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Backed with $8.6 million in seed funding, New York-based Pluto Financial Technologies has launched an AI-powered lending platform for private markets. The platform is designed to enable investors in illiquid private market assets to borrow against them, providing access to liquidity without the need to sell positions.
Pluto has received external backing for the seed funding from Motive Ventures, Portage, Apollo Global Management, Hamilton Lane, Tectonic Ventures and Broadhaven Ventures. Apollo and Hamilton Lane are also balance sheet partners for Pluto, providing the capital for approved loans.
“We‘re addressing a problem in that private markets are not very retail-friendly from the standpoint that you don’t invest, you commit. At any point in time, capital can be called, which creates anxiety for investors,” said Neel Ganu, CFA, CEO and co-founder of Pluto. “And from a liquidity standpoint, it’s locked up.”
Borrowing against investments is not a new concept, although it’s more prevalent for equities and fixed income positions. For private markets, the options are limited.
One example in the wealth management space is that in 2024, Goldman Sachs’ custodian rolled out a lending feature for some clients of RIAs on the platform, enabling eligible clients to borrow against some alternative investment positions in their portfolios. At launch, that was exclusively available to clients with assets held on the GSAS platform. Borrowing against private market positions is also something high-net-worth investors have been able to do on a bespoke basis with some wirehouses.
“There are solutions for ultra-high-net-worth investors with private banks and wirehouses that can structure loans and manually underwrite them,” Ganu said. “It’s interventional in the sense that they look for a lot of information about your life before making decisions. It can be quite an expensive and onerous process. We wanted to make that simple by creating a structure similar to margin lending for public securities, which is available at one click.”
What’s different about what Pluto is promising is wider access and an automated process, much as investors can do now via Schwab or Fidelity by borrowing against equity positions.
Pluto connects directly to portfolios so users can access credit in a single click. Pluto is calling its flagship product a Wealth Equity Line of Credit. Investors can borrow against holdings at “competitive rates, with no monthly interest payments and repayment from future fund distributions.”
Loans also provide an additional liquidity mechanism that could be preferable to trying to liquidate a position through a secondary sale, which typically involves taking a haircut relative to a position’s NAV as well as tax implications. Pluto’s loans are based on current NAVs and are not taxed.
Initially, Pluto is aligned with alts platforms Allocate and Moonfare as distribution partners (although the list of platforms could expand). Users of those platforms will now see loans as an option on their interfaces for selected assets. Once they click, they will be presented for lending amounts and terms. Loan sizes can range from 20% to 35% of NAV, with terms starting at SOFR plus 350 basis points with terms from one to five years.
For repayment, rather than paying the loans directly, the loans are paid off through distributions from the client’s remaining investment.
“As a leader in private markets, we’re focused on enabling better, more seamless, technology-enabled access for all investors,” Griff Norville, head of technology solutions at Hamilton Lane, said in a statement. “We are excited to be partnering with Pluto, whose modern, scalable platform unlocks liquidity where it’s traditionally been out of reach and empowers investors with speed, security and control.”
Aside from alts platforms, Pluto can work directly with advisory firms. Ganu said Pluto is working on several unannounced partnerships with wealth management firms.
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