Dynasty Partners With Allocate to Offer Advisors Venture Capital Funds

Plummeting stock markets and a reluctance among more business leaders to take their companies public have fueled interest in alternative investments, but VC funds have generally remained off limits for all but the wealthiest and best-connected individual investors.

“I think that it is important for advisors to have access to things like this,” Dynasty co-founder and Chief Operating Officer Ed Swenson said in an interview.

“It helps them offer things that might be unique in the marketplace that clients don’t necessarily have access to,” Swenson added. “A big part of this story is it’s providing access now to a part of the market that was really shut off from everyone except for institutional investors in the past.”

Allocate’s platform is intended for wealthy advisory clients—they still must meet the regulatory criteria to qualify as accredited investors. But the scale of its user base enables clients to achieve a purchasing power that rivals that of the institutional investors like pensions and endowments that have typically dominated VC fund investing, according to CEO and co-founder Samir Kaji. Where a VC fund might demand institutions buy in with a $5 million or $10 million minimum investment, Kaji said that RIA clients using its platform might only have to meet a $100,000 or $250,000 minimum.

The partnership is a major expansion of Allocate’s reach within the wealth management sector, though it has already carved out a significant presence there in its young life. Founded late last year by veterans of the financial and private fund industries, Allocate already works with 46 RIAs managing $116 billion in assets, Kaji said. Allocate also works with wirehouses, private banks, and other financial-services firms.

There’s a common thread in the service models of Dynasty and Allocate. Both are technology-focused companies that promise to handle the behind-the-scenes work so their partners don’t have to. For Dynasty’s advisors, that means offering a set of technology tools and business services to help them focus on building their practices. Similarly, Allocate offers a suite of compliance services to handle the unique—and substantial—administrative burdens that come with the type of investments it facilitates.

“It is the technology that makes it easy and frictionless to allow clients to invest in these products,” Kaji said in an interview. “In all the private markets there’s a lot of friction involved in everything from filling out subscription documents to performance reporting. We make that all very easy for both the advisor and their client.”

Allocate also conducts extensive due diligence reviews for each fund manager it encounters, as well as handling compliance around know-your-customer and anti-money-laundering rules.

Don’t underestimate the significance of those challenges.

“The vehicle for investment is now more automated and more scaled, so that a wealth manager, an advisor can access these opportunities for their clients in a scalable way,” Swenson said. “It used to be a really big gating factor—all the documentation and all of the paperwork that went along in direct investments.”

The company also offers education services in the form of webinars and other materials to help advisors navigate what Kaji acknowledges is “an idiosyncratic asset category” and determine whether a given fund is a good match for a client’s risk tolerance.

“By very definition,” he said, “when you’re investing in early-stage companies, [it] comes with a different risk-return profile.”

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