Acquired by ClassPass
We invest in private offerings for both income and long term growth opportunities. We focus on alternative debt and early stage equity.
Early stage investing in technology is our long term growth strategy. We allocate our resources to whom we think has the necessary experience, track record and deal flow. We are LP’s in two funds, and backers of AngelList Syndicates.
We also invest early in debt facilities provided by Marketplace Lenders.
We believe that emerging investing platforms will continue to give access to ways to grow capital and income that we would never have access before.
Below is our private market portfolio.
Acquired by ClassPass
As an asset manager for a family fund and tech entrepreneur, a lot of folks come up to me asking for advice about where to invest. This course is built to start you off on that journey: to help identify and make sense of the new opportunities and platforms that are dramatically changing the way investing is done.
I believe that everyone should understand how to invest their own money and understand the risks in doing so. I want to empower you to make your own investment decisions based on what works best for you.
Over 4,000 students have enrolled. Follow me on Medium for educational blog posts.
I’m an investor for our personal family office. I focus on private investments in both early stage equity and alternative debt. When approaching early stage equity I believe in investing alongside the best in breed. We are an LP In seed stage fund, Red Swan VC (Alt School, Mic, Bond Street) and pre seed fund,Notation Capital (Zipdrug, Sawyer). We also coinvest with other investors (Arena VC, Expansion VC) via AngelList. This gives us access to top tier deals in the ecosystem.
Our main focus is alternative credit. We look to provide debt capital into investments that are collateralized, asset backed or use data driven technology to make lending decisions. We’ve provided early debt for VC backed companies like: Bond Street, Inventure, Payjoy & Produce Pay. We’ve been early adopters to platforms like Fundrise & Yield Street.
I’m the founder of Future Investor, a free education platform that educates on investing online. I built a course focusing on angel investing via AngelList. I currently have over 4,000+ students.
“You want a diversified portfolio? Ok, so let’s call it 70% stocks, 30% fixed income. For stocks we’ll diversify amongst a group index and mutual funds, include some growth in there. For fixed income, interest rates are basically at 0, so unless you want some high risk bonds, I’d suggest adding more to stocks. Commodities are getting hammered right now, but we’ll get some exposure there as well. We’ll target about 5% annual returns, and in 20 years, your capital will be significantly higher.”
Does that sound familiar? That’s a traditional portfolio in a nutshell. It doesn’t sound that exciting, does it? I recently came into these conversations as I took over our family portfolio and was in charge of two things: annual income to take care of costs, and growth of capital. I’m not saying it can’t be done with public equities, but it’s definitely challenging.
I think everyone should be exposed to the public market. I have a background in equity trading. Not only can you capture growth and income (through dividends), but you can always be liquid if need be. I’m also a startup entrepreneur, and I understand the returns (and risk) that can be made in investing in startups, both tech and consumer. I’m not an expert in this field so I choose to allocate to VC and Angel List Syndicates (more on that). And there’s more to the private market than early stage investing. There are emerging platforms that allow for investors to receive quarterly and monthly income from real estate, small business loans and personal loans, with targeted returns of 8–12%.
This is a modern portfolio. There are plenty of people who have exposure to the private market because they are either investors, or they are successful entrepreneurs who understand the risk and now have deal flow. The same is true for public equity traders, who only have exposure to the public market. This modern portfolio is meant for the LP (Limited Partner): the person who has a high net worth (exceeding $1 million), or $200,000 a year job. These numbers are subject to the SEC’s definition of an accredited investor. We hope in time that barriers to entry will be lowered, because it’s simply not fair that the government determines who is financially “responsible.”
I’ll break down how we’re looking at this. Keep in mind, I’m still figuring out the exact allocations of everything, but we’re taking small bites and testing things out. Equity exposure is essential. We’re allocated with an asset manager that focuses on families specifically. This fund concentrates more on our income needs, and it’s a mix of index funds and mutual funds. We don’t want to stop there so we diversify within equities. I’m looking at emerging traders/funds that concentrate on high volatility trading, pretty high risk. The key is understanding that risk, and allocating accordingly.Then there’s a curated long term portfolio that looks at specific stocks and sector rotation. We use Howard Lindzon’s Social Leverage 50 for this. The common theme here is that we’ve chosen people or funds that have specific skills, experience and solid track records.
Next up, bonds. This is so not sexy right now, and a lot of portfolios are limiting bond exposure because there’s not much there. Sure you can get creative and go for higher risk, but I’d rather play debt another way: through emerging tech platforms. At the moment we are allocating into two platforms: Fundrise and Bond Street Marketplace Fund (both for accredited investors only). Fundrise is a crowdfunding real estate platform. One can sign up, look at open investments, and potentially invest capital (as debt or equity) into a property such as an apartment development project on H Street in Washington, DC. Developers are vetted, details are provided, risk is analyzed, and targeted returns vary from 8–12%, on terms anywhere from 12–48 months, paid out quarterly.The Bondstreet Marketplace is an online marketplace that connects creditworthy small businesses with investors looking to earn superior risk adjusted returns. Targeted returns are 8–12% on 1–3 year loan periods, paid out monthly. The most important thing between both of these companies is their team and their underwriting. I’ve sat down with both of them, and am very comfortable. Still, we’ve allocated a small amount to both to test and minimize risk at this stage.
Finally, exposure to private investment through Venture Capital and Angel investing. As of now, we can allocate up to 7–10% of our overall portfolio here. About 5% is allocated to a Micro VC (Red Swan Ventures)to get exposure to their Seed and Series A deals, along with their follow on investments. Love the team and the portfolio (legacy & current).The other half of our allocation will be a mix of Angel List Syndicates and Angel List Funds. We choose investors based on their track record,experience & transparency. I’ve been very impressed with how Jason Calacanis runs his Syndicate. He is so detailed in explaining each investment, and teaching us about risk exposure and diversification. We’re also an investor in the FG Angel Syndicate Fund, which gives us exposure to 15 investments with one check. I believe there’s a good mix of different strategies here, but time will tell what the right formula is (if there is one). VCs return capital as a fund, and can take up to 8 years (maybe more). Angel List Syndicates return on a deal by deal basis. There’s been recent argument that charging carry deal by deal isn’t ideal, but receiving capital back (if there’s an exit) deal by deal is definitely appealing.
Overall, this is our start into how we can create a modern portfolio. It’s a work in progress, and we’ve identified risk to keep our downside to a minimum- what we are willing to lose per allocation. I personally think this type of portfolio will transition into the mainstream. We want to be transparent, share our progress and open a discussion.
This post was written as a guest post for Disruption Corp.
Would love to hear from you. Please feel free to drop me a note at mesh(at)mk2c.com
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