Over the past year, we’ve introduced features designed to make fund operations smoother and compliance workflows more efficient. These enhancements are already helping firms tackle their biggest challenges, freeing up time to focus on what really matters: building relationships and scaling their business.
Watch the full video below and read on for a summary recap.
Ben Doran
All right, let's get started. Well, thanks everyone for joining us today. This is our webinar. We're going to talk about what we did last year, kind of what we're building next year.
So here's the outline of the agenda. So we're going to cover just a little update on just discussion of just explanation of R& D team update on, just past the generally. Talk a little bit about how things get already. That's how we collect feedback. Talk a little bit about a quick update from last year.
And then we're going to get on to talking about kind of some of the major things we did in 2024 and 2025 at the end. We'll have time for folks to ask questions. All right. So just to start. So the R&D team, you've got myself, I'm Ben Duran. I am one of the Founders of Passthrough and I lead our product. And then Justis, my colleague is on as well.
Justis leads our KYC/AML product and I run our core product. Our core product is our subscription document product. So that's sub docs and then also our API. And as far as engineering resources, about 60 percent of our engineering resources are allocated to our core team, and about 40 percent are on our KYC/AML team.
So just to set the stage of kind of where we are now, Passthrough is almost five years old. Alex and I started back in March of 2020. We have over 600 customers now. Last year we did about 260 onboardings. Last year on average a little over 2000 investors per month were invited in the platform to fill out a subscription agreement.
And on the KYC side, we reviewed about 13,000 nodes, investor nodes with the investors is kind of a term of art that we created. It's basically, let's say that I'm investing through a trust. And so it's been around trust and the beneficiaries are. Beneficiaries are myself and my wife, say. Each one of those legal endings would be a node. So each one we have to collect legal documentation for review, the legal documentation and review any kind of sanctions, to give an investor rating.
Okay, so before I get into kind of our roadmap, I just want to talk quickly about how we get feedback at Passthrough. So what our process is for collecting feedback. The way I think about the job of the Product Managers, which Justis and I are, is to collect feedback and turn that feedback into a coherent plan of what we're gonna build. So there's a whole bunch of different kinds of information sources, and we kind of take all that and turn it into, okay, this is a plan of what we should build.
And then after that, we work with design and engineering on the actual implementation. So we collect feedback from a number of sources. One of the major ones I use is we have this internal database called go/product and anyone at Passthrough can submit product requests to go/product. In the history of Passthrough, there has been about 2000 requests. The requests aren't necessarily unique. So one of the things that I asked folks to do is, you know, you're getting a request from a client, even if we've asked, even if we have this on your product, please do it again because the frequency is helpful in understanding kind of how big of a need it is.
Every two weeks, I meet with the Operations team, I'll meet with the Partnerships team and the Sales team, and I'll go through all of the requests that came in during that period just to make sure I understand them and then categorize them so that they can be kind of useful in informing the roadmap.
Another way that we get feedback is we look at every time we win a deal or every time we lose a deal with sales and why we lost. And that can provide feedback for us. We do customer surveys. So on a quarterly basis we send out surveys to folks seeing how their experience of Passthrough has been every time a customer does their initial onboarding with Passthrough.
I send a survey myself just to see how it went, see if there's anything we can improve on. Investor reviews– so when an investor fills out a subscription agreement on Passthrough, what they'll do is at the very end, they have a little questionnaire, which is a smiley face and a frowny face.
About 15 percent of folks will click on either a smiley face or frowny face. Of the 15 percent that click on the smiley face and the frowny face, about 94 percent click on a smiley face. So they said their experience was good. Of the people that said their experience was bad, they can leave us feedback as to where we kind of missed the mark. And that's helpful feedback. Sometimes I'll reach out to folks directly, you know, and thank them for the feedback and it's helpful for us to on how to both improve the product and just, you know, make sure that things are going well for investors.
Customer conversations– so I talked to customers all the time and get feedback directly from them, especially if it's something that we're working on together where there's a feature that, um, that we're working directly to kind of build out for them. And then RFPs– so really large companies sometimes will ask us to participate in requests for proposals. They'll send over a spreadsheet with 100 plus different – Do you do this? Do you do this? Do you do this? So it's really helpful for us to get those because sometimes there are things that we haven't thought of that would be helpful, but they're on those requested proposals. So we kind of take all of this and then we kind of put together our roadmap and then work with engineering on getting things implemented.
