Founder'sInvestor'ssimple.Capital(blog)How is simple.Capital() different to the traditional VC model?

April 16, 2021

simple.Capital() was founded with a very clear mission: “democratise access to early-stage high-growth investments for every one from anywhere”. This is a powerful and consequential mission that we believe will disrupt how traditional Venture Capitalists operate. When we founded the company, we knew that it would take us a long time to achieve this mission, but we’re convinced that it will be worth it in the end!

What are early-stage high-growth investments?

At simple.Capital(), we define early-stage high-growth investments as early-stage companies (generally referred to as “start-ups”) which have the potential for exponential growth. We think exponential growth is usually driven by commercialising using exponential technologies that will shape our future. These technologies include, for example, artificial intelligence (AI), augmented and virtual reality (AR, VR), data science, digital biology and biotech, medicine, nanotech and digital fabrication, networks and computing systems, robotics and autonomous vehicles.

Why is access an issue?

Today, individuals can choose to invest directly into early-stage companies, or they can attempt to access a growth fund or unit trust which has some exposure to alternative asset classes, such as venture capital.

Many reasons block individuals from accessing early-stage high-growth investments if they choose to go direct.

Some of which include:

  • Depending on where an individual resides, they may only be able to invest in early-stage companies if they meet specific criteria (i.e. if they’re considered a “sophisticated investor”). In some cases, these criteria can make early-stage investing prohibitive as it requires an individual to have significant assets on hand, often exceeding USD1,000,000.
  • Even if an individual meets the criteria to invest in early-stage companies in their local jurisdiction, there are further constraints to consider:
    • They often don’t have the networks to source sufficient deal flow to be able to choose the best investments,
    • The time and experience to perform detailed due diligence of the investment opportunity can be onerous, and
    • They aren’t able to dedicate enough time post-investment to supporting the early-stage company to grow into a more prosperous company that is attractive to later-stage investors.
  • Finally, if an individual manages to overcome all of these hurdles, they still need to diversify their investment portfolio. Early-stage companies often require a minimum investment of at least USD25,000. This means that individual investors can very quickly become over-exposed to one investment.

Finding a growth fund or unit trust with sufficient exposure to venture capital and providing a level of insight to the underlying investor is almost impossible. However, this is often the only alternative left to many investors, given the blockers listed above.

How do we plan to democratise this process?

To achieve our mission, we believe that every person should be able to invest in early-stage high-growth companies. However, even we know that is not yet possible for most folks and will take us time to achieve! We’re currently operating on the “UberBlack” model while working in the background to figure out what an “UberX” model could look like to increase access for individuals.

In our opinion, democratisation takes place when more people have access. We’re starting our mission by giving access to individuals who have the funds to be considered a sophisticated investor in their local market but don’t have the networks, time or resources to actively invest in these early-stage companies. We curate a basket of diversified investments using our strong deal flow networks, which we enable these investors to access at affordable prices, usually from ticket sizes of USD1,000.

Are we planning on disrupting any other areas of the venture capital process?

We have many ideas about how to disrupt the Venture Capital (VC) space. For example, we believe that most VCs are limited in their deal-flow opportunities because they have a small team that sources and performs due diligence on potential investments. We’re building a distributed global network to source the best deals and a separate high-quality risk team that can independently assess them on a timely basis.

The best news, in our opinion, is that we are just getting started. We believe that democracy succeeds when all interested stakeholders work together to achieve a shared outcome, so get in touch with us if you’re excited about our mission!

Author: Timothy Willis | Co-Founder & Chief Executive Officer @ simple.Capital()

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