How You Can Invest in Venture Capital for Just $25,000
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Many people think that venture capital investments are only for celebrities and billionaires. And for the most part, they’re right. The vast majority of VC shops are only open to institutional clients and the ultra-wealthy. Until now.
Say hello to Alumni Ventures. Founded in 2014, Alumni Ventures provides smart, simple venture portfolios for accredited individual investors. Based in Manchester, N.H., Alumni Ventures employs more than 130 staff — including about 40 full-time investing professionals — located around the U.S. in Boston, New York City, Chicago, Austin, and San Francisco. The firm has already raised over $600 million, all from accredited individual investors, and had over a dozen successful exits from their portfolios.
What really makes Alumni Ventures special: It offers venture portfolios for as little as $25,000, consisting of deals that most investors could never assemble for themselves. In other words, the barrier has been lowered for people who want to invest like ultra-high-net worth individuals or institutions.
To the challenge of constructing portfolios, Alumni Ventures brings a large team, a huge network of connections, and rigorous process. As Alumni Ventures CEO Michael Collins says, “To source deals, we draw on the wisdom, experience, and networks of our investment teams and a highly disciplined identification and vetting process. We also exclusively co-invest alongside other established VC lead investors to leverage their expertise. The result for investors is typically a portfolio of at least 20 to 30 highly competitive venture investments diversified by stage, sector, and geography.”
Who can invest.
First, investors must be accredited as defined by the Securities Exchange Commission. The SEC rules basically define the level and type of wealth needed.
Second, an investor should have a portfolio strategy and understand where venture fits within a well-diversified portfolio — a good topic to discuss with your financial advisor or accountant, Collins says.
Finally, an investor needs to understand that VC “is an illiquid, long-term commitment and have the patience and discipline to accept what’s generally a typical 10-year fund lifespan,” as Collins explains. “You’ll likely receive distributions along the way during that 10 years as companies exit. But distribution timing is uncertain, and the long-term nature is one of the reasons many of our investors fund with money from their retirement accounts.”
How it works.
Alumni Ventures encourages all potential investors to become familiar with their funds and materials. Then, contact the firm to get started. Collins says making an investment can take 30 minutes or less. “There’s no need to make the process more complicated than necessary,” Collins says.
As their name suggests, Alumni Ventures’ core funds are geared toward alumni of many U.S. universities, including Dartmouth, Harvard, Stanford, and Yale. The firm also offers a Total Access Fund open to all investors, as well as Focused Funds that provide an opportunity to build a portfolio backing a certain investment thesis, stage, or sector.
Investors can choose to make an investment in one fund or a combination of funds. Alumni Ventures then builds fund portfolios, diversifying and balancing over time. When a portfolio company exits, Alumni Ventures sends investors the proceeds as soon as they are processed.
Leveraging the power of community.
Another key asset that sets Alumni Ventures apart from other VC firms: Its network of 6,000 investors and over 550,000 community members and subscribers.
“Our community is our secret sauce,” Collins says. “Our network obviously provides capital, but these amazing people also help source great new ventures and provide valuable assistance to our portfolio companies. Of course, our investors want to make a profit, but many also like learning and being part of a community committed to innovation and entrepreneurship.”
It’s through implementing this unique business model and leveraging the power of community that Alumni Ventures aims to help shape the future. “The world has challenges, and entrepreneurs and innovators are going to be at the frontlines of coming up with solutions in finance, energy, healthcare, education — you name it,” Collins observes. “Being a venture investor means contributing to that future.”
As Collins notes, he too is an investor in multiple Alumni Ventures funds. “So I can personally recommend the experience — just as I do the asset class. We think if you’re a sophisticated investor who is comfortable with some risk and illiquidity, you should consider VC for your portfolio. We want to be your partner in delivering that.”
Click here to learn more about Alumni Ventures and how you can become an investor today.
Neither Alumni Ventures nor any related funds are sponsored by, affiliated with, or otherwise endorsed by any university.