The venture capital industry is traditionally exclusive and closed off to many investors. Bay Area-based startup Allocate is trying to change that by enabling wealth advisers and family offices to invest in venture capital funds.
Allocate just raised $10 million in new funding from investors including Gopher Asset U.S., Intera Investments, M13 Ventures, and various family offices, adding to the $23.5 million Allocate previously raised.
With this fresh capital, the startup aims to help venture funds diversify their limited partner base.
How Allocate Works
Allocate assesses hundreds of fund managers before selecting between 20 and 50 venture firms to partner with. These partnerships open up the investment opportunities to its customer base: investment advisors and family offices without existing relationships with fund managers or the means to make million-dollar commitments.
Allocate’s customers have invested more than $485 million already. The company currently charges an investment fee, and plans to charge subscription fees starting next year.
Accessible VC Investing
Venture capital investing is a volatile game with more failures than wins. But, if investors hit a homerun, it has the potential to make up for all of the failures — and then some.
Due to the elevated risk, investors in VC funds tend to be large institutions. But Allocate helps to make the asset class more accessible by reducing the time needed to evaluate fund managers, identifying the most promising opportunities, and minimizing fees and minimum investments.
But Allocate isn’t just a fund of funds. The company also helps clients avoid higher minimum investments and access a wider variety of funds that match their preferences.
While Allocate has broadened access to venture capital funds, it isn’t available to retail investors yet. In order to use the platform, you have to go through a family office, RIA, or private bank.
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