Tag Archives: Investment Fund Strategies

Business Articles, Investing, Investment Adviser, Investment Adviser Arizona, Investment Adviser Kansas City, Investment Adviser Representative, Investment Vehicles, Money Manager, Venture Capital

Why VC Firms Are Turning To Investment Advisers?

VC and other Partnerships have a big problem. Some are not evolving with the changing Financial Landscape.

Many Venture Capital Funds and Private Partnerships are literally risking their capital to risk. It’s not difficult to observe the Capital they have worked tirelessly to raise is diminishing from sitting for long periods. It’s also apparent from the current VC Partnerships without a Investment Adviser the accounts they keep their funds in do nothing to serve the developing Risks. Which in return silently and maliciously erodes the Funds Purchasing Power and additionally? Diminishing the capital. Discounting continuity and Preservation of Principle. Investment Advisers know how to minimize risk, strategically Preserving Capital, while at the same time implementing Growth of Funds. The bottom line is this! Not evolving to the changing ecosystem. Will diminish your Partnership Performance and diminish your returns and capital performance for your clients.

Exemption for Venture Capital Funds for Investment Advisers

Currently the Investment Advisers Act of 1940 has an Exemption for SEC or State Registered Investment Advisers who manage Private and or Venture Capital Funds. This is a Gift to the VC Partnership and Private Fund world. However based on my experience and research only the serious Professionally managed Firms are quietly utilizing Investment Advisers skills to help manage their VC Funds. After reading a Post on Medium about this Topic. It seemed prudent for me to give my Professional opinion as a new Investment Advisor Representative. You can read the article the Attorney who wrote about Compliance of RIA’s turned Venture Captial Firms “HERE“.

Market Conditions Always Changing

The SEC is very strict in it’s Regulations, and the Finance Laws are extremely complex in the Investment Adviser money management world. However the Laws and Regulations can be used for good. Especially for PROFIT AND FUND GROWTH. If you have a small team of Advisors and Attorneys who are experienced and trained in how to use their skills to navigate the complex Regulations and laws for the Benefit of your Partnerships Fund. Your ahead of the Curve of Diminishing Funds. Making your Clients capital grow and keeping your Clients Happy with your Fund or Partnerships performance. There is one certainty in Business. That is “THINGS ARE CERTAIN TO CHANGE! EVLOVE OR DIE.”

Founders Fund Registered Investment Adviser?

Peter Thiel Founders Fund is now a Registered Investment Adviser. (Image BELOW)

Which recognizable VC Firms are Investment Advisers Currently? Sequoia Capital registered recently as a Registered Investment Adviser to begin investing in the Capital Markets and Crypto Assets. Andreessen Horowitz is another Venture Capital Fund that recently registered as an Investment Adviser. This list is growing. And it seems more and more VC Firms who are serious in the space are turning to Investment Advisers for their Funds. It’s likely they have so much money under management they need to distinguish themselves and account for risk vs. returns to add a layer of Preservation of Capital. It also must be shared it’s just good business acumen to have a Money Manager who can give peace of mind to the Fund Manager and Client’s personal Asset Allocators.

If you stop to fully read the SEC.Gov website on Exemptions for Advisers to Venture Capital Funds (BELOW). You will likely conclude this is certainly the future of VC Funds who are leaders in the VC Space. Having a Professional manage your Firms Funds is added security. The benefits far outweigh any downsides. When your thinking strategically as a Investment Committee. Recently a College PH.D Finance Professor shared with me at Arizona State University, “He feels the future of Investment Advisers will begin to morph into a fragmented space where VC funds become Powerhouse VC Investment Adviser Run groups.” I honestly can see myself it’s likely to expand into other Partnership Funds as well. Interestingly this is already taking place.

Did you know..? “It is against the Professional Standards and Regulations of the Uniform Securities Act and Investment Advisers Act of 1940 for any Investment Adviser Representatives to make guarantee’s or promises related returns.”

