What 'non-custodial' means
In a non-custodial arrangement, the platform is the system of record but never takes custody of participant funds. Capital settles from the investor to the manager; distributions settle from the manager to the investors. The software records and reconciles; it does not hold.
Why it matters for trust
If no participant money sits with the platform, there is nothing for the platform to lose, freeze, or misappropriate. Counterparty risk against the software is removed by design — a meaningful trust signal for serious dealmakers.
Why it matters for compliance
Not handling investor funds is one of the factors that helps a software platform avoid being treated as a custodian or broker-dealer. Combined with a flat fee (not a percentage of capital), it keeps the platform on the infrastructure side of the line.
How distributions stay accurate
Each distribution is allocated pro-rata to every investor's stake, with penny-accurate rounding so the totals reconcile exactly. The record — who funded what, who received what — lives in one place.