Poolit raises millions to turn accredited investors into LPs in VC, private equity funds • TechCrunch

Dakota Rice has worked in the investment banking industry for many years at Goldman Sachs, Carlyle and Cortu.

One of the things that made him stand out was that only a select group of people and companies could invest in venture capital and private equity funds. Barriers to entry are high as private equity investments often start with as little as $1 million for him. While attending his School of Business at Harvard, Rice decided to build a platform that would allow accredited investors to invest in such entities for as little as $1. It essentially provides a way to become an LP without meeting the stringent requirements that have historically existed.

In formulating a business plan for the second half of 2021, Rice spoke with players in the space and got feedback that such a product would be welcomed by the industry. Earlier this year, Rice raised his $5.3 million in seed funding. poolis a Miami-based fintech startup that aims to open up investment access for private equity and VC funds.

Harlem Capital led the financing, with participation from Carlyle Group co-founder David Rubenstein, Cortu Management co-founder Thomas Lafont, Declaration Capital, Picus Capital and the family office of Gilgamesh Ventures.

Encouraged by the test and spurred on by his belief that alternative investments should be part of a sound investment portfolio, Rice dropped out of Harvard in April to work full-time on the project. And today, Poolit is out of stealth and out of beta.

Poolit currently offers accredited investors the ability to invest in two funds. All Imagine funds are venture capital firms. All Horizon Funds are private equity firms. Bain Capital Ventures, Coatue, CD&R, Apax is one of the companies that investors can put money through the platform.

“This is the first time that I can become an LP of these companies with no minimum.” Rice told TechCrunch in an interview. “Not a single fund we spoke with had any reservations about joining the Poolit platform.”

This may be because Poolit offers companies on its platform a free way to acquire investors and a variety of sales channels. Many of these companies go to private banks to raise money through the “old fashioned model” of paying marketing fees to get backers for the money, Rice said.

“2023 is probably going to be a great year for venture and private equity. It’s like we’re starting from a new base,” he added. , we now have a different channel where we can bring in assets and take advantage of the environment we live in today.I think there’s something unique about this timing.”

To ensure startups comply with federal regulations, Poolit partnered with a company called Maketa, which consults on $2 trillion in assets, to conduct due diligence and vEvaluate the quality and effectiveness of the investment itself.The company spends 2-3 months with sub-advisors to rigorously screen managers for inclusion in the fund before compiling Portfolio of various funds.

In Rice’s view, Poolit’s registered fund structure is particularly important in today’s environment. Registered funds have strict disclosure requirements by the U.S. Securities and Exchange Commission designed to protect investors more than unregistered funds.

KPMG has audited Poolit and each fund created on the platform will essentially operate as its own company. So even if Poolit ceased to exist, the funds would still exist.

“And if something happens to Purit, those people will be able to pick new advisors,” Rice added. I have.”

A registered fund also has a majority independent board of directors. Poolit includes Retired PWC audit partners and JP Morgan executives aim to represent the voice of underlying investors and approve fees from third parties (including Poolit).

“In the wake of things like FTX, I think this is really, really, really important,” said Rice. “They have external third-party custodians, third-party fund managers, all codified on the SEC Edgar database website.”

On December 9th, the Poolit platform opened to the public. It currently has over 500 users and approximately $140 million in bookings.

Image credit: pool

The company makes money by collecting a portion of its assets under management from investors. Rice said most companies charge investors before putting money into the fund, then add management fees and possibly performance fees.

To allow investors some flexibility, Poolit has established a limited quarterly share buyback program. This will start following the first year of investment.

Let’s be clear, Poolit certainly has potential. We’ll bring institutional funding to a wider audience, but for now, it’s only for certain high-income people.The criteria, as defined by the U.S. Securities and Exchange Commission, are accredited investor Have a net worth of more than $1 million, excluding the principal place of residence, and be either an individual or with a spouse or partner, and have individual personal income of more than $200,000 in the past two years, or a combined income of $30 Exceeding $10,000. for this year. ”

Historically, liquidity had to exceed $5 million to be an eligible purchaser.

For Rice, who grew up in rural Alabama before attending Brown University, opening up access to investing in VCs and private equity funds to more people is a dream come true.

“A big part of me is wanting to expand this into a true retail business, but it’s a regulatory issue and not something I can really control,” he told TechCrunch.

Rice credits growing up with a challenging socioeconomic background and working as a young black gay investor in adulthood for allowing him to approach building poolit “from a different lens.” .

“I thought it was worth doing because there is a divide,” he told TechCrunch. There are many similarities in backgrounds, and I think that’s why people have approached problems in many of the same ways.”

Harlem Capital managing partner Jarrid Tingle told TechCrunch that he was drawn to Rice’s “passion and guts.” seek to democratize access to investment;

“Poolit’s technology platform is phenomenal. Relationships with top companies are essential,” Tingle wrote in an email. “Dakota and the investor group have a huge advantage there, and the sense of urgency Dakota and the team have is unmatched.”

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