One of the biggest hurdles to investing in private equity or venture capital funds for everyday investors is the multi-million dollar minimum investments required by most top-tier funds. When considering how solve this and give people access to PE & VC, one option was to create a new private equity or venture capital fund and take investments of any size. We quickly decided this wasn't the best path solution for a few reasons...
First, private equity and venture capital is a crowded industry. According to Preqin, there are over 3,500 private equity funds in the market as of 2020.1 We did not feel that adding another fund to that list of 3,500+ was the best path. When it comes down to it, not all private equity funds are created equal and there can be huge variance in returns. While the top funds may be able to beat the S&P 500 or Russell 2000, funds on the opposite side of the distribution often underperform.2 It's important to us that our members can access top funds, not a new fund with no track-record and an increased risk of underperformance.
Second, we believe that private equity and venture capital funds should spend most of their time and energy investing. A fund that allows investors of all size has to spend significantly more time and effort on fundraising due to the operational challenges that arise from having thousands and thousands of investors. This could distract from the main goal of generating returns.
That's why instead of creating our own private equity fund, we're partnering with existing top-tier funds to offer them to our members at low minimums, scrapping the traditional multi-million dollar minimum investment requirements. This allows our members to invest in top private equity and venture capital funds like never before while allowing those funds to do what they do best; identify, invest in, and build the next generation of cutting edge companies.