Okay, so we're going to be kind of high-level in this conversation about the roadmap for 2024. It's really just kind of what are the themes that we're going to be working on, the main themes. So one thing I want to mention is if something that you're interested in is not on this presentation– last year, we released about 125 new features to the product, and about 30-50% of what engineers spend their time implementing is not on the roadmap at the beginning of the year. Thats, I think that's high for software companies. But it's a decision that we, that we intentionally make. The reason is, this is going to be kind of circular, but we want our customers to have a good experience with Passthrough. And we track referral rates and making sure that folks, that folks have a good experience. Part of that, I think, is being responsive to requests. So if something isn't working well that we release or if someone needs a new feature or “Hey, this is a great way to improve on something,” I don't want us to be “Hey, that's a great idea. But, our engineers are booked for the next 12 months. We'll see if we can get to it in 12 months.” I want to be really responsive to customer feedback in real time. And so, a lot of what we do is not on the annual roadmap. And we do it on a monthly cadence thinking about, okay, what are some of the things that are pressing that folks are asking for that we want to want to implement?
So, for example, the next month, we'll be releasing the ability to tag other admins for internal comments, which is something that a lot of our law firm partners have asked for where maybe a paralegal will review a subscription agreement. They may have a question for the associate. They can now just tag the associate, and the associate will get an email notifying them. “Hey, there's a question here for you to get to.” And there'll be, linked to that comment, something else that we’ll be releasing, which is another law firm request that will make it a lot easier to take the contacts that are in the subscription agreement and pull those into the distribution list for the closing email.
So two things that were not on a roadmap at the beginning of the year we started working on about a month ago, and we'll probably have them released early February. So that's just an example. And so we don't cover something that you're interested in. That doesn't mean we're not going to do it. So don't fear.
Okay, so now I want to talk a little bit about 2024 and kind of the core themes that we have been working on then, since last year. So there were two on the core products, so that's sub docs and APIs, two big themes. One was scaling the products, the scaling Passthrough, and the other was integrations.
For scaling, what we were looking to do is Passthrough, like I mentioned, is almost five years old. Around year three, we started to kind of run into some growing pains. It was really focused around– we had built a lot of functionality, but it was not kind of coherently put together. And so it became really hard for our customers and our CSMs to kind of configure Passthrough and to be able to do things in real time. So we had functionality that was kind of hidden behind engineering or hidden behind CSMs (Client Support Managers). So the idea was how can we make Passthrough more coherent and bring more functionality to the user so they're not needing to wait on customer success or engineering.
A couple of examples there: this is our closing settings. So there's a whole bunch of different settings that were associated with closings around what documents people should get, what the document should be called, and setting up a self-sign-up link. All of those were kind of hidden behind CSM. So we brought that out and made that more available.
Another one was bulk countersigning. In the original iteration of Passthrough, what we would do when we create a subscription agreement is we would set up the signer and the countersigner in one DocuSign envelope. And then, once it was ready for the GP to countersign, they would have, let’s say there's a hundred investors, a hundred different envelopes for them to sign. And it would take a while for them to go through and be able to send those. There's also, for putting in the accepted capital commitment dates, things like that to go on the GP acceptance page, that was done during the signature process. So, in practice, what happened was a lot of folks were like, "Hey, this doesn't work for us. Our GP isn't gonna sit there and fill this in and spend an hour signing all these."
So we had a bulk countersigning process where we would basically use engineering to get everything filled in and get the signature page set up. The challenge with it is, if you want to close at, let’s say, seven o'clock on a Friday, which is the number one time that people want to close their funds, if you didn't tell us about it, you were kind of out of luck because we have to coordinate engineering. It takes a while to do that.
So we built a workflow for bulk countersigning that just makes it so that you can do all of the bulk actions together. The GP just gets one DocuSign envelope. They just click sign for each page, which takes a minute to go under. It takes two minutes to get around investors really quickly. And then we put the documents back and make everything automatically ready to go. About 80 percent of our closings now use bulk countersigning.
