Venture Capital: Fundrise Diversifies Out Of Real Estate, Launches $1B Venture Fund For The Small Guy
The Fundrise Innovation Fund aims to democratize access to high growth private technology companies.
Fundrise, which pioneered $10 investments by the common man in real estate, is bringing that model to venture capital. It announced today the launch of the Fundrise Innovation Fund — a first-of-its kind, $1B growth equity fund aimed at democratizing access to investments in top private technology companies.
As part of a broader ambition to “transfer the entire $10 trillion private market,” Fundrise claims its existing systems and infrastructure developed for private real estate can now repeat its magic across other private asset classes.
Be greedy when others are fearful
“We believe that the current market turmoil and distress in the venture capital industry makes today a uniquely opportune time (perhaps the best in the past decade) to launch a fund focused on the space,” Fundrise said in a statement.
Other motivations for the move into venture capital are to remove the exclusivity of access to the space (“inaccessible to individuals” until the private companies go public) and the attractive returns that have historically accrued on investments in venture capital.
“Just as in the real estate private equity world, the vast majority of the returns from private tech has accrued to the venture capital and growth equity firms that act as gatekeepers to the industry,” says Fundrise on the Fund page.
The Fundrise VC fund will invest in a diversified portfolio of high-growth private technology companies across both mid and late stages, as well as hold some public equities.
However, there’s a qualification: “In certain instances such as early in its life cycle or during market pricing dislocations, the Fund may choose to hold a substantial portion of its assets in public stocks of technology companies.”
Further, in line with its focus on the small investor, Fundrise has removed entirely the “carried interest” profit sharing component out of the fee model of its fund, believing it “is not only excessive in cost but also leads to inherent misalignment.”
As of now the fund is open on a limited basis (till “it ramps up”) only to investors who have already participated in Fundrise’s real estate offerings.
Other interested investors need to add their name to a waiting list.
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