| Topic Name: |
Individual Investors |
| Message Name: |
Yes but... |
| Date Posted: |
10/12/2000 |
| In Reply To: |
I was reading an article today that said private equity bankers expect to see a big boost in VC firms offering individual investors the chance to access funds specifically geared towards them. It said that individual investors are better educated due to the internet and are willing to be exposed to more private opportunities. Do you think this is a good trend? |
| Message: |
Yes, there is, and will continue to be, an increase in individuals investing in Private Equity as long as the economy holds.
Some of the vehicles include:
1. As an angle in seed rounds
2. Through publicly traded VC funds
3. Through online and offline Investment banks that cater to both individuals and institutions (OffRoad Capital is a leader in this space).
4. An increase in private Venture Capital Funds that are willing to take investments of individuals not connected to the industry.
Remember that for VCs to take on limited partners, or for many private companies to take funds, the investor has to be "accredited", which basically means they have over $1M in assets.
The reality is that an investor with only $1M will not participate much in the PE space (too risky & not enough capital). Usually the individuals who get involved with their own capital have north of $3M (especially if they invest directly in individual companies, you may need to make 10+ investments to get one winner).
Note, historically most private company exits took north of 5 years. As the industry move back this way (as it is bound to due), this lack of may dampen the interest of individuals.
Note, Also remember most VC funds are 10 year partnerships. That can mean a rather illiquid investment even if it hits the desired ROI.
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