And that allows us again to scale where we're bringing functionality to the end user so they can close whenever they want to, but also takes a lot of the coordination that we needed to do internally out of the picture.
Another example is the “all investments” page. A lot of times investors will, let’s say, sign a subscription agreement, and then let’s say I’m doing it and my wife, Maura, needs to sign. I say, "Great, here’s what’s next up. Maura's going to go, Maura's going to get an email. She's going to sign." And then it’s kind of a black box for investors. They don’t know, "Hey, has my wife signed yet? Has my husband signed yet?"
So the all investments page gives the status of where the sub doc is in the signature process. Another group that this is really useful for is RIAs. A lot of times, they’re filling it out, but their client is the one who needs to sign the subscription agreement. So now they can go and see, "Okay, this is what the status is."
Also, if folks, after signing an agreement, want to be able to download it, there's an email that we send out where they can do that, but now they can also do it in the application. They don’t need to ask support to resend the email or anything like that. The other thing you can do now is, let’s say I put in the wrong email address for Maura when I was setting up; instead of having to go to the GP and ask them to send this out back. They can pull it back, and should be able to revisit the entry.
So, all of those were kind of illustrative of what we're trying to do, which was take the functionality that we had but turn it into a more coherent workflow. So, end users can run the platform themselves and not kind of be beholden to Customer Success and Engineering. The other big investment we made was working on integrations. On the integration side, integrations take a while. So integrations take a while to kind of get going.
By the end of 2024, we had Salesforce in place, Snowflake, Intrelia, Dynamo, and Altvia. And then there's a lot of groups that we've been working with in 2024 that you're going to see in 2025, just because it takes a while to kind of get those integrations set up when you're working with other parties. But a lot of the work on the core team was on working with other groups to get our integration set up there.
So then the next thing I just want to talk about is 2025 and what we're planning to do in 2025. The theme of 2025 is “source of truth.” And the way we define a source of truth is a single authoritative data source, considered the official piece of information within an organization. So this is the place where you go, where this is the official place where we store our information.
We think we've fallen short of being a source of truth for two main reasons historically. The first one is on the data ingestion side. I think we probably have the best system in the world for extracting information from a sub doc if people fill out the sub doc on Passthrough. So you get your data structured, it's organized. You can have custom excels to kind of dice it up however you want. About 90 percent of people that are invited to use Passthrough do fill out their sub doc on Passthrough. But for the 10 percent who don't, we typically don't store any of the information that's in the sub doc. We just store their capital commitment and where they are in the process so that you can move them through and then just the file itself of the PDF.
If you think of Passthrough as a thing that will fill out sub docs and process sub docs, that's fine. Because you can think about, let's say that we reduce the time that it takes, everyone fills out a sub doc, and for it to be processed, let's reduce that by 70 percent. About 90 percent of people use it. So we've reduced the time it takes to do a fund closing by 63 percent, which is pretty good.
The challenge is if you want to be a source of truth, 90 percent is not good enough. A source of truth needs to be a place where you can go to get all of your information. So we need to do something about getting the 10 percent of people who don't fill out sub docs in Passthrough, getting their data into the system.
There are two paths that we're taking on that. One is on the data ingestion side. We ran a beta or maybe more like an alpha last year on us as a service, just filling out sub docs that came in offline. It takes about 30 to 45 minutes to fill out a sub doc and double-check it. If you just use our normal tools today, right now we're building a new tool that makes it really easy to go page by page, fill in all of the questions that are required. That should cut the amount of time it takes down to 15 minutes or less to just manually pull the information.
The next thing that we're working on is something we started playing around with last year and will be able to commercialize this year. That's extracting data directly from the sub doc. We can use OCR and LLMs to pull out the information from the sub doc already with our onboarding map where all the fields are, so we can pull the information directly into our format. Then when you use our ingestion tool, it makes it easy to review everything and finalize the information coming in. We'll take a process that takes about 30 to 45 minutes today and reduce it to just minutes once we get the data extraction.
So that's great. Now we've gotten all of the information from the fund closing. We've gotten the 10 percent of folks that don't use Passthrough, their information along with the other 90 percent.
