'This is hardest business I have ever built'

Evolve ETFs founder is on start-up number three but still gets a kick out of going it alone

'This is hardest business I have ever built'

This is the last business I will start, vowed Raj Lala, joking that his kids no longer call him dad because of the work required to take Evolve ETFs from nothing to a $225 million AUM operation in just nine months.

It’s the third company Lala has built from the ground up and, he said, by far the hardest. His friends told him he was nuts to take it on but the chatty CEO and president had already seen active and thematic areas he felt were chronically underserved.

And having already surpassed his first-year targets, it’s a case of so far, so good. But this is not Lala’s first rodeo. About 20 years ago, he started a hedge fund of funds company that he eventually sold to Jovian Capital before launching Propel Capital Corporation in 2010, which was then acquired by Feira almost five years later.

He was Fiera’s EVP of Retails Markets and then Head of Canada at WisdomTree Asset Management before deciding to risk the wrath of his wife and go it alone once again.

He said the increase in regulation and the banks’ bigger footprint makes the environment tougher than it was 10 years ago but that the challenge makes it more gratifying when it goes right.

“I love doing this,” he said. “This is definitely going to be the hardest business I have ever built and I think it’s because we are in such a low-margin industry. My asset base to break even is pretty high, the highest I have ever been in, so it’s tough but I love it.

“What I really love is that I have put together really good quality products and it’s kind of like your kids; everyone thinks their kids are the cutest but the market is telling me they really like some of our products and they are really resonating. “

While Evolve has gained attention for its thematic ETFs – think Blockchain, Marijuana, Cybersecurity Index, North American Gender Diversity – Lala bristles at its reputation for providing niche products.

He points out that most of its assets have gone into core offerings: Preferred Shares ETF, Fixed Income ETF or Emerging Markets ETF.

So it turns out the space is proving the ideal market for Lala’s entrepreneurial spirit, although he admits he wasn’t always so sure about his current career direction.

He said: “I was involved with Jovian and they were one of the companies that incubated Horizons ETFs about two years ago. So I was very familiar with the ETF industry but to be completely honest I wasn’t sure whether the ETF industry back then had legs. Obviously it did!

“I think the catalyst was probably more CRM2 when that started to unroll. Then seeing how many advisors were starting to migrate to a fee-based discretionary practice, I Iooked at those two elements and one was partly a consequence of the other. I felt like you could really see where this is going to benefit the ETF industry when advisors become more frugal about the cost of ownership of products.”