private technology companies
Fundrise Growth Tech Fund, LLC marketed as their Innovation Fund offers access to high growth private software companies. You do not need to be accredited to participate.
Thesis
From the SEC filing, "The Fund seeks to achieve its investment objective by investing in technology companies, with a primary focus on the equity securities (e.g., common stock, preferred stock, and convertible debt) of certain privately held, mid-to-late-stage, growth companies, or other investments (including derivatives) that have economic characteristics similar to investments in technology companies. Generally, the Fund’s investment strategy is to invest at least 80% of its net assets (plus the amount of any borrowings for investment purposes) in the securities of technology and technology-related companies and other investments that have economic characteristics similar to investments in technology companies."
Leadership
The investment adviser to the Fund is Fundrise Advisors, LLC, Operating as a regulated investment company.
Fund Managers
- Benjamin S. Miller - CEO & Chairman of the Advisors as well as CEO of of Rise Companies which runs FundRise originally Popularise LLC.
- Brandon T. Jenkins – COO, he also serves as Head of Product Development and Director of Real Estate for Fundrise.
- Chris Brauckmuller– Chief Product Officer of the Adviser
- Other Key Members : Michelle Mirabal - CCO, Alison Staloch - CFO
Fee Details
1.8% Management fee. This is lower than the average of 2%. They also take no carried interest. Most Venture funds have a carry of 20-30% from the positive returns. Not paying this can have a significant impact on your bottom line. We are interested to hear how much this benefits vs some potential goal alignment issues, potentially keeping an aim on growing AUM against the return profile.
When they launched the fund they had $1Bil deployed. Setup as a closed-end management investment company that is operated as a “tender offer fund." Holdings as of March 31, 2024
- Interesting that the fund is not weighted heavier on Property Management technology when Real Estate has been the investing portal's focus for years
- Databricks is the largest concentration making up 30.2% of the overall fund. Ben stated on Reddit of this position, "50-60% growth rate, and an incredibly exciting new product line up. It is considered by many to be one of (if not) the most attractive private tech companies in the world. Given these factors, it’s reasonable to expect that the company is able to complete a successful IPO in the next several years."
- Risk: Ben addresses concern of investors from the high level of risk of Venture, by stating (again from the Reddit source above) "In aggregate, the average company revenue of our venture portfolio is about $1 billion per year, making it a far cry from the risks common with early-stage VC."
- Fund of Funds: There are a number of funds invested as well like HOF Capital, Theory Ventures, therefore increasing the overall fees/expenses paid by you the investor. I am not sure why this is necessary as opposed to building the fund purely of individual firms.
- March 2024 full filing SEC Doc
We are excited about what this fund offers as far as exposure to private companies and hope some of these insights help with your review.