Venture Capital Firms Turning Into Investment Advisers

Traditionally many Private Funds or Venture Captial Funds have used a REG D offering for their Funds framework. However based on evidence in the space and growing sums of Capital under management? Times are changing and VC Firms are turning to or into Investment Advisers. To leverage Capital Markets for Preservation of Capital and Growth.

A Reg D offering and a (RIA) Registered Investment Adviser are completely two different things. A RIA is a Firm that Manages Funds for a percentage of Assets Under Management. Usually 1.5percent. A REG D offering is a “Exempt Offering”. The Law and Regulations all RIA’s Registered Investment Advisers have to adhere to professionally. Includes a long list of seriously strict responsibilities, Regulations and Policies. It’s serious business. Some of the rules of the road address Portfolio Management, Custody, Investment Discretion, Record keeping and lots lots more. However this is not a Post about Laws, Regulations or the differences of a REG D offering vs. a Registered Investment Adviser. This is meant to share more in depth examples of the complexity of Managing Funds.

Venture Capital Teams Under Pressure to Evolve From Competition

With many Venture Capital Firms under pressure to out perform each other and evolve from their competition by performing with their Clients Money. These Venture Capital Funds are feeling the squeeze of having Capital sit for long periods inside accounts without proper preservation policies implemented. This causes the Capital to be inactive on the Firms Balance Sheet. There are strategies Investment Advisers can execute to minimize Purchasing Power Risk and begin to grow Funds implementing a preservation of capital as it’s Objective. Several large VC Firms have seen the Value Investment Advisers bring to the Balance Sheet using Advisers. And more and more Venture Capital firms are on the look out to Recruit Investment Adviser Representatives for their Skills. One thing is certain in this Asset management Business. You should always be looking to gain the edge by utilizing Investment Advisers Skills to help grow the Firms Funds.

Conclusion Clients Impressed By Increased Returns

In conclusion after sharing the above examples. It looks to be completely clear the Venture Capital space is turning to Investment Adviser Representatives and utilizing their money management skills. It’s absolutely clear the Value and increased performance Advisers can bring to a VC Firm and their Investment committee. Traditionally speaking? Investment Advisers do 3 things incredibly well. Preserve Capital, Manage Capital while managing risk, and strategically use Capital Markets to Grow funds, for the purpose of beefing up a Company’s Balance Sheet.

Have you read my post on the Three Financial Statements “HERE“.

Risk will always be apart of Professional Investing at every stage. However many Investment Committee’s and Investment Professionals would most likely agree. “Having a Professional Money Manager on your Firms Team will likely give your Company an Edge in the Market while making your Clients very happy from seeing a improvement ROIC.”

Thank you for reading.

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Business Articles

The Rule Of One Hundred

Robert Kyosaki “Rich Dad Poor Dad” best selling author teaches Entrepreneurs to look at 100 properties if your in Real Estate, or look at 100 Business’s if your in Private Equity before making a decision to buy. Why would I share expert advice from the ultra successful Investor Robert Kyosaki? Because I have used his advice and won! It’s that simple. Here is another reason I follow Roberts teachings and listen intently. Robert and myself are both USMC Veterans and trained Pilots, we literally have many things in common with each other like seeing the world through entrepreneur lenses. Not to mention a laundry list of other interests that intersect. His advice is 100% rock solid. This is why I listen to his advice and share his fantastic wisdom. Im going to share why this business rule and strategy could be useful for all areas of your life and how it has worked for me. And since I am naming Business Heavy Weights I personally watch. Do you know who Noah Kagan is? Look him up! I feel Noah would most likely agree a 100% with my post.

What is the 100 Rule?

Here’s the problem I see most of the time with Entrepreneurs. They expect results way to quickly and they have no strategy at all. Or they just have no patience and are quick to move on to the next project without really giving their best. However if you do decide to use this information in this blog post? It’s likely you may be impressed with the results. And this information may just change your entire life!