The next part for being a source of truth is what we call the investor object. Today we think of ourselves as a transactional platform. If someone fills out a sub doc, that's a transaction. We just process these transactions. But let's say I'm Ben and I've been investing with you for a couple of years in four of your vehicles. If you want to send a wire to me and know, "Hey, where are Ben's wire instructions?" you'd need to find the most recent fund closing I participated in and then find the associated wire instructions in that subscription agreement.
The idea of the investor object is to aggregate all of the closings Ben participated in with you in one place. You'd be able to see, okay, Ben participated in these closings. Then we'd aggregate the information Ben provided. So, Ben said that his wire instructions were this the last time he filled out a sub doc. You could have that information for me as an investor, available as opposed to just the separate transactions I've made.
And there's a lot of kind of powerful things we can do with this. So one is, not only just kind of maintain the instructions, but let's say you need to send out distribution, you know, you can go out through Passthrough and reconfirm the wire instructions, and all of that will be audited.
You can see, like, okay, like, you know, we confirm the wire instructions. Then, you know, a week before this distribution, we're good to go. Also documents. So, every time someone fills out a sub doc on Passthrough, if it's, let's say it's their third time, they're filling out a sub doc for your fund, we still collected new W-9.
That's because using their profile, it's really easy that it just pre-populates. They just say, yeah, all of my information is the same and then sign it. But let's say you want to run a report and say, you know, do I need updated W-9? It's been three years. Anyone for anyone who's been, who hasn't given me a W-9 three years with the investor object, that'll be really easy to do because you'll have kind of.
Okay. These are all the documents that Ben's provided. These are all the W-9s. When was the last time, you know, when it was provided? So the investor object will allow us to be a source of truth that aggregates across our transactions. So folks can do a lot of kind of powerful reporting, make sure that we can keep investor information up to date.
So that's the core theme. That's the theme for core for next year. And then I'm going to pass this off to Justis and he can talk about what our themes are for KYC.
Justis Midura
Great. And Ben, just before I get started, Leo has a question about the definitive list of integrations specifically around fund admins.
Do you want to cover in the Q&A section or do you want to just answer now?
Ben Doran
The definitive list of integrations. Well, so with fund admins, it's typically some fund admins have their own software, but a lot of fund admins use third-party software. So happy to just follow up with an email. I can point you to where integrations live.
Justis Midura
Cool. All right. Let me go ahead and share my screen.
Okay. Ben, can you see my screen? Yes. Okay, cool. So, as Ben mentioned, I'll cover the KYC portion. I'm our Product Manager on our KYC team. What I want to do is set the stage for what KYC looked like heading into 2024. We launched our KYC product, our managed service, in 2023. At the time, it was really 1.5 people on the actual team running our managed service.
For those of you who don't know our managed service, we have software that goes out to your investors, whether you send it with a subscription document or you just need to collect KYC from them separately. Investors sort of self-structure their beneficial ownership information and then provide documentation and data that allows us to run screening and do reviews. At the time that we went live with that product, we were really just 1.5 people because we had one full-time KYC analyst and then my sort of flex time. By the end of 2023, we'd grown quickly to north of 100 customers.
Heading into 2024, we were dealing with a lot of the challenges that you would be when you go from 0 to 100 customers and need to maintain along the way, but also other things that happened as we became more and more entrenched. The theme for 2024 was really to improve the level of service that we could offer our customers.
We also knew heading into 2024 that FinCEN was considering formalizing requirements for private equity. Banks have always had to do requirements for KYC, and for the private equity companies that were doing KYC primarily, at least from our sort of customer research, they were doing it because banks that they wanted to bank with were putting those requirements on them to make sure they weren't letting in money launderers or people financing terrorism or that kind of thing.
Heading into 2024, we knew that FinCEN was considering formalizing those requirements for private equity firms to broaden the scope of places that money laundering could enter the system. We were expecting that if FinCEN did formalize those requirements, there would be an uptick in demand for our product. If we were dealing with service level issues at 100 customers, we wanted to make sure that we spent a lot of time on that so that should FinCEN release that rule, we could give customers a really good experience with KYC.
Also, as we became entrenched with those customers doing the managed service, we were starting to be perceived as someone who can provide advice on certain things related to KYC and AML. We learned really quickly what was working for eliciting good responses from investors for KYC versus what wasn't. In 2024, we set to address a lot of those things.
