Sweater Ventures raises $12M to democratize VC funding

What if everyone could invest in venture capital? That’s the question a new retail VC firm called Sweater Ventures seeks to answer, the firm tells Axios Pro.

Why it matters: If successful, Sweater could open up to everyday investors an asset class that has mostly been limited to endowments, pension funds, family offices, and high net worth individuals.

Driving the news: Sweater raised $12 million in equity financing to build technology to manage funds and offer a VC platform to retail investors.

How it works: Sweater Inc., the fintech company affiliated with the firm, provides the underlying tech and will act as a registered investment advisor on behalf of investors who sign up.

• Sweater Inc. is also launching a mobile app so that investors can check in on how the fund — and their funds — are doing.

Meanwhile, the Sweater Cashmere Fund operates as a statutory trust that is independent of Sweater Inc.

• It will manage a so-called rolling fund that pools retail investors’ capital to deploy into startup investments.
• Instead of a $500,000 minimum investment into the fund (industry standard), the minimum investment in the Cashmere Fund will be $500, Sweater’s founder Jesse Randall tells the Axios Pro Fintech Deals newsletter.
• The fund will aggregate all those small checks together and act like any other big VC — by managing its own deal pipeline and writing checks to startups.

The bottom line: The pandemic awakened the retail investor and drove them into the stock market. Whether the same crowd is willing to try on this VC sweater is the bet at play here.

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