUM base. For a fund, And you want to meet with an investor who's running at least$100 million in order for it to make sense. Because at that level, you can get a large enough allocation from them that it's worth the time and energy.

6:13Because this is not a quick sales cycle, this business. Oftentimes, the managers are spending years getting to know the allocators. So we screened out a fair number just because their AUM was too low. But the way we really handle it, honestly, is just by continuing to add great members to our team. Our IR team is now up to about eight people. Our sales team is roughly 10 people. And our primary mechanism to evaluate a potential new investor is really through that same network. We will call the cap intro teams at all of the prime brokerage companies that are sponsors of the event. We'll call fund manager clients who have been in the business a long time.

6:53The industry in aggregate, they all know who the real investors are. So given the fact that we've now achieved real scale, we lean on that network heavily, and it's the best and fastest way to be able to figure out if someone really belongs in the event. And our screening process has actually started to become more electronic, where if a new investor enters our orbit, they have to basically supply references. If it's a reference that's already a member of the iConnection platform, they get an email. They can easily click a few buttons to respond and say, yes, this person, we have a relationship.

7:31We know they're legitimate. We're going through multiple checks like that to make sure people are really qualified. When you look at who's here on both sides, just rough numbers of the managers, how many of those managers are, let's put a big number, over a billion in assets? Of the 850 managers in attendance, 350 of them are over a billion in assets, and that's firm assets. So they may have multiple funds that make up that billion plus, but that number grew dramatically. And then if you look at the allocator side, you mentioned hopefully nobody less than 100 million. How do you think about how that breaks out in terms of assets under management?

8:07That one has a giant range because we have families that are 100 million. And then we have sovereign wealth funds who don't even really disclose their AUM, but we know it's over a trillion. I think we're in the range of around 20 sovereign wealth funds from regions all over the world, several from the Middle East, some from Asia, some from Europe. That category, the sovereign wealth category in particular, has expanded nicely this year. And we're really excited to have them and hope to keep growing that particular category. And once you've brought all these people here, you mentioned there's 15 ,000 meetings and they're all one-on-one meetings.

8:43How do you match up all these people so that they can figure out who they want to meet? One of the things we learned early on was it was best to create a tech platform that enabled the attendees to really select each other. At other cap intro events, One difference is many of them are multiple investors to one manager where we are primarily one-to-one. And oftentimes the group that's organizing those events will select who will meet with home. We realized early on the investors in particular would much prefer to choose which managers they're going to meet with. And in these large portfolios, they have needs across every imaginable investment category.

9:27So it would be really hard for us to know what is the best fit for them. And we ask them lots of questions and they tell us here are the things we're looking for, but those things change over time and market shift can really impact that. So we found it's really best to let the attendees choose each other. So our platform has a tremendous amount of information that all the attendees fill in about their firms. And then that gives everyone the ability to search and refine their searches and identify who were the best fits for my meetings. No one actually books a meeting time in this event. Everyone just tells us, these are my open meeting times.

10:04And then we run an algorithm about a week before the event and that algo will then book 15 ,000 meetings. It runs for about two hours and then it slots all of these meetings. And what's great about that is it clusters the meetings to try and minimize the amount of walking that the investors have to do. here at the Fountain Blue, and we spread over into the Eden Rock as well. We have, I think it's around eight or nine ballrooms now that we're using. So it's a complex campus that captures the whole event. In order to make it manageable and in order to make sure people are not late for their meetings, that clustering is a really important element.

10:41And then we actually have about 50 investor guides who all have an app on their phone. And the app will tell them, okay, in five minutes, you have to pick up allocator XYZ at booth number 592 in this room. And they're at that booth at the end of that meeting saying, okay, Mr. So-and-so, I'm going to take you across to the next ballroom to get you there on time. When you have that many meetings and you've had a questionnaire effectively going into that to try to match it up, it just sounds like an explosion of data. It's a lot of data. Yes. What have you learned from all of the meetings that have happened over the years and then what do you hope to learn with all of that data to use in the future?

11:23For sure, we hope to use that data to analyze it over a longer period of time and get a big enough sample set to be able to make predictions on where the meetings will happen and who will likely get the most meetings. I think we have the ability to now overlay actual market data leading into this event with the meeting data and all of the profiles to try and create probability curves to assess, okay, coming into the event, we think this particular category of funds has the highest probability of punching above its weight. And by punching above its weight, what we look at is if, let's just say global macro funds make up 10 % of the event.

