Looking to dip your toes into venture capital investing? Well, the Fundrise Innovation Fund is your ticket in. It’s made venture investing accessible to everyone, with a minimum investment of just $10. That’s a far cry from the traditional venture capital funds that are invite-only and require a hefty $100,000-$250,000 minimum investment.
Let me share a bit of my own experience. Back in 2007, I made my first venture capital investment. I put $70,000 into Bulldog Gin, a company started by a college buddy of mine. Fast forward to 2017, and Bulldog Gin was sold to Campari. Looking back, I realize that investing such a large sum in a single private company at the age of 30 was a bit reckless. I didn’t know much about the spirits market, and the investment was a significant chunk of my income and investments. It was a risky move, but luckily, it paid off.
Since then, I’ve become more strategic and responsible with my private investment capital. I’ve found that the best deals usually go to venture capital funds with strong connections and expertise. That’s why I’ve shifted my focus to investing in funds rather than individual private companies.
Why do I invest in venture capital funds? Well, for starters, it helps diversify my investments away from public equities, bonds, and real estate. Public equities can be particularly volatile, which can be nerve-wracking once your portfolio reaches a certain value. I also invest in venture capital funds to get in on companies that stay private for longer. I’d rather invest in private companies early on to try and capture their valuation growth.
But here’s the catch: traditional venture capital funds usually require minimum investments of $100,000 – $250,000. That’s a barrier for many people. But not anymore, thanks to Fundrise.
In 2022, Fundrise launched its Innovation Fund. Two years on, the fund has built a portfolio of promising investments in high-quality private growth companies like Vanta, Databricks, Anthropic, Canvas, and many more. And the best part? You can get in on the action with just a $10 minimum investment. Plus, Fundrise only charges a 1.85% management fee and doesn’t take a cut of your profits. That’s a big difference from traditional venture capital funds, which typically charge a 2% management fee and take 20% of your profits.
The Innovation Fund invests in five main areas: Artificial Intelligence & Machine Learning, Modern Data Infrastructure, Development Operations (DevOps), Financial Technology (FinTech), and Real Estate & Property Technology (PropTech).
One investment that really caught my eye was the Innovation Fund’s $25 million investment in Databricks, a leading software, data, and AI company. Databricks was born out of a project at my business school alma mater, UC Berkeley, and is now used by over 10,000 organizations worldwide. It’s raised about $500 million from investors like Andreessen Horowitz, Baillie Gifford, ClearBridge Investments, and NVIDIA.
I’m particularly interested in AI as a long-term investment trend. I’m also concerned about AI crowding out jobs for our children, which is why I’m trying to hedge by investing in AI. Databricks is a prime example of the kind of AI companies I’m looking to invest in.
In 2024, the Innovation Fund also announced investments in open AI and Anthropic, two of the leading AI LLM companies. As a private equity investor since 2001, I prefer investing in a venture capital fund over individual companies.
I live in San Francisco, where AI is a hot topic. I don’t want my kids asking me in 20 years why I didn’t invest in AI companies when they were just starting out. Even if I don’t pick a winner, at least I can say I tried.
I recently had a chat with Ben Miller, the CEO and Co-Founder of Fundrise, about his fund, how an evergreen venture capital fund works, and future investments his team is excited about. You can listen to our conversation on Apple or Spotify.
If you’re interested in learning more about the Fundrise Innovation Fund, you can check it out here. You can see the investments before deciding to invest and how much. With traditional venture capital funds, you have to commit capital first and then hope the general partners make good investments.
