The exclusive club for family offices is just shortened by a comma.
For a paltry $350,000, or just over 5x U.S. median household incomeindividuals can invest in sophisticated strategies focused on alternative assets through Equi, which the firm says is common among billionaires seeking to increase their wealth.
These billionaires and ultra-high net worth individuals often work with family offices that manage their investments.thanks equipment, millionaires can now invest in these strategies too. What’s more, they can do this without investing $70 million worth of initial capital, which the company says is often needed to implement such strategies.
Alternative assets have attracted some investors because they have historically provided higher returns than stocks and bonds. Equi offers a range of assets in its flagship investment fund, including hedge funds, private equity, private real estate and venture capital.
Equi’s flagship fund launched more than a year ago with a target annual return of 17-23%. That compares to an average annual return of 10.5% for the S&P 500 over its lifetime, although it remains to be seen whether Equi can consistently deliver these high returns over a long period of time.
In order to invest through Equi, a person must qualify as an accredited investor, usually by meeting the annual income threshold of $200,000 for individuals or $300,000 for married couples. About 1 in 10 American households fit this definition.
Although it serves this tiny minority of investors today, Equi hopes to eventually expand its offering to include registered public funds that can attract tens of thousands of investments with much lower minimum thresholds, whether they are accredited or not. By. company.
Equi co-founder and CEO Tory Reiss told TechCrunch in an interview that he worked for years as a financial literacy educator while working in various tech roles. Through these efforts, he engages in vulnerable conversations about money with a wide range of people and realizes that most of them are invested in traditional stock and bond portfolios, if any, through mutual funds.
“Traditional investment advice Just average the dollar cost into the Vanguard fund and hope that everything will be fine — that’s true, and that’s a good suggestion given the environment we’ve been in for the past 40 years with declining interest rates,” Reiss said.
“But then, when I actually had enough money to invest and the ability to invest in different asset classes, I started really looking into real estate and private credit,” he continued.
Inspired by David Swenson, former head of the Yale EndowmentIn Reiss’s signature book, “Pioneering Portfolio Management,” Reiss began investing in some of these alternatives, with the goal of maximizing the diversification of his portfolio. Once he started experimenting with these strategies, he said, Reiss was no longer willing to speak to others on behalf of traditionally prescribed investment advice when he himself did not follow the traditionally prescribed investment advice.
Reiss’s entrepreneurial journey in fintech began when he co-founded Harvest Money, a consumer debt refinancing tool, in 2017. The company raised seed money from investors but closed shortly after due to issues between Reiss and his co-founders, he said.
Rice’s next adventure, trust token, more successful. Stablecoin company co-founded by Reiss in 2018, Raised $30 million in funding from investors including Andreessen Horowitz last August and continues to expand its platform today. Still, Reiss said he couldn’t get away from the idea of Equi, so he started working on it as a research project, before starting to focus on it full-time in early 2020.
Equi has a minimum investment of $350,000, down from $1 million when it first launched, according to the company.
There are many startups offering institutional investment strategies to a wider range of investors, including titan, distributeand good street, to name a few. Most of these companies focus on a specific subset of products, Reiss explained—Titan is designed to mimic hedge fund investments in public equities, while Allocate focuses on venture capital, and YieldStreet is best known for its private debt products.
Equi offers a wider range of asset classes in one place, and plans to eventually partner with other platforms, including Allocate, to offer funding on Equi, Reiss said. Rather than wanting users to sign up for multiple different investment platforms for each asset class, Reiss wants Equi to be a one-stop shop for all kinds of private transactions.
Equi is able to gain distribution rights to private equity funds because it “systematically targets[s] relatively undiscovered strategies” rather than focusing on big-name fund managers, he added. According to the firm, these managers often implement niche strategies — for example, investing in life insurance settlements or trading carbon credits.
Equi’s chief investment officer, Itay Vinik, founded hedge fund United Global Advisors and spent nearly seven years running the fund before co-founding Equi with Reiss. Vinik’s experience in the hedge fund space informs Equi’s approach to data-driven investment management and risk assessment; Reiss said the portfolio team leverages Equi’s in-house technology to help them identify and structure deals with fund managers. This is a relatively unconventional approach, at least in private markets, where transactions are often conducted through pre-existing face-to-face relationships.
Unlike stocks offered on popular trading platforms like Robinhood and Public, Equi’s holdings are intentionally designed to be held in perpetuity, he added. Investors in the flagship product typically allocate 5% to 50% of their investable assets to it, with the Equi founder himself putting 80% of his liquid net worth into strategies on the platform, Capital Reiss said he plans to hold and watch to compound decades.
Since its official beta, which included 300 participants three months ago, Equi says it has accepted about 7 percent of its customers on its waitlist. Individuals on the waitlist, including Fortune 500 executives and billionaires, represent more than $800 million in capital — a figure that reflects strong user interest in the Equi platform, Reiss said. Reiss declined to say how many users Equi has today, but said the company is “going to scale” and is working towards an eventual public launch of its product.
The company announced it has raised $10 million in seed funding from a group of investors including Montage Ventures, Foundation Capital, Hustle Fund and Loom founder Shahed Khan. All investors, including those investing on behalf of institutions, have committed to put a portion of their personal net worth into Equi, the company said.
The startup has been able to generate interest purely through informal marketing and word of mouth, Reiss said. He added that users (and waitlist members) typically learn about Equi through live Q&As about investing hosted on Twitter and Vinik on Youtube.
Reiss is optimistic about the size of the market Equi is targeting, noting that only accredited investors are sitting $73 trillion in investable wealth.
“Over the past 20 years, I’ve seen ultra-high net worth investors, endowments and multi-family offices shift to investing nearly half of their portfolios in alternatives, but if you look at mainstream consumers, they’re still at a low Single digits,” Rice said.