Investments  

VC investment platform taps advisers keen to diversify assets

“Sprout is a platform which allows qualified investors to prove their eligibility and browse VC funds which have an information pack attached to each one.

“Whether your ticket is £5,000 or £500,000, Sprout is the platform for you because a lot of these top funds - the minimum you need to invest is usually between £1mn and £5mn.”

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Historically, retail investors have been able to take a punt on an individual startup, but the chances of them failing is high. Nearly 67 per cent of startups stall at some point in the VC process and fail to exit or raise follow-on funding, according to CB Insights.

The idea of Sprout is to give investors the opportunity to invest smaller amounts in a group of VC-backed startups via funds designed to ride out the high failure rate of the majority of companies and capitalise on the few which make it.

“We’ve seen clients putting money into speculative startups. We see people putting as much as £100,000 into one company,” said Blausten.

“This is a smart way to do it. The maths shows the vast majority of startups fail, but you’re building a portfolio with a low percentage to go big.

“So for example, we’re speaking to a fund at the moment which plans to invest in 100 startups. They expect four of those to go huge, and they expect seven to be pretty big. They run through the maths of it, and that still gets you to a five times return on the whole fund. And that’s with 40 per cent of them failing.”

If you go into a fund and there’s a failure that’s fine, Blausten added. “The fear is going to zero. But the funds we’re working with - the worst performing of them have still achieved 15-20 per cent a year historically.”

Sprout charges a one-off structuring fee, and then each fund charges an annual fee which reduces the more an investor invests in it.

Blausten said the company can hold advisers’ hands throughout the process, acknowledging VC is a new asset class many might not currently be familiar with.

“We can help them with the education piece,” he said. “We want advisers to think of us when they get questions about VC.”

ruby.hinchliffe@ft.com