As private markets grow more complex, the platforms supporting them must evolve. Prof. Cyril Demaria explains why scalability has become a strategic priority.
Private markets have expanded rapidly, but many of the systems and processes supporting them have evolved incrementally. What once worked for smaller investment firms is now being tested by new strategies, increasingly complex fund structures, tighter regulation, and rising investor expectations.
The challenge is no longer simply to keep operations running, but to build platforms capable of supporting the industry’s continued growth. For Prof. Cyril Demaria, Affiliate Professor at EDHEC Business School, scalability has become a defining challenge.
Drawing on more than 25 years of experience as an investor, researcher, and adviser, Demaria argues that building a stable platform is essential to serving investors and accommodating increasingly complex fund structures.
“Building a stable, professional, and scalable platform is a requirement to attract investors who are often themselves under pressure.”
– Professor Cyril Demaria, EDHEC Business School
Growth has outpaced the operating model
The rapid expansion of private markets has exposed a growing mismatch between the industry’s ambitions and the operating models supporting them. Many firms developed their processes gradually, responding to immediate business needs rather than designing for the scale and complexity they face today.
“The core challenge that fund managers and fund investors need to address is scalability,” Demaria says. “The industry started off with a multitude of boutiques that have grown fast, and processes were built as the structures grew. This approach can only go so far.”
As the sector became more regulated and the requests from fund investors increased, and as fund managers developed new strategies and grew their assets under management, this bespoke and pragmatic approach showed its limits. This became even clearer as new structures such as evergreen funds were launched. “Building a stable, professional, and scalable platform is a requirement to attract investors who are often themselves under pressure.”
The launch of an evergreen fund illustrates how an operational challenge can have wider implications for a firm’s ability to grow and serve investors. “The structure differs substantially from a typical closed-end fund in its operations, its method and frequency of reporting, and forces fund managers to rethink the way they operate. Part of the challenge is that the business is constantly evolving and innovating, which means that fund managers and investors have to deal with moving targets.”
For Demaria, this is why it is important to have a well-designed strategy and plan to design and scale a private markets platform.
About Designing and Scaling a Private Markets Platform
How can private markets firms build operating models that remain resilient as strategies, investor demands, and technology evolve?
In AIF’s three-day program Designing and Scaling a Private Markets Platform, Cyril Demaria, Jean-Louis Deshayes, and Björn Wunderlich bring together investment, technology, and implementation perspectives. Through cases, discussions, and workshops, participants explore operating model design, make-or-buy decisions, data governance, outsourcing, and automation.
Explore the program or contact AIF for personal advice: +31 20 246 7140 | info@aif.nl
Why the platform cannot be built in silos
A scalable platform needs to serve the investment strategy rather than become an end in itself. That requires investment expertise to be closely connected with the people responsible for technology, operations, and implementation.
Demaria approaches the challenge from the investment perspective. His co-faculty members on AIF’s new program Designing and Scaling a Private Markets Platform, Jean-Louis Deshayes and Björn Wunderlich, bring complementary expertise in building and running the platforms that support private markets activity.
He has worked with each of them in very different contexts and values the way their perspectives complement one another. “Besides the fact that they are passionate about their job, have a high energy level, and are great people, I appreciated how complementary our approaches were. This training program is quite unique because it is very difficult to find professionals who have in-depth expertise that they can communicate, on the one hand, but also connect to my typical business perspective, on the other.”
His distinction is straightforward: “I know private markets as an investing function. Jean-Louis and Björn know how to make it work, how to ‘build and fuel the engine’, and make things happen.”
Neither perspective is sufficient on its own. “Our knowledge is very complementary, because without the investing perspective, the engine would run for the sake of it. And investing without the engine means doing everything manually, an approach that is not sustainable and prone to errors.”
For Demaria, that combination is what matters: “The beauty of building a sound platform is when these different perspectives blend and work together.”
The first test is resilience, not technology
What should a firm ask before investing in another system or redesigning its platform? Demaria cautions against developing an appealing strategy on paper and only then attempting to translate it into day-to-day operations. Private markets require a different approach.
“The reality of the business is that each transaction is bespoke, that information is scarce, and that systems have to be flexible enough to handle a myriad of special cases and exceptions.”
That leads him to a more demanding starting question: “How resilient will the operations of our platform be as we add new and, by definition, unusual transactions and investment strategies, while satisfying ever-increasing regulatory requirements and investor demands?”
The implication is that readiness to scale cannot be measured simply by the number of technologies a firm has installed. It depends on whether its processes, controls, and systems can accommodate a changing business without creating a new set of manual workarounds.
“There was no standard C-level profile that could easily oversee every aspect of construction and development of the platform.”
The moment private markets stopped looking like a cottage industry
A conversation with the head of a large fund-of-funds management firm brought the industry’s transformation into sharper focus for Demaria. What began as a discussion about market trends, industry participants, and evolving fund terms soon turned to an unexpected subject: technology.
The executive described the difficulties of managing multiple software systems, each addressing a specific question, and how ultimately the business was facing a situation that large financial institutions such as banks were famously confronted with all the time.
“At that specific time, I realized that this was no longer a cottage industry but an actual asset class: its pain points were operational, technological, and typical of structures that experienced fast growth but could not structure themselves fast enough to fully manage this growth.”
The conversation also exposed a leadership challenge. “I also had the intuition that addressing these pain points was difficult because there was no standard C-level profile that could easily oversee every aspect of construction and development of the platform.”
That insight remained with him. After several years of development, it helped shape a program to support the professionals who want to tackle the challenge of building and scaling private markets platforms.
About Designing and Scaling a Private Markets Platform
How can private markets firms build operating models that remain resilient as strategies, investor demands, and technology evolve?
In AIF’s three-day program Designing and Scaling a Private Markets Platform, Cyril Demaria, Jean-Louis Deshayes, and Björn Wunderlich bring together investment, technology, and implementation perspectives. Through cases, discussions, and workshops, participants explore operating model design, make-or-buy decisions, data governance, outsourcing, and automation.
Explore the program or contact AIF for personal advice: +31 20 246 7140 | info@aif.nl
Read also: Redefining capital allocation: Prof. Cyril Demaria on mastering private markets
Meet the expert
Prof. Cyril Demaria is Head of Private Markets Strategy & Research at Bank Julius Baer and a private-markets expert advising on asset allocation, funds and direct deals. He began in 2000 investing in software and e-commerce with a VC fund, built a track record in direct investments, advised start-ups, and managed two late/growth-stage IT VC funds.
Previously, he was a partner at Wellershoff & Partners and, at UBS’s CIO office, led private-markets research (buy-side). Combining practice and academia, he is an Affiliate Professor at EDHEC Business School in Nice and has previously lectured at top academic institutions, including EADA Business School in Barcelona. He has authored best-selling books such as Introduction to Private Equity, Debt and Real Assets (3rd ed.), Private Equity Fund Investments, and Asset Allocation and Private Markets (2021). He holds a PhD from the University of St. Gallen and degrees from Paris V, Paris VIII, and HEC Paris.
Discover Cyril Demaria’s expertise and programs.