Q. I DON’T KNOW ANYTHING ABOUT INVESTING. IS THIS STILL A GOOD FIT FOR ME?
A. Yes – our funds are designed for those new to investing and those with deep investing experience. If you don’t have much or any experience, we offer a rich educational experience. This includes real-time hands-on learning each month, as well as podcasts and webinars for deeper dives into the various components of angel investing. You don’t have to be an angel investor to benefit from a diversified ‘portfolia’ of 6-10 high-potential companies.
Q. IS THERE AN EDUCATION COMPONENT INCLUDED WITH THIS FUND?
A. Yes, the overview of the learning interaction is included, but in short it lets the investor learn at whatever level of engagement fits their lifestyle. We have a learning library of videos by top angels on every aspect of investing for baseline knowledge and monthly 'Ask Me Anything' sessions, but the real learning comes from being a part of this totally transparent process: watching the companies pitch, hearing the questions that the lead investors drill down on, being a part of the discussion as we evaluate companies post-pitch, joining the deal team to be a part of the diligence process, and joining success teams post-investment to help the companies succeed. Limited partners in our funds can go on to become Leads in future funds.
Q. I’M INTERESTED, BUT I DON’T HAVE MUCH TIME TO GIVE TO THIS RIGHT NOW, IS THIS SOMETHING I CAN STILL DO?
A. Your investment in a Portfolia Fund provides you a diversified portfolio in 6-10 high-potential entrepreneurial companies. The learning program is a nice benefit, but it’s not necessary for you to participate to still get amazing value—we want Portfolia to fit your interest and lifestyle. Portfolia is a ‘guilt free’ zone and we encourage you invest annually and engage personally at whatever level works for you now.
Q. WHERE DO YOU FIND COMPANIES?
A. Companies are sourced through Portfolia’s networks, our lead investors, and limited partners. Additionally, our deal flow comes from the deep relationships Portfolia holds with the Venture Capital community, accelerators and others in the innovation ecosystem. Our CEO is also Founder/CEO Emeritus of the Kauffman Fellows Program, a venture capital training program which has nearly 500 VCs around the world, with 30% women. We see companies not available to others.
Q. HOW MUCH DOES TRAINING COST?
A. The ‘Learn-by-Investing’ approach offered through Portfolia funds is provided at no additional cost. Angel Training programs can cost as much as $5,000-$10,000 tuition. We access video education underwritten by the Kauffman Foundation, and provide an experiential ‘learn-by-investing’ program that lets you view and discuss the companies through live video. You can also provide your feedback, participate in private ‘Ask Us Anything’ sessions with our Lead Investors, join due diligence research groups and company success teams after the investment. We believe Portfolia’s collaborative and experiential process is the ideal way to create or sharpen investment skills as well as gain a diversified portfolio of entrepreneurial companies.
Q. CAN I SEND IN COMPANIES FOR PORTFOLIA FUNDS TO REVIEW?
A. Yes, we source companies through our lead investors, the larger limited partner group (that would be you), and our deep personal and professional networks. We encourage you to submit companies who are venture ready and meet the criteria set forth by the Fund. That usually means that they have a product, service or platform in the marketplace or ready to launch, have a unique competitive advantage in the marketplace, and have an experienced leadership team. Your referrals are one of the reasons we’re so successful as a team.
Q. CAN I INVEST MORE THAN 10K?
A. Yes, we are currently taking investments at $10,000, $25,000, $50,000 and $100,000. Additionally, for family offices and other ultra, high-net worth individuals, we accept larger amounts. Why the increments? To make smaller funds with nearly 100 partners each, we need to be more streamlined, and investing increments lets us process reporting more quickly and easily.
Q. CAN MEN INVEST IN THE FUNDS?
A. Absolutely. Portfolia funds are designed as a new model of venture investing that appeals to women – but we’re inclusive to all and welcome men in our funds. Today 20% of our larger community are male. Today’s traditional venture capital and angel investing processes were created for men, by men, before women held much wealth or were even in the workforce. In venture capital, nearly 90% of investors are men. We believe that when women are engaged as investors, we’ll see different companies, teams and solutions succeed in the marketplace. All are welcome to be a part of it.
Q. WHAT IS ACCREDITED AND WHY DO I HAVE TO BE IT? DO I NEED TO TAKE A TEST OR BE AUDITED FOR THIS?
A. US regulations require potential investors in private companies to meet certain income guidelines before they invest. This was set up so that the individual can prove they can afford to suffer a loss of the funds without undue consequences, it harkens back to the Great Depression in the 1930s. To be accredited you must hold income of $200,000 for the last two years and expect to have that income going forward (or $300,000 if including your spouse); or net assets, minus your home, of $1 million.
Q. IS MY INVESTMENT PROTECTED AS IT IS IN A BANK DEPOSIT?
A. No, investing in private companies is high risk investing. You can and will lose money in early stage investing. Our goal is that the successful investments will outweigh the losses we’ll see in some of our early stage portfolio.
Q. HOW DOES EARLY STAGE INVESTING COMPARE TO OTHER INVESTMENT OPTIONS.
A. This is a complicated question, but see the chart below for comparisons on average of angel investing, venture funds, and public markets. Angel investors who hold a portfolia of 30+investments have the greatest returns per the available data, but this number is very difficult to achieve on your own. An investor would have to review hundreds of deals, do deep research on dozens before creating a personal profile of 30+ companies. That’s why Portfolia uses a collaborative process, reviewing opportunities across the country, to provide its members with a quick portfolio.
