The underserved investor
— Capital at risk. T&Cs Apply. Nothing in this article constitutes investment advice. —
We started Sprout for people like us. We saw a world of professionals, especially in the investment world, who wanted access to the high performing asset classes that we interact with every day.
Barriers to investing in VC funds
As Sprout has grown, we’ve learned that the problem of accessing top-tier VC funds extends to a wide range of people and profiles. Venture capital is inaccessible, with barriers for investors across five aspects:
- Knowledge barrier: People don’t understand VC, know which funds are the best, or how to assess them.
- Network barrier: People can’t connect to the best funds, where relationships are often required for access.
- Time barrier: People don’t have the time or resource to dedicate to learning about VC, fund selection and diligence.
- Scarcity barrier: The best funds are often full, with limited capacity for new investors (LPs) to enter, and many hand-pick their LPs.
- Size barrier: The best funds typically have prohibitively high minimum investment requirements, often in excess of £1m+ per investor.
Different investors face different barriers in different combinations. At Sprout, we’re here to help investors overcome these barriers, learn more about venture capital, and access top-tier opportunities.
Who is the ‘underserved investor’?
We talk about the ‘underserved’ investor, because most private investors looking to access VC do not currently have someone who can help them navigate these barriers. Some examples of the ‘underserved’ investor include:
- Finance & professional services: People who likely know and understand private markets. However, they can’t devote time to scouring the market, and can’t write the tickets required to enter the best funds.
- Investment professionals in PE / VC: Know and understand the industry, probably know most of the best funds by name, but don’t have the access or the network to get in, and can’t write the tickets required.
- Family offices: These people often made their money elsewhere, need help navigating and understanding the VC market, and still need substantial scale to be able to write the required ticket sizes.
- Active private investors who leverage personal networks: Often very active investors, with angel portfolios, and maybe some funds, but very unlikely to see or access the best quality opportunities.
- Clients of large private banks: May be receiving advice across a multi-asset portfolio, but these private banks do not offer VC funds in any meaningful way. They don’t understand VC and their business models do not support offering these funds in a curated way. We will be covering this in a separate piece another time.
Breaking down barriers; serving the underserved
These are all underserved investors. Sprout building a community for the underserved investor, with education, engaging content, and events. We are changing the VC ecosystem, and dismantling these barriers, by:
- Knowledge barrier: Educating our community on how VC works, how to think about funds, and which metrics to look at.
- Network barrier: Connecting private investors to top-tier VC funds, and to each other.
- Time barrier: Doing the work to scour the market, diligence funds, and curate a selection of top-tier funds, so you don’t have to.
- Scarcity barrier: Leveraging our brand and relationships to get allocations into hard-to-access funds.
- Size barrier: Lowering the minimum to access the best funds from 1m to thousands.
We’re excited to have such an amazing community, that’s growing faster every day. Private investors across Europe are recognising the work we’re doing to take people on a journey with venture capital, and provide previously inaccessible opportunities for investors who have never been served before. Register to join Sprout.
— Capital at risk. T&Cs Apply. Nothing in this article constitutes investment advice. —