12:06If everything was even, we'd expect them to get 10 % of the meetings. This year, it just so happens, global macro is one of the hotter strategies. Everyone's looking at it. So they're getting more than 10 % of those meetings this year. Depending on how a particular strategy is performing in the market and where investor interest lies, you'll see that they're either punching above their weight or below their weight. To mention a few others, private credit, absolutely punching above its weight. People are really interested in private credit right now. The boom is still here. One surprise though, digital assets peaked in around spring of 22, has been in a nuclear winter pretty much since.

12:46But surprisingly, we have 40 firms here that are digital asset firms. And those firms are performing about at breakeven level. They're not punching above, but they're not punching below. Three months ago, if you had asked me, I would have said the digital asset firms are going to struggle. But I think the Bitcoin ETF getting approval by the SEC has been a really positive development. And I think investors are still curious in this asset class. In 22, it was punching way above its weight. Last year, not so much, but it's back to even, which I think is positive. When you look at the matching of meetings and the interest in meetings as the input, the output ultimately is dollars for the manager, a return on investment for a manager who's coming to spend money to come here and return on time for the allocators.

13:35How do you think about measuring outcomes for the attendees on both sides? This is something we're paying a lot of attention to in 24, and we're going to be running a few pilot experiments to better capture that data. The truth is this business is such a long sales cycle. You can come here and have 20 or 30 meetings. You may not get an allocation from any of those investors for years. If you're a really big, well-established manager, it's probably less than 12 months. If you're an emerging manager running 100 million, 200 million, it can easily be two or three years. What we are trying to do is to create mechanisms to incentivize the entire community to provide this data as it comes in.

14:18I can tell you anecdotally, the stories we hear coming out of Miami over the next six months after the event ends. It's generally XYZ fund raised$50 million. This fund raised$100 million. A few weeks ago, I heard a story from a really large fund of funds in the hedge fund space that told us they had allocated$500 million to managers they met here last year. So we've also run surveys and we know based on all of that information, billions of dollars are being transacted as a result of this event and the meetings that start here. And hopefully next year, we'll be able to talk about how we're capturing more of that data in a more systematic way.

15:01But because of that long tail, it is a challenge. How do you think about the future of this event over the next couple of years and where you want to take the business? A big change is coming in 2025. We have frankly outgrown the conference center in both of these hotels, and we've had a great experience with the Fountain Blue and the Eden Rock. They're both iconic hotels. Our clients absolutely love it here. They are really fun places to throw an event, but the conference centers are just at max capacity. So in 2025, we're moving the meeting during the day to the Miami Beach Convention Center, which is only a 10-minute drive south of here.

15:40And all of the nighttime activities will take place back here at the Fountain Blue and Eden Rock. But that daytime aspect of the event, when the meetings are happening will be dramatically simplified by putting it into a convention center that's a much simpler rectangle. We can create an address system. Someone suggested to me that we sell the naming rights to the alleyways. So I thought it was pretty funny, but that will enable us to both expand the event. But honestly, for me, the most important thing is reducing the complexity. If you're an allocator trying to get from one end of this complex to another, it's very complicated at times.

16:19So inside of a convention center, we can just simplify that and make it a better experience for everyone. People won't miss meetings, won't be late for meetings. So we're really excited about that move, but I don't want people to be confused. This is still absolutely the home base and all of the fun stuff, the parties, the dinners, all the things that give people an opportunity to get to know each other in a more relaxed way. None of that will change. How are you thinking about the iConnections business beyond just this big event in Florida? A big opportunity for us is if you think about what we do in this event, we are really good at bringing this community together, letting them find each other, discover each other and learn a little bit about each other in our tech platform and then ultimately schedule a meeting with each other.

17:03That same activity takes place for everyone at this event all year round, except they're just not doing it in one building and they're not doing all the meetings on the same day. most of the industry operates through what we call roadshows. A manager will visit a city and they'll book 10 or 20 meetings in that city over a course of maybe three days or four days. We are adding to the iConnections platform a roadshow module, which will enable all of that activity to happen outside of this event. So it'll have a calendar feature that you'll be able to sync with your calendar, and it will also calculate the travel time in between meetings so that when you make your calendar link available to an allocator, it will know, can I provide 10 o 'clock to an allocator who's uptown?

17:51If my 930 meeting is downtown, I probably can. So it'll make sure that it factors that in. And then behind that roadshow module will be a whole concierge team that will help our fund manager clients while they're actually on the roadshow, both setting it up, but also on the roadshow. Because when you're traveling around the city, especially like New York, anything can happen. So the best laid plan can go to waste. The roadshow concierge team will help you if anything goes off the rails during your roadshow. So you'll be able to text, call, whatever you need. We'll reschedule your meetings, adjust things.

