Allocate raises $10 million to open top VC doors to wealth advisers

Allocate, a company enabling clients of wealth advisers and family offices to invest in venture funds, raised $10 million in new funding.

Why it matters: The current fundraising market is an opportunity for venture firms to diversify their limited partner base, and for eager smaller investors to get access to top funds.

How it works: On an average year, the company assesses between 500 and 700 fund managers, and selects between 20 and 50 across established large firms and smaller newer ones, according to co-founder and CEO Samir Kaji.

• Though he declined to name any firms, SEC filings indicate they include Andreessen Horowitz, Lightspeed Venture Partners, Khosla Ventures, Craft Ventures, Altimeter, Uncork, and among others. It also provides co-investment opportunities alongside some fund managers.
• Allocate charges an investment fee, and will begin to charge subscription fees next year as it expands its portfolio management software's capabilities. So far, customers have invested almost $500 million.

Of note: While wealth advisers and private banks have gravitated toward more blue chip funds, family offices tend to be more interested in smaller firms, says Kaji.

What they're saying: "iCapital and CAIS allowed these [registered investment adviser] firms to offer these types of opportunities to clients... the one area that hasn't been as democratized is top tier venture capital," says Kaji, who previously worked at First Republic Bank and Silicon Valley Bank for two decades.

• While institutional investors are currently split on investing in venture, Kaji says that Allocate's customers are enthusiastic about the asset class and eager to get more access.

Between the lines: An obvious question is why Allocate's customers wouldn't simply invest in funds-of-funds in order to access venture firms.

• Kaji argues that Allocate lets clients invest into funds that are more tailored to their preferences, avoids the double charging of carry, and avoids the higher minimum investments some funds-of-funds require.

Details: Allocate's new funding came from Gopher Asset US (affiliate with Noah Holdings International), Intera Investments, M13 Ventures, and family offices.

• Prior to this round, the company had raised $23.5 million in total, per PitchBook.