Our client, Crowdfunder, has announced the world's first VC "Index Fund", giving smaller investors a shot at investing in bigger deals while spreading out their risk.
If you can successfully choose the right companies at the seed round, you can make some serious money. Picking these companies isn't easy, as most startups fail and not many go on to become Ubers and Spotifys.
If you aren't the best at picking stocks in the stock market, what do you do? You invest in an index fund that tracks a vast number of corporations, like the Dow Jones Industrial or the S&P 500. You spread out your risk by putting your funds into all of the corporations in the index. If the stocks for those companies perform well overall, the value of your share of the index fund increases.
Crowdfunder's new Index Fund is looking to imitate some parts of this strategy by giving investors access to a broader spectrum of investment options while reducing their risk as well. The fund plans to invest in 300 early-stage deals. They claim their fund is 10x more diversified than a VC fund, leading to much lower portfolio risk.
"We have created the next generation of the early-stage venture firm," said Chance Barnett, CEO of Crowdfunder. "We're allowing investors to access both direct online investments into single ventures, as well as broader diversification into a portfolio of hundreds of VC-backed startups."
To learn more about Crowdfunder, visit their website: crowdfunder.com