Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued growth with the emerging manager landscape.
A few weeks ago, I announced that after 20+ years as a venture banker, I was leaving to launch a new company. After taking a couple of weeks to recharge, our team has been hard at work setting the foundation for our new mission.
I’m thrilled to officially introduce our new company, Allocate, to the world.
As many that have worked with our group over the last decade know, we have long been laser-focused on catalyzing the next generation of great fund managers (which really is the “now” generation of fund managers).
Our thesis was centered around the belief that a decentralized, democratized, and diverse ecosystem of fund managers would benefit everyone in the innovation ecosystem, from LP’s to founders and anyone else in between.
During the last ten years, our team has worked closely with over 1300 fund managers and LPs. Through this, we spent much of our time thinking about the issues affecting capital supply and demand for early-stage funds.
We also observed three trends that we think are secular in nature.
1) The supply side of non-institutional capital has increased dramatically. Today, estimates place non-institutional capital at $73T, with the number of family offices up from 1,000 in 2008, to 11,000+ today, while the number of accredited investors in the US is approaching 17MM.
2) The increase in demand for alternative assets across investor types. Unlike years past, non-institutional investors are increasingly seeking to place capital in non-traditional assets. While still lagging behind the 20–40% large family offices and institutional investors place in alternatives, gateways such as Icapital, Republic, Alt, Vinovest, Coinbase, AngelList, and Fundrise all offer retail investors the ability to invest into interesting alternative assets. Check out Michael Sidgmore’s Altgoesmainstream substack. Michael does as well as anybody in describing the Alt investing movement.
3) The complete decentralization of venture capital. Unlike the monolithic industry that I saw in my early years in venture over 20 years ago, today’s venture world is highly fragmented where new fund managers enter daily and are segmented across stage, sector, geography, model, and backgrounds. While we may see markets cycles transiently disrupt the velocity and flow of new managers, the world of decentralized institutional investing is here to stay.
As we analyzed these trends, we concluded that 1) There is far too much information and network asymmetry between fund managers and their investors 2) The virtuous cycle of the same people raising from the same small group of highly connected LPs did not feel equitable or healthy to us when it came to driving real innovation. I can’t begin to count the number of incredible fund managers over the last 15 years that have provided UPPER decile returns and that were largely undiscovered in the early days.
Although we are early, I wanted to share the basics of what we are up to.
Put simply, we are building a platform that enables LPs the ability to relevantly discover the most compelling fund managers while concurrently expanding the pool of investors that can access these high-quality and often overlooked assets.
We’re excited to share more in the coming weeks, and I’ll be sharing updates regularly on ventureunlocked.substack.com. I can be found at Samir@allocate.co going forward. Thank you for your support.