I spent my career representing companies that were raising capital and funds that were investing capital in those companies.
And, I think the key thing that was the light bulb that came on for me, for iSelect, and what was the fundamental discovery that gave rise to our company, was that instead of focusing on the people who were trying to raise money, instead of focusing on the people that already had money to invest and were already investing that money, the way to really grow this area was to focus on the investors who never had access to this asset class. Who never had the opportunity for these types of investments that have asymmetrical growth opportunities, but who have the money and the capability to actually make the investments if you made it available to them.
So, when you have a background in venture capital, one thing that’s obvious is that it’s not easy. Doing the diligence on a company, 120 hours of diligence is a number, but it’s a lot of work. And it means that you have to have the time, and the effort, and the resources to really get in and understand what a business is about, or else you have a substantial likelihood of losing your money.
I don’t want to minimize it and say, “You can’t lose money in our portfolio,” too, but if you don’t do diligence on a company and make an investment, it’s almost the surest way possible to lose that money.
So, we had to package that process up and make it where it could be something that could be repeated in a way that made this available just to your average investor. And that was the magic, the science of iSelect, was the effort that we put into building a platform that can do this sophisticated level of diligence using modern technology, using modern resources to information, using the internet and databases, and everything else we could to streamline the process and make it where it’s easier to do and easier to access for the investor in a way that they can really come in and have a chance to get into this asset class.
The other thing we had to do was come up with a legal structure that enabled them to get into this in a way that made sense financially for them. So, if you typically want to go into venture capital, you’re looking at, to get into a capital venture fund, anywhere from a $250,000 to $1,000,000 or more investment just to get into one fund. If you’re looking at building a diversified portfolio of companies that are startup stage companies, you’re probably at a $50,000 minimum investment in each one. So, if you want ten companies, a reasonably diversified portfolio, that’s $500,000 of investment.
Most people don’t have the time or the money to go and invest in this asset class, but they would if you made it easier for them and gave them bite sizes they could actually get real diversification under.
That was the magic of iSelect. We came up with a diligence process that was easy for people to access, and see what we’ve done, and understand our companies, and that also is comprehensive in a way that eliminates all of the risks that you would have, all of the risks you can eliminate in investing in a company at this stage of investment. It also allowed people to take investments as low as $5,000 and put those in. So that for $50,000 to $100,000 you could create a diversified portfolio.
And, so by focusing on those investors needs, and figuring out the structure, and the systems, and the processes to address those concerns, that’s what’s truly unique about iSelect and it’s what makes our fund different. If we focus on the smaller investor like that versus the large funds, the large institutional investors, we’re focusing on bringing venture capital down just to ordinary accredited investors.