StepStone Group Inc. (STEP): Business Model Canvas [11-2024 Updated]
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StepStone Group Inc. (STEP) Bundle
Understanding the business model of StepStone Group Inc. (STEP) reveals how this leading private markets investment firm effectively navigates the complex landscape of asset management. With a focus on customized investment solutions and robust partnerships, StepStone leverages its experienced team and proprietary technology to deliver exceptional value to a diverse clientele. Dive deeper to explore the key components of their business model canvas, from revenue streams to customer segments, and discover what sets StepStone apart in the competitive financial sector.
StepStone Group Inc. (STEP) - Business Model: Key Partnerships
Collaborations with third-party fund managers
StepStone Group Inc. collaborates with various third-party fund managers to enhance its investment offerings. As of September 30, 2024, the company has managed approximately $79.9 billion in assets across various investment strategies, including private equity, real estate, and infrastructure.
Relationships with institutional investors like pension funds
StepStone has established significant partnerships with institutional investors, including pension funds. As of the same date, the company reported having $29.7 billion in undeployed fee-earning capital, which is expected to generate management fee revenue once invested. The majority of StepStone's revenues are derived from management and advisory fees, which increased by 30% to $184.8 million for the three months ended September 30, 2024, compared to $142.1 million for the same period in 2023.
Partnerships with financial institutions for distribution services
StepStone maintains partnerships with financial institutions to enhance its distribution capabilities. The company earned net management and advisory fees of $124.8 million for the three months ended September 30, 2024, up from $96.3 million for the same period in 2023. This growth reflects increased client activity and the effectiveness of its distribution partnerships.
| Partnership Type | Key Metrics | Financial Impact |
|---|---|---|
| Third-party Fund Managers | $79.9 billion in managed assets | Supports diverse investment strategies |
| Institutional Investors | $29.7 billion in undeployed fee-earning capital | Generated $184.8 million in management fees (30% increase) |
| Financial Institutions | Net management and advisory fees of $124.8 million | Reflects 30% growth year-over-year |
These partnerships are critical for StepStone's growth strategy, enabling the firm to leverage external expertise and broaden its market reach. The collaboration with third-party managers allows StepStone to offer a wider range of investment products, while relationships with institutional investors provide a steady influx of capital for its various funds. Additionally, partnerships with financial institutions enhance distribution channels, facilitating access to a broader client base.
StepStone Group Inc. (STEP) - Business Model: Key Activities
Managing private market investments
As of September 30, 2024, StepStone Group Inc. manages a total of $104.4 billion in fee-earning assets under management (FEAUM) across various asset classes:
| Asset Class | FEAUM (in millions) |
|---|---|
| Private Equity | $57,136 |
| Infrastructure | $20,986 |
| Private Debt | $16,975 |
| Real Estate | $9,318 |
| Total | $104,415 |
The weighted-average fee rates for these asset classes as of September 30, 2024, were:
| Asset Class | Weighted-Average Fee Rate |
|---|---|
| Private Equity | 0.80% |
| Real Estate, Infrastructure, and Private Debt | 0.44% |
| Total | 0.63% |
Providing advisory and data services
StepStone Group generates significant revenue from management and advisory fees, which increased to $362.8 million for the six months ended September 30, 2024, a 29% increase from the previous year. This growth was primarily driven by new client activity and a 13% growth in average FEAUM across the platform. The breakdown of revenues attributed to management and advisory fees is as follows:
| Revenue Type | Revenue (in millions) |
|---|---|
| Management and Advisory Fees | $362.8 |
| Incentive Fees | $4.0 |
| Carried Interest Allocation Revenues | $86.5 |
| Total Revenues | $453.3 |
As of September 30, 2024, StepStone had $29.7 billion of undeployed fee-earning capital, poised to generate management fee revenue once invested or activated.
Sourcing and executing investment opportunities
StepStone focuses on sourcing and executing investment opportunities across various private market sectors. For the three months ended September 30, 2024, the total revenues rose by $80.3 million, or 42%, to $271.7 million compared to the same period in 2023. This increase resulted from higher management and advisory fees, net, and higher carried interest allocations:
| Revenue Source | Q3 2024 (in millions) | Q3 2023 (in millions) |
|---|---|---|
| Management and Advisory Fees | $184.8 | $142.2 |
| Incentive Fees | $3.2 | $5.0 |
| Realized Carried Interest | $17.6 | $1.6 |
| Unrealized Carried Interest | $69.8 | $56.9 |
| Total Revenues | $271.7 | $191.4 |
Investment performance metrics as of June 30, 2024, reflect that StepStone's investments across various strategies have shown resilience, with the internal rate of return (IRR) and net asset value (NAV) demonstrating solid performance metrics that are critical for sourcing and executing new opportunities. The company maintains a rigorous investment evaluation process that feeds into their advisory services.
