iCapital diversifying beyond feeder fees
Managing Director at iCapital on the AML/KYC chokepoint in private markets
The key point is that iCapital still makes most of its money from being the operator and GP of feeder funds, but it is building toward a higher volume, lower touch software and data model. Feeder funds pay more because iCapital handles fund setup, KYC and AML, fee logic, reporting, tax documents, and investor servicing. The software and research layers matter strategically, but they are still smaller than the administrative fee base tied to conduit and feeder structures.
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On feeder funds, iCapital gets paid basis point style fees for running the vehicle, often roughly 15 to 25 bps, sometimes higher with added services. That is recurring, higher revenue work, but it also needs more operations staff, more exception handling, and more administrator coordination.
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On direct and registered products, the economics shift. Instead of earning mainly from fund management, iCapital is more often selling subscription workflows, reporting, and integrations under transaction based or enterprise contracts. That business is more scalable in software terms, but lower fee per dollar of assets.
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Research, diligence, and connectivity are important because they help RIAs and wirehouses approve products faster and keep data moving among wealth managers, admins, tax providers, and GPs. But multiple interviews say these software and data revenues are still not close to the feeder fund revenue base today.
The direction of travel is clear. As private wealth shifts toward registered and direct products that do not need feeders, iCapital's center of gravity moves from managing wrappers to owning the data pipe, the workflow, and the reporting layer across many more transactions. That makes the software side more important over time, even if the feeder fund book remains the economic anchor for now.