Poolit raises millions to turn accredited investors into LPs in VC, private equity funds
Dakotah Rice spent many years in the investment banking industry, at companies such as Carlyle, Goldman Sachs, and Coatue.
He was struck by the fact that only a few people and companies could invest in venture capital or private equity funds. As minimum investment requirements for private equity are often $1 million, the barrier to entry is high. Rice was a Harvard Business School student and decided to create a platform that allows accredited investors to invest in such entities for as low as $1. This would allow them to become LPs without having to meet the strict requirements of the past.
Rice met with players in the space to get feedback and a business plan was created. He received so many high-profile investors’ support that he was able to raise $5.3 million in seed funding to help him build his business plan. Rice raised seed funding of $5.3 million earlier this year. Poolita fintech startup based in Miami that aims to make it easier to invest in private equity and VC funds.
Harlem Capital, Picus Capital, and Gilgamesh Ventures co-led the financing.
Rice was encouraged by the validation and motivated by the belief alternative investments should be part any healthy investment portfolio. In April, Rice dropped out of Harvard in order to dedicate her full-time work on the project. Today, Poolit emerges from stealth and is out of beta.
Poolit currently offers accredited investors the opportunity to invest in two funds. The Imagine fund is open to all venture capital firms. The Horizon fund is for all private equity firms. Bain Capital Ventures and Coatue, CD&R, and Apax Listed below are some of the companies that investors can invest through the platform.
“This is the first opportunity for someone to be an LP in these firms for no minimum amount.” Rice spoke to TechCrunch in an interview. “There hasn’t been one fund we’ve spoken to that has had any reservations about being part of the Poolit platform.”
Poolit’s platform offers investors a free route to Poolit and a wide distribution channel. Rice stated that many of these firms turn to private banks for funding. They do so by paying a marketing fee to gain backers.
“2023 will be a great year for venture and private capital. It’s almost like you’re starting at a new place,” he said. “So these larger institutions that have had exposure that goes up or down now have another channel through which they can also bring assets in to take advantage of the current environment. This timing is unique, I think.
Poolit partners up with Meketa, a $2 trillion-asset advisory firm, to ensure compliance to federal regulations.etting the quality of investments. Before compiling funds, the company spends 2-3 months with its sub-advisor. The various funds are incorporated into a portfolio.
Rice believes that Poolit’s registered fund structure is particularly important in today’s environment. The U.S. Securities and Exchange Commission has strict disclosure requirements for registered funds. These are designed to protect investors better than non-registered ones.
KPMG audits Poolit. Each fund created on the platform operates as its own company. The funds will continue to exist even if Poolit ceases to exist.
Rice said that if Poolit were to be destroyed, the affected people would be able choose a new advisor. Rice said that there are all of these protections available for underlying investors.
Registered funds can also have majority independent boards. Poolit’s also includes A retired PWC audit partner, and a JPMorgan executive who are meant to represent the voices and approve fees from third party (even Poolit).
Rice stated that Rice believes this is extremely important in the wake of an FTX. “They have the external third party custodians, third party fund administrators, and it’s all documented on the SEC Edgar website.”
The Poolit platform was made available to the public on December 9th. It currently has over 500 users and approximately $140 million in reservations.
The company makes its money by charging investors a percentage of assets under their management — an annualized 1% management fees. Rice stated that most firms charge investors before they put money in any funds. Then management and sometimes performance fees are added.
Poolit has created a quarterly share repurchase program to give investors some flexibility. It kicks in after the first year of the investment.
Poolit has the potential to be a great tool for promoting social change. Although institutional-style funding will be available to more people, it is currently only available to those with a higher income. The criteria for eligibility are set forth by the U.S. Securities and Exchange Commission. An accredited investor A net worth of more than $1 million, which excludes one’s primary residence. This can be done either individually or jointly with a spouse/partner.
To qualify as a qualified buyer, one must have more than $5 million in liquid assets.
Rice, who grew-up in rural Alabama and attended Brown University, dreams of one day allowing investors to access VC funds and private equity funds.
TechCrunch spoke to him that there is a large part of me that wants to expand it to true retail. However, that’s a regulatory issue and less of something that I could actually control.
Rice believes that his socio-economic upbringing and experience as a young black gay investor helped him see Poolit from a different perspective.
TechCrunch asked him if he thought it was worthwhile because of the disparity. “If you look at our space and the founders of many of these companies, you will see a lot in common. That’s why people have tried to solve the problem in many of the same ways.
Jarrid Tingle, Harlem Capital managing Partner, told TechCrunch that Rice’s “passion” and “grit” attracted him to the company’s. Try to make it easier to invest.
“Poolit’s tech platform is amazing. Tingle sent an email stating that it is important to have relationships with top companies. “Dakotah’s and the investor group have a significant advantage.” Dakotah’s and the team’s sense of urgency are unmatched.”
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