StepStone Group Inc. (STEP) - Business Model: Key Resources
Experienced investment professionals
StepStone Group Inc. employs over 360 staff, which includes experienced investment professionals across various investment strategies. This diverse team enhances the company's capability to deliver value to its clients through informed decision-making and strategic management.
Proprietary data and technology platforms
StepStone utilizes proprietary data and technology platforms to support its investment decision-making processes. These platforms enable the firm to analyze market trends, assess investment opportunities, and optimize portfolio performance based on real-time data analytics.
Global presence with offices in 26 cities across 16 countries
As of 2024, StepStone has established a global presence with offices located in 26 cities across 16 countries. This international footprint allows StepStone to access a wide range of investment opportunities and serve a diverse client base effectively.
| Key Resource | Details |
|---|---|
| Number of Staff | 360+ |
| Global Offices | 26 cities in 16 countries |
| Assets Under Advisement | $506 billion (as of September 30, 2024) |
| Fee-Earning AUM | $104.4 billion (as of September 30, 2024) |
| Cash and Cash Equivalents | $179.8 million (as of September 30, 2024) |
| Investments in StepStone Funds | $1.537 billion (as of September 30, 2024) |
| Accrued Carried Interest Allocations | $1.381 billion (as of September 30, 2024) |
| Debt Obligations | $172.3 million (as of September 30, 2024) |
StepStone Group Inc. (STEP) - Business Model: Value Propositions
Customized investment solutions across multiple asset classes
StepStone Group Inc. offers tailored investment solutions across various asset classes, including private equity, infrastructure, private debt, and real estate. As of September 30, 2024, the firm is responsible for approximately $682 billion of total capital, which includes $176 billion of assets under management (AUM) and $506 billion of assets under advisement (AUA).
Access to proprietary market intelligence
StepStone provides clients with licensed access to proprietary data and technology platforms, such as StepStone Private Markets Intelligence (SPI) Research. These tools enable clients to gain insights into market conditions and investment opportunities, enhancing their decision-making processes. As of September 30, 2024, SPI Reporting tracked detailed information on over $730 billion of client commitments.
Alignment of interests through co-investment in managed funds
StepStone demonstrates alignment of interests with clients by investing its own capital into the StepStone Funds it manages. As of September 30, 2024, the firm had $1,537.0 million in investments in StepStone Funds, including $1,381.1 million of accrued carried interest allocations. This co-investment strategy ensures that the firm shares in the performance of the funds, reinforcing its commitment to delivering value to clients.
| Value Proposition | Details |
|---|---|
| Customized Investment Solutions | $682 billion total capital responsibility; $176 billion AUM; $506 billion AUA |
| Proprietary Market Intelligence | Access to SPI Research; $730 billion tracked in SPI Reporting |
| Co-investment Alignment | $1,537.0 million in StepStone Funds; $1,381.1 million in accrued carried interest |
StepStone Group Inc. (STEP) - Business Model: Customer Relationships
Long-term partnerships with institutional clients
StepStone Group Inc. focuses on establishing long-term partnerships with institutional clients, which include pension funds, insurance companies, and endowments. As of September 30, 2024, the company reported total revenues of $271.7 million for the quarter, reflecting a 42% increase compared to the same quarter in 2023. This growth is largely attributed to new client activities and a 17% growth in average funds under advisory management (FEAUM) across the platform.
Tailored advisory services for portfolio construction
StepStone provides tailored advisory services to its clients for portfolio construction, helping them navigate complex investment landscapes. The management and advisory fees have seen significant growth, with fees increasing by $42.6 million, or 30%, to $184.8 million for the three months ended September 30, 2024. This increase was driven by the introduction of new funds, including the Secondary Opportunities V and infrastructure co-investment funds, which contributed $14.9 million in retroactive fees during the quarter.
| Type of Fee | Q3 2024 Revenue ($ Million) | Q3 2023 Revenue ($ Million) | Change (%) |
|---|---|---|---|
| Management and Advisory Fees | 184.8 | 142.1 | 30% |
| Incentive Fees | 3.2 | 5.0 | -36% |
| Realized Carried Interest Allocations | 17.6 | 1.6 | 1,000% |
| Unrealized Carried Interest Allocations | 52.2 | 55.4 | -4% |
Regular performance reporting and analytics
StepStone emphasizes regular performance reporting and analytics to maintain transparency and trust with its clients. The company reported a net income of $53.1 million for the three months ended September 30, 2024, compared to $59.3 million in the same period in 2023. The performance of funds is closely monitored, with total carried interest allocation revenues increasing to $69.8 million in Q3 2024 from $57.0 million in Q3 2023.