18:28But having that extra layer of support ultimately helps our clients achieve what they're trying to achieve, which is simply to meet more potential investors, which are more customers for their business. There are a couple of trends you mentioned that you can see based on, say, down here, the volume of meetings in macro right now or digital assets coming on the rise. Then you also had this thought leadership day yesterday. I'm curious, from all of the data that you see, from all the activity of these allocators, from the things that are of interest to the thought leaders that come speak, what are some of the trends that you see playing out over the next year?

19:03So the thought leadership this year was absolutely our best ever. We had an incredible lineup of venture investors in particular, and I think venture is on the cusp of really breaking out. Venture has had one of the toughest times over the last year raising capital, and everyone has talked about it. There haven't been enough exits that LPs have benefited from so that the cash flows are there to fund those future commitments. I feel like a lot of what I heard this week from conversations with guys like Brad Gerstner and Bill Gurley and Gavin Baker, first of all, I think they believe this is one of the best times to be a venture investor because the portfolio companies have really become much more fit.

19:50Brad in particular talked about this yesterday. Portfolio companies are much stronger than they were a few years ago when valuations were at a peak. And I think as investors, hopefully we're starting to see the IPO markets open up a little bit here. We heard news this week that Reddit will be going public probably in the month of March. If the IPO market starts to open and the M &A market gets going, I think you're going to see a huge wave of interest in venture, and especially in those funds that I think were very smart and didn't go crazy when things were at a peak and are now taking advantage of what's probably one of the best venture markets of our lifetime.

20:30Well, Ron, I want to get past iConnections Global Alts, the business, to a little bit of Ron Biscardi, the person. What is your favorite hobby or activity outside of work and family? Probably why we have a video set up here is because I'm a total amateur videographer. My kids will tell you, I drive them all crazy on vacations because I'm generally filming everything. And I love going back and editing the videos and putting them to music and making them a little bit more fun than just watching start to finish the raw footage, which of course no one really does watch. I'm either working or editing video.

21:04What is one fact that most people don't know about you? It's probably that I think I could possibly get a job editing video. I know it's basically the same answer, but it is true. I'm very good at editing videos in Final Cut Pro, which like, no one knows how to use Final Cut Pro. But yes, I've got all this hardcore stuff on my computer that I'm using to do it. So only the people who've probably been tortured by my videos would know that fact. What's your biggest pet peeve? That's an easy one, Ted. My biggest pet peeve is people trying to crash our events without paying for our events. We want to get the whole industry together.

21:43And by the way, we know that there are emerging managers who don't have the budget to attend a high-end event like this. And we are creating paths where they can get in at a lower price point. But yes, the people who used to camp out in the lobby and the restaurants, trying to pull all the investors into those meetings, that absolutely drives me crazy. Which two people have had the biggest impact on your professional life? I say there's no question my parents. My mom was the entrepreneur of the family. My mom ran a little accounting business out of the house. I'm the oldest of five and raising five kids, sending them to private schools, colleges, it wasn't exactly easy.

22:24So my mom ran a business out of the house. So I got to watch her raise us while she was running a business and see that firsthand and what it was like. My dad is like the conscience of the family. My dad really ingrained in us to do the right thing when no one is looking. And that has always stuck with me. And I just think it serves you well in life. If you can live that, you will win to it in your life, in your personal life, and in your career. What's the best advice you've ever received? It's probably what I just said that my dad taught us. It really was do the right thing when no one is looking.

23:01All right, Ron, last one. What life lesson have you learned that you wish you knew a lot earlier in life? I would say for sure, just pay it forward. When I started in business, my first business I opened at 26. and it was hard to figure out so many different elements. Being an entrepreneur, people have no idea how hard it is. I have so much respect for small business owners in particular, it is so hard. There's no real book for this. You can go to business school, but until you're in it, you can't possibly be prepared for all the challenges you face. And what I've learned is helping people before you're asking for help is absolutely the best approach.

23:39There are many people at this event emerging managers in particular who I just comp because I like them, I believe in them, and I want to help see them succeed. And I know that will come back to me in spades over time. For sure, paying it forward, I would recommend every entrepreneur do that. And over the long term, there is no question, you will get back more than you gave. Ron, thanks for sharing the iConnections story and its continued growth. Awesome. Thanks, Ted. It was great to be with you. Thanks for listening to the show. To learn more, hop on our website at capitalallocators.com, where you can join our mailing list, access past shows, learn about our gatherings, and sign up for premium content, including podcast transcripts, my investment portfolio, and a lot more.

24:28Have a good one, and see you next time.

24:38Thank you.