Archer: Roadmap Validation and Alignment of Pricing to Value Delivered

Archer and LLR Partners had a long-standing relationship as neighbors in the Philadelphia community focused on financial technology. LLR has been investing in fintech for more than 20 years, developing deep expertise, particularly in asset and wealth management. Archer provides a comprehensive middle and back-office platform that helps investment managers improve operating efficiencies and meet the needs of institutional, private wealth and retail investors.

By 2020, Archer was a growing, scaled business that was well-positioned in a large and growing market supported by two key tailwinds: 1) asset managers were under pressure from fee compression to drive operational efficiencies; and 2) increased demand for investment products that are customizable at scale, such as separately managed accounts (“SMAs”).

Archer had established itself as one of the market leaders in Retail SMA, offering a modern technology platform, superior scalability, efficient implementation, and high-quality user experience. In the Institutional end market, we believed Archer’s platform was well positioned against larger, legacy competitors given its value proposition to asset managers who wanted a turnkey solution to manage their middle office.

LLR believed that Archer’s ability to serve both retail and institutional clients and allow asset managers to distribute increasingly customized products at scale created an attractive growth opportunity. We invested in Archer in May 2021 to help support the Company’s continued growth.

The LLR and Archer teams have been working collaboratively since then to help accelerate growth. Here are a few of the most impactful outcomes of those efforts to date.

Archer’s platform was built to streamline the launch and management of investment products while aiming to deliver the highest quality customer experience. Archer had developed a strong product offering and reputation in the market, and CEO Bryan Dori, with LLR as a partner, was looking for ways to continue to improve its product offering, expand its market opportunity and further validate Archer’s strategic roadmap.

LLR’s Value Creation Team ran a series of strategic planning workshops with Bryan and his management team to help prioritize key initiatives in line with their goals. The guided exercise helped ensure alignment across the management team, LLR and the Company’s Board, leading to a strategic roadmap to guide quarterly Board meetings to check in on progress.

The strategic planning exercise considered key questions such as:

1. Was the Archer team and infrastructure ready to scale and serve an increasingly complex customer base?
2. Was Archer’s pricing and go-to-market model optimized to accelerate revenue growth?
3. Where did Archer need to invest and/or refine operations to meet the needs of an increasingly complex client base?

One priority that emerged was the initiative to deliver 24-7 customer support. This type of support was a priority for Archer’s customer base but not yet in its offering. Following an evaluation that considered buying, building and outsourcing, Archer selected a third party known to LLR to provide round-the-clock support capabilities to the company and its customers.

Through due diligence and the strategic planning process, an opportunity was identified to reexamine whether Archer’s pricing model aligned to the Company’s position as a premium offering in the market. LLR’s Value Creation Team partnered with Archer to conduct an extensive study of the Company’s highly complex enterprise sale, understand the range of pricing models in the market, and identify opportunities for optimization.

The first step was choosing the right 3rd party partner to run the study and included the formal evaluation of three firms. LLR’s in-house product and pricing resources helped manage that process, enabling Archer to actively participate but limiting distraction from running the day-to-day business.

The study, ultimately completed by Pricing.io, combined in-depth customer interviews, external competitive data and a deep dive into Archer’s current contracts, pricing structure and differentiators. It revealed opportunities to revise certain fees and confirmed Archer’s understanding of customer preferences for per participant fees vs. AUM-based fees (and vice versa) depending on the type of investment manager and asset allocation strategy.

In the end, the conclusions of the study helped to better align pricing to the value provided to customers and reaffirmed alignment with client expectations. While pricing changes can take years to see the full effect, Archer has seen strong client acceptance from both existing and new clients.

Case studies presented herein do not reflect a complete list of LLR investments and are provided for informational purposes only. Certain statements about LLR made by portfolio company executives herein are intended to illustrate the work of LLR’s Value Creation Team with such portfolio companies. Such portfolio companies are controlled by investment vehicles managed by LLR. Portfolio company executives were not compensated in connection with their participation, although they generally receive compensation and investment opportunities in connection with their portfolio company roles, and in certain cases are also owners of portfolio company securities and/or investors in LLR-sponsored vehicles. Such compensation and investments subject participants to potential conflicts of interest in making the statements herein.