| Performance Metric | Q3 2024 ($ Million) | Q3 2023 ($ Million) |
|---|---|---|
| Net Income | 53.1 | 59.3 |
| Total Carried Interest Allocation Revenues | 69.8 | 57.0 |
| Deferred Revenues | 33.3 | 31.0 |
StepStone Group Inc. (STEP) - Business Model: Channels
Direct engagement with clients through dedicated teams
StepStone Group Inc. utilizes dedicated client engagement teams to foster relationships and deliver tailored investment solutions. As of September 30, 2024, the company reported total revenues of $271.7 million for the third quarter of 2024, demonstrating a 42% increase compared to the same period in 2023. This growth is attributed in part to enhanced client interactions and the onboarding of new clients.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenues | $271.7 million | $191.4 million | 42% |
| Management and Advisory Fees, Net | $184.8 million | $142.1 million | 30% |
| Net Income Attributable to StepStone Group Inc. | $17.6 million | $26.2 million | -32% |
Online platforms for data and reporting services
StepStone leverages online platforms to provide clients with comprehensive data and reporting services, enhancing transparency and accessibility. The company reported that as of September 30, 2024, it had $29.7 billion in undeployed fee-earning capital, which can generate management fee revenue once activated, indicating robust future revenue potential from its digital offerings.
| Metric | Amount |
|---|---|
| Undeployed Fee-Earning Capital | $29.7 billion |
| Cash and Cash Equivalents | $179.1 million |
| Restricted Cash | $763,000 |
Financial advisors and consultants for broader reach
In addition to direct client engagement and online platforms, StepStone collaborates with financial advisors and consultants to expand its market reach. The firm’s management and advisory fees, net, increased by $82.5 million, or 29%, to $362.8 million for the six months ended September 30, 2024, compared to $280.2 million in the same period of 2023.
| Metric | 6 Months Ended September 30, 2024 | 6 Months Ended September 30, 2023 | Change (%) |
|---|---|---|---|
| Management and Advisory Fees, Net | $362.8 million | $280.2 million | 29% |
| Performance Fees | $95.3 million | $89.2 million | 7% |
| Total Revenues | $458.1 million | $369.4 million | 24% |
StepStone Group Inc. (STEP) - Business Model: Customer Segments
Large public and private pension funds
StepStone Group Inc. serves a diverse array of large public and private pension funds, which are critical to its business model. As of September 30, 2024, StepStone reported total management and advisory fees of $362.8 million for the six months ended September 30, 2024, a 29% increase from the same period the previous year.
These pension funds contribute significantly to StepStone's assets under management (AUM), which includes a reported $29.7 billion of undeployed fee-earning capital as of the same date. The average fee rate for private equity was 0.80%, while infrastructure and private debt asset classes averaged 0.44%.
Sovereign wealth funds and insurance companies
StepStone also caters to sovereign wealth funds and insurance companies, providing tailored investment strategies that address their unique risk-return profiles. The firm has seen growth in its client base from these segments, with revenues derived from non-U.S. countries reaching $288.3 million for the six months ended September 30, 2024, compared to $277.3 million for the same period in 2023.
In addition, the company's carried interest allocation revenues from these clients totaled $86.5 million for the six months ended September 30, 2024, albeit a decrease from $120.8 million in the prior year. This highlights the volatility in performance fees and the need for StepStone to continuously adapt its strategies to meet the expectations of these institutional investors.
High-net-worth individuals and family offices
High-net-worth individuals and family offices represent another key customer segment for StepStone. The firm has established a reputation for managing investments for wealthy clients who seek diversification through private market opportunities. As of September 30, 2024, StepStone's total revenues increased to $458.1 million for the six months ended September 30, 2024, a rise of 24% year-over-year, indicating strong demand across all client segments, including high-net-worth individuals.
These clients benefit from personalized advisory services, which include access to StepStone's extensive network of private equity and real estate funds. The firm reported that management and advisory fees from high-net-worth clients contributed significantly to the overall revenue growth, driven by new client activity.