So what did we do? The first thing that we did, and this is not really product in the traditional sense of software-related, but we brought in an expert, Mark, as our Head of Financial Crime, who a lot of our customers have met. I'm sure there are people on this webinar who aren't current customers. Mark came with a couple of decades of experience working in private equity, real estate, and alternatives, doing BSA and AML work, drafting policies and procedures, and that kind of thing for compliance reasons. Mark was also an advisor prior to joining the team when we originally built the product. He's been with us since the inception of the KYC product at Passthrough.
We also grew the team. We hired more financial crimes compliance analysts. You should see Adrian, who's been with us for several years but transitioned into a Financial Crime Compliance role, Will, who came to us in early 2024, and Maddy, who recently joined the team. We're a team that's four strong, four and a half if you include some of my time. These changes alone have drastically improved our service level quality.
We also improved the product. As our customer base grew, we knew that we would need admin tools that make servicing LPs quicker. Some examples: not every LP wants to upload all of their information directly into the platform. We needed to build ways that allowed us to service those kinds of customers. We have now a queue of investors that goes across organizations. We needed tools that would help us prioritize KYC tasks across organizations to manage volume and risk.
One thing that's maybe not so sexy but was crucially important: if you think about a software product that's meant to collect KYC information and also just broadly Passthrough's core product for subscription documents, one of the best things you can do to speed up how quickly investors can get through the process and have the best closing experience possible is to reduce the ratio of investors that require you to go back to them to change their answer about something. With KYC, this is especially important because beneficial ownership structures are complicated, and the document requirements for each name in the structure vary.
We spent a lot of time looking at our U.S. requirements in particular and redrafting what we could ask for to elicit the most accurate response. We also worked on what language we could use to better guide investors. We saw major reductions in the ratio of investors that we'd have to go back to update their answers.
We also made an assumption when we went live with the KYC product originally that our customers would want to optimize for reducing the number of communications to investors at large. We thought it made sense for KYC comments or changes to be sent along with subscription document changes should the lawyer need to get the investor to change an answer on a sub doc and batch those together. That was maybe a good assumption at the time, but we learned quickly that because of the nature of KYC and how law firms like to work in subscription documents, we ended up blocking the law firms in certain cases when they would like to just log in and send off their changes immediately.
In 2024, we spent a considerable amount of time splitting out, in the backend, the admin side of Passthrough KYC from sub docs to give us the ability to do these processes fully in parallel while maintaining the look and feel of a single process from the perspective of the investor. Investors don't know that these things are actually split out. It looks like they happen in sequence, but in the backend, we have the flexibility to take KYC from start to finish without law firms finishing their sub doc review and vice versa.
Finally, with the growing investor base and scope for KYC comes added risk. We spent time on some case management tools to tighten risk. We have new ways of looking at alerts. We have ways of making it easy to track which investors were flagged for enhanced due diligence. Other ways of getting documents into the system came to us through means that aren't the ordinary course of action.
That was 2024. Here's one screenshot. I don't know if I can zoom in, so I apologies. This is a screenshot of our diligence hub. This is a tool that we built this year that coordinates our work across all of the organizations that are part of our managed service. If you sign up for our managed service, we have this tool that prioritizes your investors in their reviews. You can think of it as the most important ordering first being criticality. We put things that would actually pose a risk to one of our customers at the very top of the list. A sub-grouping there is chronological—when did this thing come in? Assuming there's no high-risk activity, investor reviews then would be the next category, and whoever submits first goes to the top.
FinCEN actually did in August release a final rule to bring into scope the ERAs and RIAs working in private equity into FinCEN's KYC and BSAML requirements. In the latter half of 2024, we worked a lot on a product and brought it to market that we call our AMLCO product. This is a level up from our managed service where we're not just contracted at the point in time that you're onboarding investors for a specific fund to do KYC reviews. With the AMLCO product (which stands for AML compliance officer), we act as your compliance officer at the organization level. We do all the things you would need to enforce within our software to meet the requirements FinCEN has put on you. So we think that there's a technology product in that alone and that nobody's really focused on it.
