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Pactio secures $14M investment to bring order to private equity investment

The Pactio team
Image credit: Pactio

Pactio, who provides the digital infrastructure to support private equity markets across the complete investment lifecycle, have announced $14 million in Series A funding. Led by EQT Ventures, and joined by Angel investors like former Stripe Europe CEO Matt Henderson and Volt founder Tom Greenwood, the round will support Pactio as they expand in a market that’s projected to be worth $29 trillion by 2040.

Founded by Eric Heimark and Lorenzo Foglianti, who are now CEO and CTO respectively, their platform has already met with success with their first clients. TFN asked Heimark, along with Tom Mendoza, Partner at EQTV, about Pactio, the problems they are solving.

Solving the problems they had encountered

Heimark and Foglianti met in 2021 at Entrepreneur First, and quickly bonded over their passion and views of tech and finance. Heimark had previously been a private equity investor, most notably as an Executive Director in Goldman Sachs’ private equity arm, and knew first-hand what the industry lacked. Foglianti had expertise and experience in tech and AI, both as a researcher at Cambridge and later from positions at AI startup PaperCup and then at Nomura. Combined, they believed that they could create the solution, and Pactio was the result.

Pactio aims to build the missing infrastructure for private markets, replacing a myriad of improvised solutions to create a single platform that works from deal creation all the way to exit. Over the past 12 months, Pactio has already supported $10.7 billion worth of transactions.

“In my years as a professional investor, I’ve seen first-hand how private markets struggle with outdated, manual processes,” Heimark told us. “This is especially true when closing deals, as legacy tools and e-mails are error-prone and vulnerable to cyberattacks.”

The problems are often baked in at the very beginning of the process, making management and co-ordination difficult and resulting in chaotic transaction closings. The problems may be familiar to anyone, with software being used for purposes for which it was not designed, such as structure charts in PowerPoint, backed up by unconnected emails and Word documents.

Because of the sheer number and complexity of deals, with no central tech system, there is a high risk of error. In addition, because the data is frequently unencrypted, it can become a major security risk. And the problems can even continue after closing, since the documentary foundations are so shaky.

“You’re left juggling between disjointed spreadsheets and other files, with teams manually duplicating inaccurate outputs into systems of record and reporting,” says Heimark. “This problem follows the investment throughout its life, all the way up to exit, so the potential downside risk is huge.”

Pactio addresses this with a centralised system that co-ordinates and encrypts everything, replacing an almost completely manual process with an integrated system that creates a reliable single source of truth.

An adaptable, AI-powered platform

The range of private equity activities has grown enormously, but has also expanding to promote greater co-investment and retail access. Pactio has been built with this in mind, allowing for future development.

“We maintain a deep understanding of deal nuances and how professionals are used to working,” Heimark said. They already have partnerships with private equity firms like Alvarez & Marsal and tax advisory firms like PWC UK. But they are finding that many firms quickly find the benefits of Pactio. “We’re finding that firms quickly see Pactio as the gold standard for data integrity, even in the most complex deals for megacap funds,” Heimark told us. “Our software was even used to catch errors in earlier proof of concept transactions, which were run side-by-side with the traditional process.”

Rather than using AI with external LLMs, Pactio’s AI implementation identifies the connections between the structured information stored in Pactio maintains. This avoids hallucinations, while enabling Pactio to provide a system that maintains the integrity of the data throughout the deal lifecycle.

Tom Mendoza, Partner at EQTV, echoed Heimark’s points. “The private capital sector is growing rapidly but the tech to support it remains stuck in the past – it’s one of the last frontiers when it comes to disrupting finance, so the market opportunity for Pactio is vast.” Highlighting Pactio’s ability to address this, he continued, “years of investing in fintech have shown us that the most successful founders are those who were former end-users themselves. Eric’s experience in executing PE deals means he has an unrivalled understanding of the inefficiencies plaguing dealmakers and the solution needed to fix them.”

Pactio plans to use the Series A round to extend the reach of their digital infrastructure and expand their team, combining both private equity professionals and machine learning and fintech experts. They want to build on their success so far, turning Pactio into the leading platform for private equity deal management, says Heimark, “we knew a platform that unified deal data and workflows would be a game-changer, giving investors a source of truth they can rely on for accurate, secure data from start to finish.”

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