How to attract large investors to your direct investing platform
- Should you give an anchor investor a stake in your fund's management company?
- How VC and private equity funds can launch portfolio-acceleration platforms
Many fintech startups have tried to become a market-maker between investors and investment opportunities. However, the challenge with this two-sided market is: How do you get the investors to show up? It's hard enough to get retail investors, but family offices and other large check writers are even more challenging to lure.
I've been meeting lately with an increasing number of family offices interested in investing directly into companies in lieu of via funds. As a result, I've started investigating some of the online platforms that enable direct investing. For instance, those focused on:
- Primary investments in private companies: AngelList, AngelSquare, ClearList, iAngels, FundersClub, Future Africa, Gust, Interprivate, iSTOX, LetsVenture, Manhattan Street Capital, MicroVentures, Nasdaq Private Markets, OurCrowd, Proteus, Republic*, Sharenett, SeedInvest, Seedrs, Zanbato and Trident.
- Secondary stakes in tech companies: CartaX, Equityzen, Sharespost/Forge.
- Real estate: AcreTrader, AlphaFlow, Brickvest, Crowdstreet, Fundrise, PeerRealty, RealCrowd, RealtyMogul, Republic Real Estate*, SmallChange.
- Cryptocurrency: Bisq, Binance, Bitcoin IRA, BlockFi, Cash App, Coinbase, eToro, FalconX, Gemini, Republic*.
- Art and collectibles: Otis, Rally, Masterworks, Vinovest, Yieldstreet.
- Debt: Percent, Clade, Republic*. YieldStreet
Tim Friedman, the founder of PE Stack, observes that the interest in direct access to alternatives has been so strong that platforms like Delio have emerged, which provide technology to allow institutions that already have relationships with buy- and sell-sides to quickly launch robust private investment platforms. Delio built an ESG-focused direct private investment platform for Barclays' wealth management division, for example."
Note that I'm specifically excluding from this analysis firms that help investors access investment funds, for instance: CAIS, Context365, iCapital Network, OurCrowd, Palico, PrimeAlpha and Trusted Insight. Investors there are outsourcing the decision-making about individual investments to the general partners.