Alternative investments such as private equity, venture capital, real estate, and hedge funds account for nearly half of all institutional investor portfolios today. This was not the case just 30 years ago, when stocks and bonds represented roughly 90-95% of institutional portfolios. Yet until now, millions of individual investors holding tens of trillions of dollars of capital lacked the access, know-how and technology required to invest in these alternative assets. This inequity has caused the more diversified and sophisticated family offices, endowments and pension funds to outperform high-net-worth individuals without access to alternative assets by 2-4x over the past three decades.
We believe that the world is in the early stages of a new asset reallocation epoch, and that by the end of this decade individual investors will shift over US$4 trillion from stock and bond portfolios to alternative assets. Large and valuable businesses will be built to support this massive reallocation along the way.
This vision is shared by the founders of Equi, a digital platform that democratizes access to alternative investments for high-net-worth individuals ($1M+ in assets, “accredited” investors in the US). Equi uses technology to collect and analyze data on 12,600+ private funds to recommend and execute curated customized alternative strategies for 1.36 million “accredited” investors controlling over US$70 trillion in private wealth in the US alone.
Investors who join the Equi platform can transform their portfolios with powerful software: within a few clicks, they receive access to “core” managed funds consisting of top performing “long tail” alternative investments (three strategies available currently: growth, growth + income, real estate) or can invest from a menu of “a la carte” funds and SPV opportunities available on the Equi platform. The core funds currently managed by Equi target returns of up to 20% with minimal checks ranging from US$350,000 to US$500,000.
Existing fintech solutions suffer from adverse selection effects, and do not solve for diversification, portfolio construction, or risk management. We believe that Equi’s control over the entire digital alternative investment management spectrum positions it well to build a market-leading alternative investment platform for individual investors and family offices. The vision is validated by significant early traction: Equi reached US$100m in AuM in less than a year from launch.
Our main investment thesis revolves around supporting projects with network effects. As more and more quality funds join the Equi distribution platform, it becomes more valuable to investors looking to build a diversified and high-yielding alternative portfolio. Over time, we believe that a winning digital platform can offer additional tailored third-party services to all of its users (investors, funds, service providers), which would further strengthen the Equi network.
Frontier Ventures is excited and honored to back a team that shares our passion for technology and alternative investments. Equi is run by successful serial entrepreneur-founders and top operations and finance professionals. Co-founders Tory Reiss, Itay Vinik and Jeremy Smith have previously founded multiple companies, including TrustToken, Harvest, United Global Advisors, Ace of Swords, SpotHero and BlockSpring.