The world of venture capital investing is relatively small, and relationship-based to boot. Family offices and accredited investors are eager to join high quality funds, but face barriers such as access to fund managers.
recorded allocation of. The company, founded by Samir Kazi and Hana Yang in February 2021, is developing an approach to venture capital fund investing that offers investors of any size a way to participate.
On Thursday, the San Francisco-based company announced that it raised $5 million in seed funding from a group of backers including Urban Innovation Fund, Tusk Venture Partners, Basis Set Ventures, Liquid2 Ventures, Fika Ventures, Ulu Ventures and Anthemis Group.
The pair met as Kaufman Fellows, both with backgrounds in financial services. By the time they met, Yang was working in the nonprofit world, and he said they started talking about the friction between the nonprofit and venture capital worlds. Then Yang joined Qazi at First Republic Bank to continue working together and negotiating.
Qazi, Quoting the Boston Consulting Group reportThere are estimated to be between 8,000 and 11,000 global family offices and approximately 17 million accredited investors who currently control some $42 trillion in assets.
He viewed the issue as a supply and demand related issue: On the supply side, there are a limited number of institutional investors, “all filled out their dance cards,” Kaji told Nerdshala. Fund managers want to get that nontraditional endowment amount and are looking at family offices, but finding those individuals is a challenge.
Meanwhile, on the demand side, family offices have trouble reaching venture capital firms — they don’t know where to look for managers, don’t have time to develop those relationships or can’t make traditional $1 million commitments.
As a result, Kazi and Yang decided to introduce allocation as a way to usher in the next era of venture capital by creating a way for retail investors of any size or background to invest in the fund and for managers to find family offices. did.
The allocation platform curates venture fund products for wealth advisors, family offices and qualified individual investors based on their investment objectives, and any pre- and post-investment transactions and reporting activities are carried out on the platform.
The company sets up its own feeder vehicle which pools the investor capital so that there is minimal investment and that capital can be easily managed by the fund managers. Thereafter, it charges a fee on the investment made on an annual basis.
At present, investors can choose the funds they wish to invest in, but Kazi said the allocation will eventually offer products that will be like a fund of funds, where the investment goes into a pot that is invested by the fund manager. Will go
The company is pre-revenue and said it will use the new funding to build out its product and do some significant work next year as it prepares for a formal software product launch at the end of the year. It is already attracting waiting lists of several hundred fund managers and investors.
“With the way the market is, the number of accredited investors is expected to grow by 50% by 2025,” Kazi said. “There’s a huge opportunity to unlock the market and get people to participate.”
Tusk Ventures co-founder and managing partner Jordan Knopf agrees. He sees that a lot of economic growth is taking place outside the public market, and opportunities present themselves for someone to capitalize on.
He told Nerdshala that because of the access issue between fund managers and potential investors, trillions of dollars are sitting aside. With the allocation, Nof saw a way to bridge both sides with the tools on both sides to make sound decisions and further develop venture capital.
“I’ve known Sameer for a long time, and he and his team understand this problem and have a vision for what the venture capital future looks like,” he said. “It is a cottage industry that, even though VCs are responsible for influencing the biggest technology companies that have taken VCs, it is still a super fragmented industry with no transparency. Allocation is the next transition to a true platform that enables access to family offices and high-net-worth individuals. “