Q. DO YOU ONLY INVEST IN COMPANIES LED BY WOMEN?
A. We invest in companies where women make markets, where we add real value to the entrepreneurial. In nearly every case, women would be on the executive team. Our goal though is to find the best investments for our members.
Q. I HAVE INVESTED A LOT, BUT I’M INTERESTED IN THE MODEL, AND WOULD LIKE TO HAVE GREATER DIVERSIFICATION IN MY PORTFOLIO. IS THIS A GOOD FIT FOR ME?
A. Yes, experienced investors will find the model innovative and will benefit from further diversification across a national footprint. And we’re always looking for experienced angel investors, retired VCs or cashed-out entrepreneurs as lead investors in future funds.
Q. I AM INTERESTED IN INVESTING IN LGBT OR OTHER MINORITIES. IS THAT A FIT FOR PORTFOLIA?
A. It’s probably not a surprise that we’re interested in backing companies that are not finding an open door in traditional venture capital. Great companies are being founded by African American and Hispanic men and women, yet they are finding difficulty in getting capital; while their communities see gaps that must be filled. The same is true with the LGBT community. Portfolia aggressively seeks companies that we feel understands a large and untapped market, beyond that defined by traditional Silicon Valley or Wall Street investors. It makes sense economically and socially. Please let us know if this is an interest for you as an investor, or as a Lead partners.
Q. CAN I TELL OTHERS ABOUT PORTFOLIA FUNDS?
A. When Portfolia investors become involved in the funds, they often ask to share it with their friends and colleagues. We’re happy for you to do this. Do remember that you must be accredited to invest. Please refer those that have an interest in Portfolia Funds to Maggie@portfolia.com.
Q. HOW CAN MY ORGANIZATION GET INVOLVED?
A. We have options for organizations to have their own funds allowing their members a way to invest in private companies in areas that are meaningful to the organization, or in their own members.
Portfolia manages the funds and shares a significant part of the profit with the organization to support their mission. Contact us regarding opportunities for special Portfolia organization partnerships.
Q. HOW INVOLVED CAN I GET?
A. You can be as involved or as passive as you would like to be. We invite all investors to attend the monthly company pitches and Ask Us Anything sessions. There are opportunities to participate on diligence teams, deal teams and success teams that we build around companies. Additionally, Portfolia holds live, in-person regional and national events throughout the year. Participation is never required, but offered for those who want to be involved.
Q. HOW DO YOU KNOW THAT I’M ACCREDITED?
A: You will have to be validated as accredited, but it’s not too onerous.
If you are already a member of an angel group or were referred by a member of our angel group that knows you to be accredited, we can take their statement.
If you're new to investing, you can forward a copy of the income form that goes to the government that shows your income in 2014, with your ID number blacked out, then you'll mark the accreditation boxes on Portfolia that indicate you have met the guidelines for the past two years and believe you will again this year.
Q. DO YOU INVEST IN COMPANIES OUTSIDE THE US?
A: At this time, we are only investing in companies that are registered in the United States. Many companies that are founded in other countries register in the US. We do have investors from countries around the world.
Q. HOW MANY INVESTMENTS WOULD THE FUND PURSUE?
A: We usually make 6-10 investments from each annual fund.
Q. HOW WOULD FOLLOW-ON INVESTMENTS WORK?
A: Follow-on investing is when a company where we have made a prior investment, comes back for additional capital. We invest the full fund in 12 months, but have assignable pro-rata rights (the right to invest at the share of the company we now own), so that the investor can continue to invest in the company if they choose. If the individual doesn’t choose to invest, the rights go back to Portfolia for its use or distribution.
Q. WHAT INCENTIVES DO YOUR LEAD INVESTORS HAVE TO BRING GREAT DEALS TO THE FUND?
A: We’ve created a new model that brings top individual investors, mostly women, into leadership roles in our funds. All of our lead investors share in the carried interest (or profits) of the fund, both as a group and individually for the companies they bring to the fund that. This enables us to have a national footprint and ‘cherry-pick’ the best deals for our fund.
In addition, to the financial interests, all are committed to getting more women engaged as investors in entrepreneurial companies. They also benefit from the collaborative nature of the process, which results in seeing more and better investment opportunities as a group. Finally, as one said, ‘this is the most enjoyable investing I’ve ever done.’
Q. CAN YOU PLEASE CLARIFY THE INVESTMENT CONTRIBUTION(S) OF THE MANAGING MEMBER, MANAGING DIRECTORS AND THE ASSOCIATE DIRECTORS?
A: Everyone, including managing members, directors and associate directors invests in the fund.
CAN YOU SHARE THE INVESTING TRACK RECORD OF THE LEAD INVESTORS?
A: Each of the associate directors are very experienced angel investors, and associated with multiple angel groups. They're here to ensure best of class deal flow from around the country. As wealthy individual angels, they do not want all their investments made public. As angel investors, they invested their own money in deals to maximize returns and passion deals that they just found interesting. With Portfolia Funds, they're here to bring the best deals forward for the fund, and to assist in managing the investments. They don't get paid, but do share in the proceeds, both collectively and by the individual companies they bring to the group.
Q. AM I CORRECT IN THAT THE WATERFALL OF PAYMENTS BACK TO MEMBERS IS AS FOLLOWING – FIRST, ALL MEMBERS RECEIVE 100% OF THEIR CAPITAL COMMITMENT BACK, THEN THE RETURN IS 80/20 MEMBERS AND MANAGING MEMBER?
A: The return is by deal, with each investment independent of the others. So with a return in a specific company, you will receive your full investment back first, then profits are split with 80% to the investors and 20% to the fund managers and lead.