Private markets have grown faster than the fund accounting systems underneath them, and many firms have filled the gap with spreadsheets. LemonEdge, a fund accounting platform built for private markets, is betting that this is the moment those firms finally replace their core infrastructure.
The company closed a USD 21 million Series A in July, led by Blackstone Innovations Investments and joined by BNY, with participation from existing investor Sidekick Partners. It took total funding to more than USD 30 million. At the same time LemonEdge appointed David T. O’Malley, previously president of Numerated Growth Technology, which was sold to Moody’s Analytics, as chief executive officer and board chair.
O’Malley said the funding is aimed at breadth and depth rather than a change of direction. “The investment allows us to accelerate an already ambitious innovation roadmap,” he said. “In particular, we are expanding our ability to serve a breadth of asset classes, and investing more deeply in AI capabilities that solve practical problems for fund managers, administrators and finance teams. It will also help us scale delivery in the US and Europe.”
On the investors, he pointed to the pressure new fund structures, asset classes, investor expectations and reporting requirements are putting on older platforms. “Both Blackstone and BNY recognise the importance of having a trusted system of record where data is governed, auditable and accurate,” he said. “Their involvement brings much more than capital: they provide deep industry expertise and insight into the challenges facing some of the world’s most sophisticated private market firms.”
Workarounds that became the system
LemonEdge cites a forecast that global private market assets under management will reach USD 26.7 trillion by 2030. O’Malley’s explanation for why the technology has lagged is that it was built for a simpler market and then patched. “As the industry evolved, firms frequently responded by adding spreadsheets and manual processes around their core accounting platforms,” he said. “Those workarounds enabled them to keep moving, but they also created fragmented data, duplication and operational risk.”
Replacing the core is a decision firms put off for good reason, he acknowledged. “It sits at the centre of highly sensitive financial processes, so risk aversion is understandable. The result, however, is that modernisation efforts have often been deferred until the operational cost of standing still becomes greater than the perceived risk of modernisation.”
He was specific about what modernisation is not. “Modernisation is not simply moving an existing system into the cloud or applying a new interface to old architecture,” he said. “It means bringing processes that have historically sat in spreadsheets or other offline tools into one governed, real-time and auditable system. The platform needs to understand private-market accounting requirements, including complex ownership structures, allocations and reporting obligations.”
Connectivity is the other half. “A modern platform needs an open, API-based architecture so it can connect with the wider technology stack and allow data to flow between systems without manual intervention.”
Where AI fits in fund accounting
O’Malley puts data before AI. “In fund accounting, an answer that is quick but not accurate, governed or explainable has very limited value,” he said. “The real foundation is therefore a single system of record in which the underlying data is complete, auditable and reliable.”
He drew a line between the AI tools most common in private markets today, which help users answer questions, extract data from documents or build reports and dashboards, and what he sees as the larger opportunity. “These are useful capabilities, but they often still leave the user to complete the task themselves,” he said. “The bigger opportunity is for AI to work from the application model itself. It can see the objects, relationships, rules and context in each client’s environment, including custom configuration. The user describes the required outcome. The agent builds or runs the work in a controlled Canvas, where the result can be checked before anything reaches live.”
He added a caveat. “Given the complexity and responsibility involved in fund accounting, it must operate within a controlled, transparent and auditable framework, with professional judgement and appropriate controls remaining firmly in place.”
Lessons from Numerated
From his time at Numerated, O’Malley said the main lesson was that technology alone does not scale an enterprise fintech business. “Strong technology is essential, but it only creates lasting value when clients can implement it successfully, adopt it across their organisations and see measurable improvements in how they operate,” he said. The second was to stay close to the market, “understanding the problems beneath their immediate requests and translating those insights into a disciplined product and commercial strategy”.
Over the next year LemonEdge plans to focus its roadmap on AI, a wider set of asset classes and shorter client onboarding. “Education carries as much weight as the product,” O’Malley said. “LemonLab, our accreditation programme, certifies partners and clients across three levels, from operating the platform to building on it.”
The company is headquartered in New York and London and says it serves private equity firms, fund administrators and large family offices with more than USD 2.5 trillion in assets under client management.
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