Many month’s ago I was driving my usual circuit of pit stops and making my way to the Plaza’s Barnes & Nobles Book store. While driving an interview video popped up of Noah Kagan the CEO of App SUMO & OK DORK and Ryan Holiday author of “Trust Me Im Lying” . If you don’t know who these fellow Entrepreneurs are? You should go watch some of their Content and Read Noah’s book. 100% They get it!! And we have similar experiences of knocking on thousands of doors and learning rejection is just apart of the process and will make you stronger. This is one thing I really love about Noah videos. He is transparent about his battles. I can relate to his experiences 100%

While Noah and Ryan were sitting at a Table on this video interview their conversation veered to a subject about the The One Hundred Rule. Your probably asking yourself What is the One Hundred rule? Im happy your thinking ahead. The One Hundred Rule is exactly this in it’s definition. Say your writing a Blog or starting a Youtube Channel or even Selling a product you made to the open market. The One Hundred rule makes it clear that in order to know if your Blog, Youtube Channel, or Product is worth pursuing and not quitting? You must write One Hundred Blog Posts, create One Hundred Youtube Videos or even Pitch the product you made to One Hundred Executives before deciding if this was worth your time to keep going? Or to quit. This same rule can be applied to Finance, M&A, and especially Business Strategy!!

The One Hundred Rule Used By Warren Buffett and Charlie Munger

If you watch Warren Buffett and Charlie Munger’s videos from the Berkshire Hathaway Annual Meetings Q&A sessions. You will hear in their answers how Warren and Charlie have both referred to looking at One Hundred Businesses before deciding which business they would like to invest in and take a official position. There must be only one explanation. They use the One Hundred Rule. I have even heard Warren Buffett refer to reading a Hundred different Annual reports in order to begin his deliberation on which company to invest in when the market was bearish. Fascinating stuff right? Yep!

How Im Using the One Hundred Rule in Mergers & Acquisitions?

If your in the Big leagues of Business your definitely not ever going to just rush into a decision of buying a business. It’s been my experience that many people will openly lie to you. They will waste your time, and they will try and deceive you along the way for their own gain. Here’s a great example. While searching for Vineyards in the Midwest as Targets to buy it became very clear very fast almost all the vineyards in the midwest are small family run farms with a very small section of vineyards on these remote country estates. They do have make great small income streams from their cash flow.

The revenue streams from these Vineyards and Wine tasting businesses relies heavily on traffic from the city’s. They rely on this traffic so they are able to stay in business. And then Corona Virus hit! That basically destroyed this cottage industry literally overnight. And many of these country vineyards and estates were put on the market by online Business and Real Estate Brokers. I had inquired about a few of these vineyards or estate’s because I could see these vineyards repurposed for maximum returns on investment. But almost every Broker I spoke with wanted to highlight the Vineyards history of profit. And market these real estate properties as turn key businesses. I don’t know about you. But investing in a business that relies on a market that has gone bust is not a attractive investment opportunity. LOL I did not buy an estate vineyard. Because I looked at One hundred Wine and Beverage opportunities. That decision and using this strategy saved me from making a bad decision.

How the One Hundred Rule is shaping my Business & Finance Blog?

As this blog continues to grow and continues to introduce new Business Strategies in Entrepreneurship, Finance, Business Strategies and more. We see I am using the One Hundred Rule to evaluate the optimal direction I as the writer and content producer should travel. The input and support this blog is receiving from the Business community is truly a blessing and humbling at the same time. Especially considering I am not a professional writer.

So at the end of the day if you want to test an idea, a business strategy or an idea in your personal and professional life? I would recommend to try using the One Hundred Rule when deciding if something is worth pursuing or not. It gives you metrics, it gives you data and results to look on and ask yourself? This is interesting or it isn’t interesting. Should you put more time into this idea or shouldn’t you? Because realistically at the end of the day If you have followed this rule and pushed through the roadblocks and challenges. I feel your likely to agree you accomplished something amazing and surprised yourself. All because you took the time to use this fantastic little rule. Thank you for reading and thank you for your thoughts and comments below.

Do you agree using the One Hundred rule give you an advantage when most people in our society are likely to quit when they don’t see results after attempting a task or goal once or twice? Let me know.

Godspeed

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