E128: iCapital CEO Lawrence Calcano on the New $145 Trillion Entering Private Markets

Jan 10, 2025

Lawrence Calcano, CEO of iCapital and former Goldman Sachs tech banker, reveals fascinating insights about alternative investments. He discusses the staggering $145 trillion held by retail investors, emphasizing their potential in private markets. Calcano highlights the challenges of democratizing access to these investments while leveraging technology to streamline operations. The conversation touches on high-net-worth trends shifting back to equities, the unique advantages of illiquidity in generating alpha, and the critical need for education among financial advisors.

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INSIGHT

Wealth Management's Untapped Potential

The wealth management market has an untapped potential of $145 trillion globally held by retail investors.
This rivals institutional markets and presents a huge opportunity for alternative investments.

INSIGHT

iCapital's Chicken-or-Egg Problem

iCapital faced the classic "chicken-or-egg" problem when starting.
Advisors wanted to know which managers were on the platform, and managers wanted to know how much money and which advisors were on it.

INSIGHT

Illiquidity and Investor Comfort

A key difference between high-net-worth and institutional investors is their comfort level with illiquidity.
Institutions are accustomed to illiquidity, but individuals find it less natural.

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In this episode of How I Invest, I sit down with Lawrence Calcano, Chairman and CEO of iCapital, to explore the transformative potential of alternative investments in the wealth management space. Lawrence shares his journey from Goldman Sachs to building iCapital, a platform managing over $200 billion in alternative assets. We dive deep into the challenges and opportunities in democratizing access to private markets, the role of technology in scaling the alternatives industry, and the growing appetite for private equity and credit among high-net-worth investors. If you're curious about the future of wealth management and the intersection of technology and alternatives, this episode is a must-listen.

Highlights: The Wealth Market's Untapped Potential: Retail investors collectively control $145 trillion globally, rivaling institutional markets.

Democratizing Alternatives: iCapital enables financial advisors to access institutional-quality alternative products and simplifies operational complexities with technology.

Trends in High-Net-Worth Investing: A shift back to equities in 2025 following a credit-dominated two years.

Illiquidity as a Feature, Not a Bug: How private markets generate alpha through active management during illiquidity periods.

Overcoming the Chicken-and-Egg Problem: Building trust with both advisors and general partners to grow the platform.

Technology as a Game Changer: AI, distributed ledgers, and automation reduce inefficiencies and errors in managing private fund investments.

Future of Alternatives: Allocations to alternatives are expected to grow significantly as education and access improve.

Key Lessons in Investing: Lawrence emphasizes the importance of understanding investments fully to navigate market dynamics effectively.

Building a Cohesive Culture: Insights on leadership, teamwork, and fostering a shared mission at iCapital.

Guest Bio: Lawrence Calcano is the Chairman and CEO of iCapital, a leading platform providing access to alternative investments for wealth advisors and their clients. With a background in tech investment banking at Goldman Sachs, Lawrence has been instrumental in modernizing how advisors and high-net-worth individuals access and manage private market investments.

Our podcast now receives more than 200,000 downloads a month. Are you interested in sponsoring an episode? Please email me at dweisburd@gmail.com.

We’d like to thank @ReedSmith for sponsoring this episode!

#VentureCapital #VC #Startups #OpenLP #AssetManagement

SPONSOR: Reed Smith is a dynamic international law firm dedicated to helping clients move their businesses forward. With an inclusive culture and innovative mindset, Reed Smith delivers smarter, more creative legal services that drive better outcomes for their clients. Their deep industry knowledge, long-standing relationships, and collaborative structure make them the go-to partner for complex disputes, transactions, and regulatory matters. Learn more at www.reedsmith.com.

Stay Connected: X / Twitter: David Weisburd: @dweisburd

LinkedIn: David Weisburd: https://www.linkedin.com/in/dweisburd/ Lawrence Calcano: https://www.linkedin.com/in/lawrence-calcano-5b8b9111/

Links: iCapital: https://icapitalnetwork.com/

Questions or topics you want us to discuss on How I Invest? Email us at dweisburd@gmail.com.

(0:00) Episode preview (1:14) I Capital's founding and evolution from Goldman Sachs (2:37) Private equity's wealth channel strategy and challenges (4:56) Comparing high net worth and institutional investors (7:31) Investor trends: From credit to equity interests (10:27) Projections for the future of the alternatives industry (14:45) Wealth channels' impact on adverse selection (15:23) Sponsor: Reed Smith (19:28) I Capital's aggregation service for General Partners (GPs) (20:32) The enduring nature of the wealth channel (22:16) The role of emerging managers in the wealth channel (26:00) Lawrence Calcano's investment philosophy and early lessons (27:40) The significance of investment comprehension (28:03) Fostering and maintaining iCapital's company culture (30:39) Scaling company values with organizational growth (32:31) iCapital's ambitious vision for 2030 (33:22) Addressing challenges in the alternatives sector (34:43) Leveraging technology to solve client problems (37:11) Implications of the accredited investor rule (38:46) Closing remarks