As an asset class, Start-Ups historically have returned 22%+ per year

Higher than all other asset class

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Over the last 20 years the best performing asset class was Seed stage investments in start-up companies. As an asset class, Seed stage companies had a higher average annual return (22% per year) than every other asset class including Hedge Funds (18% per year) or the S&P 500 (15% per year) according to a study of early stage returns by the Kauffman Foundation.

Early Stage Investing Is Also The Most Risky

However, it is well known that start-up companies are also the most risky and have a high probability of failure. According to a study by the Kauffman Foundation 52% of Angel deals lost part or all of the investment.
— Rob Wiltbank “Returns to Angel Investors in Groups” Kauffman Foundation 2007

Seed Also Most Risky Asset Class

Kauffman angle

The study reveals the following outcomes for angel investors connected to angel organizations:

  • The average return across all angel investments in this study is 2.6 x (260%)
  • Only 1.3% of companies had outlier “Black Swan” exits over 100x
  • The average return without the “Black Swan” outliers in this study is 2.2 x (220%)
  • The average time to exit was 3.5 years
  • The Internal Rate of Return (IRR) was approximately 27%
  • This IRR compares favorably with other types of private equity investments
  • 52% of all of the exits lost part or all of the capital invested in the venture
  • 48% of investments had grater than 1x (positive) returns
  • 25% of deals produced returns of 2x – 5x
  • 7% of the exits achieved returns of more than 10x the money invested
  • 45% of the companies financed had no revenues at the time of investment.
  • 68% of the deals that took follow-on investments resulted in a loss of capital.
  • Taking follow on Venture Capital reduced outcome certainty with no increase in average exit value.

VIP Benefits

Key Benefits for Investors:

  • Easy Diversification (5 – 20 stocks) in a Theme
  • Access to selected high quality deals
  • Lower cost ($25K) than average Angel deal ($50K+)
  • Better Risk-to-Return Ratio than individual start-ups
  • Professional Stock Selection & Portfolio Design
  • Potential Secondary Market Liquidity
  • Low correlation with other asset classes (e.g. public stocks)
  • Side-by-side “Double-Down” investment opportunities
  • Potential early liquidity via Online Exchanges after 1 year

Risk Factors

There are substantial risks in investing in Venture Investment Portfolios. Please refer to the Private Placement Memorandum and disclaimers for a more detailed description.

Specific Risks include:

High risk of partial or complete investment loss.

  • All invested companies could fail. (smaller, normal font)
  • There is no guarantee of any capital return.
  • High Risk investments are not Suitable for all investors

Investment may be illiquid

  • No secondary market exists for VIP ownership units, and there is no guarantee that any such market will be

available in the future.

Investment capital subject to management fees

  • Management fees start at 2.25% and include a 20% carried interest.

Fees on Invested Capital

Management Fees:

  • Initial Fee: 2.5% (5 years)
  • Reduced 0.25% each year after
  • 20% Carried Interest

 

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