The exclusive club of family offices has become smaller.
For a modest $350,000, more than five times the average American household income, Equi allows people to invest in sophisticated alternative asset-focused strategies that the company says will increase their billionaire wealth.
These billionaires and wealthy people often work with family offices that manage their investments. Now even millionaires can invest in these strategies thanks to Equi. In addition, they can do so without investing $70 million in seed capital, which the company says is typically required to implement such strategies.
Alternative assets are attractive to some investors because they have historically generated higher returns than bonds. Equine offers several of its main investment funds, including hedge funds, private equity, private real estate, and venture capital.
The flagship equity fund launched just a year ago and aims for 17-23% annual returns. By comparison, the S&P 500 has an average annual return of 10.5% over its lifetime, although it remains to be seen if stocks can consistently deliver such higher returns over a longer period of time.
In order to invest in Equi, you must become an accredited investor, typically subject to an annual income limit of $200,000 for individuals or $300,000 for married couples. Approximately 1 in 10 American families meet this definition.
While Equi serves this much smaller segment of investors today, Equi expects to eventually expand its product offering to include registered public funds, which can attract thousands of investors at a fairly low minimum, whether recognized or not. Trade.
He told gaming-updates in an interview that Tory Rees, co-founder and CEO of Equie, has been a financial literacy teacher for many years while holding various technical positions. Through these efforts, he talked languidly about money to various people, realizing that most of them invested in traditional portfolios of stocks and bonds through mutual funds, if they invested at all.
“Traditional Investment Advice” Averaging dollar value into Vanguard funds and hoping it worked out was true, and it’s been good advice for the last 40 years given that we’re living in an environment of declining interest rates,” Rees said. ,
“But when I got to the point where I actually had enough money to invest and could afford to look at different asset classes, I really started looking into real estate and private loans,” he continued.
Inspired by the cult book Pioneering Portfolio Management, a cult book by former Yale chairman David Svensson, Rees began investing in some of these options to maximize portfolio diversification. As he began experimenting with these strategies, he says, he became uncomfortable defending others in the name of traditionally prescribed investment advice when he wasn’t following it himself.
Rees’ fintech entrepreneurial journey began when he co-founded Harvest Money, a consumer loan refinancing facility, in 2017. He said the company raised seed money from investors but was soon closed due to disagreements between Rees and its co-founders.
Reis’ next venture, TrustToken, was much more successful. The stablecoin firm, which Reece co-founded in 2018, raised $30 million in funding from investors including Andreessen Horowitz last August and continues to expand its platform to this day. However, according to Rees, he couldn’t get the Equie idea out of his head, so he started exploring it as a research project before focusing on it entirely in early 2020.
According to the company, Equi’s $350,000 minimum investment is down from $1 million when it first launched.
There are many startups that offer institutional investment strategies to a wide range of investors, including Titan, Elocate and YieldStreet, just to name a few. Most of these companies focus on a specific subset of products: Titan aims to mimic hedge fund investments in public stocks, while Allocation focuses on venture capital, and Yieldstreet is best known for its private equity products.
Rees said Equity offers a wide range of asset classes in one place and plans to eventually partner with other platforms, including distribution. Rather than expecting users to register on several different investment platforms for each asset class, Rees expects Equity to serve as a one-stop-shop for private trades.
Equity can be placed in private funds as it is “systematically directed”.[s] Instead of focusing on large branded fund managers, he says, there are strategies that are relatively overlooked. Often, these managers will implement certain strategies, such as investing in life insurance plans or trading in carbon credits, the company says.
Equi’s chief investment officer, Itay Vinick, founded and led hedge fund United Global Advisors for almost seven years before co-founding Equi with Rees. Vinick’s experience in the world of hedge funds formed the basis of Equine’s data-driven approach to investment management and risk assessment; Rees said the portfolio team uses Equine’s in-house technology to identify and structure trades with fund managers. This is a relatively unconventional approach, at least in private markets where transactions are often made through pre-existing personal relationships.
Unlike stocks offered on popular trading platforms like Robinhood and Publix, Equity shares are specifically designed to last forever, he says. According to Capital Reis, investors typically invest between 5% and 50% of their investment assets in a flagship product, with the founders of Equity themselves investing 80% of their liquid assets in on-platform strategies, planning to maintain and maintain integrity for decades to come.
Since the official beta test three months ago, which was attended by 300 people, about 7% of customers have been on the waiting list, according to Equi. Those on the waiting list, including Fortune 500 CEOs and multi-billionaires, have a net worth of more than $800 million, a sum that Ries said reflects significant user interest in the Equi platform. Rees declined to give the number of Equi users today, but said the company is “basically on the road” and is working to eventually bring its product to market.
The company announced that it has raised $10 million in seed funding from several investors including Montage Ventures, Foundation Capital, Hustle Fund and Loom founder Shahid Khan. The company states that all investors, including those investing on behalf of the institution, have committed to investing a portion of their personal assets in shares.
Rees said the startup generated interest solely through informal marketing and word of mouth. He said users (and waitlist members) usually heard about Equine through Twitter and the live investment Q&A posted by Winnick on YouTube.
Rees is optimistic about the size of the market Equi is targeting, noting that accredited investors alone own about $73 trillion worth of investment assets.
“Over the last 20 years, I have seen wealthy investors, endowment funds and multi-family offices hold almost half of their portfolios in options, but if you look at the mainstream consumer, you will see that they are still low single digits,” said Rice.