We want to take 2025 as the opportunity to build the best solution possible for making sure that you understand where your investors' wealth came from, that there's supporting documentation for that. And then, when you go to do a capital call, it's really easy to know that the money being used to fund that is coming from a place of clean money.
We also want to embed AML training into our platform. We want to make doing AML and training as easy as possible for our customers. That doesn't mean not doing live training, but it does mean that the product needs to provide the audit trail that your employee base has actually been trained in AML on an ongoing basis.
I mentioned the suspicious activity reporting piece. We're going to look to have a case management tool in the product for doing SAR filings and then, towards the latter half of 2025, looking to integrate that with FinCEN's website. They have an API, so we could conceivably make a push-button SAR filing flow. The last piece is building out reporting functionality and dashboards in the tool so that you can handle requests from either law enforcement or regulators.
The last piece of the AMLCO product is that your policies and procedures need to be independently audited. FinCEN says so. And as you can see, we're building all of these things to make that piece as easy and as painless as possible for you. Whereas if you had to go and stitch together all of those independent pieces, you probably wouldn't be ready in time for the go-live date of January 1, 2026.
The next theme is augmenting KYC with AI features. Ben touched on the investor object. He also touched on document extraction for sub docs. As I mentioned earlier, one of the things that is really good for us to optimize for when we think about improving the investor experience is reducing the number of change requests. One of the key ways that the Passthrough product for KYC innovated on the status quo of how KYC was done historically is that investors can self-structure their beneficial ownership information upfront as opposed to having to wait to communicate with somebody and check a checklist and then go back and forth via email.
What would be even easier than that is if an investor could just dump all of their documentation that they think is loosely related to their investing entity into a place, have that place build the beneficial ownership structure for them, and then tell them and walk them through what's missing. That's what we're looking to do.
If you think about Passthrough, I'd say we're roughly 10 percent institutional investors and 90 percent high-net-worth or retail investors. Among those 90 percent, most of them invest as either individuals, single-member LLCs, two-member LLCs, or trusts. This kind of flow is really good because retail investors, who most of them haven't done KYC before or have but aren't super familiar with it, can do it with a higher degree of success while knowing not so much about it. For institutional investors, they are totally used to doing KYC, but their structures tend to be more complicated. They always have—or typically have—a zip folder or some folder with a large amount of documentation in it.
The act of building out a big structure in a form can be somewhat tedious for them, so just being able to drop that folder into a place and have it build the structure for them adds huge value and is one of the few places where we can help institutional investors at the same time as helping retail investors. That's what we're looking to do.
The second one is looking at ways of highlighting screening results. As I mentioned, in our managed service, when we screen your investors and their beneficial owners, we have to check all of these various lists. We have a screening provider that we're integrated with, and sanctions lists are checked, international sanctions lists are checked, political exposure lists, fitness and probity (which is crime and law enforcement databases)—all of those things get checked. It'd be great if we had a way to prioritize among the hits in there. We're going to look at ways of doing that with AI.
Those are the themes for 2025 for KYC. I'm just gonna stop sharing. So I guess we're going to Q&A now, right, Ben?
Ben Doran
Yeah, that's right. I think we have one question. JT asked us, "Does the AMLCO product cover 100 percent of decisions/inputs that will be needed?" The answer to that is yes. We designed it for that. Now, what I should stipulate is the AMLCO product is available in the United States and covers Cayman as well through a partner. We don't offer this for funds that are domiciled in other jurisdictions like Luxembourg or Singapore, but if you're a fund that just works in the United States and the Cayman Islands, you're good to go if you sign up with us.
All right. I know we're a little over, but we're happy to stick around if other folks have questions. I think there's a questions button and a chat button, so I can monitor both. I'll just wait another minute for folks who want to write in any questions.
All right. Well, thanks, everyone. If anyone does have any questions or product suggestions, if you want to chat, feel free to reach out. My email is really easy: I'm just ben@passthrough.com. So feel free to shoot me an email. I'm happy to follow up on any of this. And Justis is justis@passthrough.com.
Justis Midura
Yeah. I just put those in the chat. Definitely feel free to send us an email.
All right. Thank you.
Ben Doran
Thanks, everybody.
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