| Customer Segment | Total Revenue (6 Months Ended Sept 30, 2024) | Growth Rate YoY | Average Fee Rate | AUM |
|---|---|---|---|---|
| Large Public and Private Pension Funds | $362.8 million | 29% | 0.80% | $29.7 billion (undeployed fee-earning capital) |
| Sovereign Wealth Funds and Insurance Companies | $288.3 million | 4% | 0.44% | N/A |
| High-Net-Worth Individuals and Family Offices | $458.1 million | 24% | N/A | N/A |
StepStone Group Inc. (STEP) - Business Model: Cost Structure
Employee compensation and benefits
The total compensation and benefits for StepStone Group Inc. amounted to $268.9 million for the six months ended September 30, 2024. This includes:
- Cash-based compensation: $161.1 million
- Equity-based compensation: $56.5 million
- Performance fee-related compensation (realized): $29.6 million
- Performance fee-related compensation (unrealized): $16.8 million
- Legacy Greenspring performance fee-related compensation: $4.8 million
| Type of Compensation | Amount (in millions) |
|---|---|
| Cash-based compensation | $161.1 |
| Equity-based compensation | $56.5 |
| Performance fee-related compensation (realized) | $29.6 |
| Performance fee-related compensation (unrealized) | $16.8 |
| Legacy Greenspring performance fee-related compensation | $4.8 |
Technology and data acquisition costs
While specific figures for technology and data acquisition costs are not disclosed, these expenses typically encompass software subscriptions, data licenses, and IT infrastructure. The overall increase in general administrative expenses, which increased by $26.1 million to $91.1 million for the six months ended September 30, 2024, suggests a significant allocation towards technology and data acquisition as part of their operational strategy. This increase includes:
- $18.0 million due to loss on change in fair value for contingent consideration obligation
- $3.0 million in travel and associated costs for investment evaluation and client service
- $2.2 million in professional fees
- $1.5 million in marketing expenses
- $1.0 million in human resources and recruiting expenses
General administrative expenses
General and administrative expenses for StepStone Group Inc. increased significantly, totaling $91.1 million for the six months ended September 30, 2024. This reflects a 40% year-over-year increase primarily driven by various factors:
- Loss on change in fair value for contingent consideration obligation: $18.0 million
- Travel and associated costs: $3.0 million
- Professional fees: $2.2 million
- Marketing expenses: $1.5 million
- Human resources and recruiting expenses: $1.0 million
| Expense Type | Amount (in millions) |
|---|---|
| General and Administrative Expenses | $91.1 |
| Loss on contingent consideration | $18.0 |
| Travel costs | $3.0 |
| Professional fees | $2.2 |
| Marketing expenses | $1.5 |
| HR and recruiting expenses | $1.0 |
StepStone Group Inc. (STEP) - Business Model: Revenue Streams
Management and advisory fees from clients
For the six months ended September 30, 2024, StepStone Group Inc. reported management and advisory fees of $362.8 million, which represents an increase of 29% compared to $280.2 million for the same period in 2023. This increase was primarily driven by new client activity and a 13% growth in average Fee-Earning Assets Under Management (FEAUM) across the platform.
Specifically, for the three months ended September 30, 2024, management and advisory fees were $184.8 million, up from $142.1 million in 2023, reflecting a 30% increase. The fees included retroactive fees of $14.9 million from various fund closings.
| Period | Management and Advisory Fees | Change (%) |
|---|---|---|
| Six Months Ended September 30, 2024 | $362.8 million | +29% |
| Six Months Ended September 30, 2023 | $280.2 million | - |
| Three Months Ended September 30, 2024 | $184.8 million | +30% |
| Three Months Ended September 30, 2023 | $142.1 million | - |
Performance fees from investment funds
StepStone generates performance fees through incentive fees and carried interest allocations. For the six months ended September 30, 2024, total performance fees amounted to $95.3 million, compared to $89.2 million in the same period of 2023, reflecting a year-on-year increase of 7%.
Incentive fees specifically totaled $4.0 million for the six months ended September 30, 2024, down from $5.0 million in 2023, indicating a decrease of 19%. In contrast, carried interest allocations increased significantly, with realized carried interest reaching $59.4 million, a 270% rise from $16.1 million in 2023.
| Period | Performance Fees | Change (%) |
|---|---|---|
| Six Months Ended September 30, 2024 | $95.3 million | +7% |
| Six Months Ended September 30, 2023 | $89.2 million | - |
| Incentive Fees (2024) | $4.0 million | -19% |
| Incentive Fees (2023) | $5.0 million | - |
| Realized Carried Interest (2024) | $59.4 million | +270% |
| Realized Carried Interest (2023) | $16.1 million | - |
Carried interest from fund performance
Carried interest plays a critical role in StepStone’s revenue model. For the six months ended September 30, 2024, total carried interest allocations amounted to $86.5 million, down from $120.8 million in the same period of 2023, reflecting a decrease of 28%. This decrease was primarily attributed to lower net unrealized appreciation in the fair value of underlying investments in the Company’s private equity funds.
For the three months ended September 30, 2024, carried interest allocations totaled $69.8 million, up from $57.0 million in 2023, showing an increase of 22%.
| Period | Carried Interest Allocations | Change (%) |
|---|---|---|
| Six Months Ended September 30, 2024 | $86.5 million | -28% |
| Six Months Ended September 30, 2023 | $120.8 million | - |
| Three Months Ended September 30, 2024 | $69.8 million | +22% |
| Three Months Ended September 30, 2023 | $57.0 million | - |
Updated on 16 Nov 2024
Resources:
- StepStone Group Inc. (STEP) Financial Statements – Access the full quarterly financial statements for Q2 2025 to get an in-depth view of StepStone Group Inc. (STEP)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View StepStone Group Inc. (STEP)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.