I am excited to announce the launch of Zell Capital, likely the first venture capital fund open to all investors, not just accredited investors. The minimum investment is $1,000 and investors can invest directly through our website (zellcapital.com) on our anticipated launch date of June 8, 2021.
The fund is raising up to $50 million in this offering to invest in Seed and Series A rounds for early-stage startups. Seed checks will be $250k to $1million, and up to $2 million in a Series A round. We are happy to be the lead investor in the round as well.
Many people have asked how we did this. Here is the quick story:
I have long held the belief that all investors should have access to private markets like venture capital, not just the wealthy. I also believe that a fund-based strategy can be ideal for many investors who do not want to actively build their own portfolio.
My curiosity about this problem led me down several paths over the last decade. Many people were hopeful the JOBS Act would create this opportunity, but it specifically restricted funds. Many have also lobbied for the removal of accreditation rules altogether, which would enable fund-based strategies. This does not appear likely to happen.
Interestingly, the solution was in front of us the whole time. Under the Investment Company Act of 1940, there is nothing that precludes a registered investment company (fund) from investing in private securities. In fact, there is a subset of 40 Act funds active in private markets, but mostly in private debt or private equity focused on large companies.
As I went deeper into the law, the situation became clearer. The challenges to creating a fund like ours were more mechanical and operational, not legal. With the help of our lawyers, Zell Capital filed its first registration statement with the SEC in April 2020 to present its novel structure, called an Access Fund.
In the effort to open private markets to all investors, someone has to bear the regulatory burden. In the Access Fund model we are pioneering, it is the fund that bears the burden, not the startup company.
We are just getting started and there is much to share. However, one of the realities of a registered fund is the compliance and approval process required for certain communications. My ability to communicate freely on social media will be challenging initially, while we work out the best way to manage communications on platforms like Twitter. Regardless, expect to hear much more from us soon. Our anticipated public launch date is June 8. Sign-up for notifications at zellcapital.com.
Cheers,
Will
The fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. The prospectus contains this and other important information about the investment company, and it may be obtained by calling 888–484–1944 or by visiting www.zellcapital.com/prospectus. Read it carefully before investing.
The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may obtain these documents for free by visiting our website at www.zellcapital.com/prospectus. Alternatively, Zell Capital will arrange to send you the prospectus if you request it by email at info@zellcapital.com or call US Bank 1–888–484–1944.
Investing involves risk. Loss of principal is possible. Investing in our shares involves a high degree of risk. Before buying any shares, you should read the discussion of the material risks of investing in our shares in “Risk Factors” in the prospectus, a summary of which is also found here. Our shares will not be publicly traded, and you will have very limited liquidity, may not be able to sell your shares, and may not receive a full return of your invested capital, regardless of how we perform.
Our investments in what we believe to be rapidly growing venture-capital-backed emerging companies may be extremely risky and we could lose all or part of our investments. Significant risks of investing in venture capital backed emerging companies are: these companies may have limited financial resources, limited operating histories, and have generally less predictable operating results. Because they are privately owned, there is generally little publicly available information about these businesses. Also, early-stage and development-stage companies have a high rate of failure and often experience unexpected problems.
We plan to focus a significant portion of our investing in technology companies, which may cause the value of our interests to be susceptible to factors affecting the technology industry and therefore subject to greater risk than an investment in a fund that invests in a broader range of securities.
The marketplace for venture capital investing has become increasingly competitive, making it difficult for us to locate an adequate number of attractive investment opportunities.
Because our investments are generally not in publicly traded securities, there will be uncertainty regarding the value of our investments, which could adversely affect the determination of our net asset value.
One of the key elements of our structure as an Access Fund is the potential for investors of the type we expect to attract to provide expertise to our portfolio companies in various areas. There is no guarantee that any of our investors will, in fact, have expertise that would be useful for any of our portfolio companies, or if they have such expertise, that they would have any interest in working with our portfolio companies.
We have identified only a few specific investments that we may make with the proceeds from this offering. As a result, this may be deemed to be a “blind pool” offering and you will not have the opportunity to evaluate historical data or assess any investments prior to purchasing our Shares.
The Fund is distributed by Foreside Fund Services, LLC.
