One of the exciting things about the Exempt Market is that every week, month, and year, new participants come to market. Some of them are seasoned capital market veterans testing the waters of a world perceived to have lesser regulation, while others are entrepreneurs with the ‘next big thing’ in search of the capital to get it off the ground.
A commonality amongst all market participants is a desire to keep costs as low as possible. This of course benefits everyone, most importantly the end client. So EMDs, DRs, and Issuers alike all look for various ways to save money without compromising quality.
For those entrepreneurs that are new to the capital markets, one of the most obvious “low hanging fruits” to cut costs is to handle their certificate paperwork and client registries themselves. How hard could it be to print off some certificates, calculate interest payments, and track an excel spreadsheet, right?
Truth be told, investor database management and certificates can be handled in house just fine…until they can’t. Every single issuer in the modern day exempt market started small, but many now grow into funds with hundreds of millions of dollars and thousands of investors. Is handling all of that data management in house really economically efficient anymore? Issuers quickly find themselves taking more time to manage client data than to bring the ‘next big thing’ to fruition. Where recordkeeping may have initially been a small task for an employee of the firm, it eventually can become a full time job. Factoring in salary, benefits and other overhead, having this done in house often becomes uneconomical.
There of course have been transfer agent solutions available to the exempt market for years, but these organizations typically deal with multi-billion dollar public companies so getting their attention as a small dynamic issuer is often challenging.
This has left a void needing to be filled by a company that understands exempt market securities and the needs of smaller issuers.
Enter George Asprey and Mike Kalic. Enter Prometa Fund Services.
It seems like yesterday that George Asprey and Mike Kalic were contemplating their next move in their careers. They had worked together for a number of years as software developers in a mid-sized Canadian mutual fund. In 2005, their employer had suddenly been faced with the reality that it would be winding down, eliminating any future at the company. It was difficult to process the sudden reality that they would both be out of work. They both had families, and were primarily concerned about immediate employment.
The first reaction, as with most, was to dust off the resumes and begin the search for a new career. For both, finding the right fit was not easy. They interviewed with prospective employers, and in the end, nothing seemed to spark either of them to accept an offer. George and Mike both found temporary employment working together as independent contractors, again in the Mutual Fund industry. They found that their skill sets complemented each other quite well, and there was a desire to find something that they could build together. They realized that there was potential sitting right in front of them. Could they possibly start a back office for fund companies, and build it from the ground up? They decided to give it a shot.
George and Mike decided they could develop a business model that could be cost-effective right from the get go. It is much more difficult to convert data in that had been maintained by a fund manager, especially over a lengthy period of time.
The first thing to get in order was the business model and a plan to map out the system. Time was an important piece in this puzzle. Transfer agency systems are not primarily built from scratch for those entering the market. There are a handful of systems that are leased from larger software vendors, but that option was something that George and Mike were not interested in. They wanted full control of the software, and they wanted something unique, that would separate themselves from their competitors. They knew that it would be a difficult task to get a system up and running within their target time frame of eighteen months, but they were strongly motivated. Putting in ten to fourteen hour days was not uncommon. During the build, they happened to also secure a client that they had previously done some business with, which allowed them to hit the ground running once everything was completed for a live launch.
They came up with the name Prometa Fund Services Inc. (‘Pro’ coming from the word Professional, and ‘Meta’ taken from the word Meta-data, or data that describes other data). Prometa launched on the FundSERV network in November of 2007, with one client and 3 employees, including Mike and George. Prometa is located in Winnipeg, which is not a normal location for a back office service provider, as most of their competitors were out east. George and Mike both felt that the Winnipeg location could have just as many pluses, as being located in the centre of the country allowed them to be just as close to potential Western Canadian customers, as well as those from the East. A lower cost of operating the company would mean they could provide a higher level of customer service, in addition to offering more competitive fees.
Prometa had many early doubters. Potential new customers had never heard of them, and thus convincing those fund managers to take a risk on a new player in the industry was difficult at times. The best fit early on was to take on start-ups. Many competitors were not willing to take on new business if it did not mean getting higher instant returns. Prometa’s management team’s thought process was to not worry about how much in revenue the new clients could bring in, but rather to try and build good relationships and build a system around what the clients need to make their fund a success. You can say Prometa’s system has become the number one selling point based on this model. Our team of developers can customize Prometa’s transfer agency system to fit the fund, not the other way around.
Fast forward to 2015 and things really started progressing. Prometa has moved into new office space in downtown Winnipeg in September, and is growing at a remarkable rate. The company now has twelve employees. With three billion dollars of assets under administration, Prometa’s competitors, and more importantly potential new clients, are taking notice.