A startup called Pluto Financial Technologies Inc. said today it has raised $8.6 million and secured hundreds of millions of dollars in lending capacity to help investors in private equity unlock the value held in these illiquid assets.

The round was led by Motive Ventures and saw backing from Portage, Apollo Global Management, Hamilton Lane, Tectonic Ventures and Broadhaven Ventures.

Pluto has created an artificial intelligence-enabled lending platform for private market investors, and its goal is to unlock the liquidity held in their asset portfolios. Traditionally, this has always been very slow and expensive to do, because private equity refers to investments in private companies that are not traded publicly. Investors normally access these opportunities through investment funds created by private equity firms, which aim to acquire, manage and ultimately sell such companies for profit after improving their business operations.

Private equity markets are booming right now, and Pluto says the total assets under management of such funds is expected to grow by 1.5 times in the next five years. That’s all well and good, but it will mean greater friction for investors, because any capital they invest into private equity funds inevitably remains locked up for years, without any opportunities to make an easy exit.

Investors have no simple way to borrow against these assets, with existing options being slow and expensive, marked by their low loan-to-value ratios and expensive repayments. They’re also extremely restrictive and paperwork heavy, and the process of securing a loan can still take up to three months.

Pluto is hoping to change that with its AI-driven lending platform that’s able to transform once-illiquid private equity investments into free-flowing capital that can be leveraged in close to real time. With Pluto’s Wealth Equity Line of Credit, users can borrow directly against their private equity holdings in a single click, without having to sell their positions or wait months for intermediaries to provide the necessary funds.

Pluto co-founder and Chief Executive Neel Ganu said investors can take advantage of its competitive loan rates with no monthly interest payments to unlock liquidity without being forced to make a highly punitive early exit. He explained that the startup’s AI-enabled platform works by underwriting and scaling credit across the most complex private equity portfolios to make liquidity access as simple as the initial investment process. “Pluto is the bridge between alternative asset ownership and everyday financial freedom,” he said.

The capital made available to investors stems from institutional backers, with Pluto securing hundreds of millions in lending capacity. Through its distribution partners, Allocate Management Co. LLC and Moonfare GmbH, it intends to reach thousands of investors managing a combined $6 billion worth of alternative assets.

Allocate Chief Executive Samir Kaji said the ability to unlock liquidity will help to make private equity markets more attractive to investors. His company plans to integrate Pluto’s offering directly within its platform to make instant credit available to its entire investor client base.

“Liquidity constraints have limited wealth advisor participation,” he explained. “Our partnership with Pluto allows us to offer flexible liquidity solutions in real time.”

Image: Pluto Financial