Truffle Invest Ltd (“Truffle”) is a new online platform that provides access to private markets funds for smaller investors in the UK & Ireland. Truffle held its launch event yesterday evening in central London, with 100+ high net worth investors, family offices and private market professionals in attendance.
The private markets have historically only been accessible for institutional investors – sovereign wealth funds and pension funds – who can invest in excess of $10 million per fund. Despite only being available to a small number of investors, it is a huge market with $5.2 trillion of assets under management globally. Those who can invest often do so in a big way.
Private market investments have historically outperformed their public market equivalents. For example, of the 20 year period to 30th June 2017, investing in European Private Equity would have generated a return of 15% per annum, compared to 5% if the same cash flows had been invested in European public equities (source: Bain & Company).
Truffle has developed bespoke technology that enables eligible investors to invest from just £5,000 per fund. Registered members will be able to browse and research the funds available on the platform, before making their own decision as to whether or not to invest. Truffle has been launched by a team of experienced private markets investors in response to their own frustration at being unable to invest in the funds they were working with and advising their institutional clients to invest in.
Jason Proctor, co-Founder of Truffle says "We have seen a significant trend over the last few years in terms of broadening access to private markets. This has been led both by some of the larger private markets fund managers as well as intermediaries such as private banks and others. In a market where there is increasing emphasis on long-term saving for retirement, we believe further broadening of access to private market funds for sophisticated smaller investors is inevitable."
Odi Lahav, Strategic Advisor to Truffle explains that many individual investors are currently underserved with few high-quality options outside of traditional public stocks and bonds. ‘While institutional investors have been able to increase allocations to private market funds, most sophisticated individuals have not been able to follow-suit – for the simple reason that they don't have access. Truffle Invest fundamentally changes this.’
Panellist Ben Finestein, Head of Private Debt at KPMG, drew attention to the strong demand he has seen from institutional investors seeking alternative forms of yield. ‘Since the crisis, institutional investors have increasingly looked to the private debt fund managers to generate stable, reliable income. To access an 8% contractual yield with senior secured risk, that has been extremely attractive’.
Joe Schorge, Founding Partner at Isomer Capital, commented that ‘many of the best known tech companies with billion dollar valuations are typically backed by venture capital funds. These funds are often oversubscribed and the preserve of large institutional investors. It’s unfair that sophisticated individuals cannot access these funds, typically having to rely on smaller (and often higher risk) EIS, SEIS or even worse, ‘crowdfunded’ businesses as their only access point to high potential tech firms’.
Truffle Invest is currently accepting pre-registrations with the expectation of offering a Private Equity, Private Debt and Venture Capital fund to investors before year end.