How to Become an Aspirational Investor
As Wall Street veterans and early stage investors, we discovered a huge void back in 2015. Individuals, especially women, who had the interest and financial means to invest didn’t have access to the top-tier deals.
These aspirational investors also wanted to invest with greater intention and have more impact, but one person can’t quite compete with powerful institutional players.
And so, we decided to create Plum Alley, a private investment platform to allow women, men and families to invest in early stage companies for returns, influence, impact and diversification.
We’re about to close our 15th investment and have so far raised nearly $13 million for companies we believe are changing the world.
We focus on STEM, with one third of our companies in the health care space and two thirds across all areas of technology. We require at least one woman to be on the founding team.
We offer access and opportunity to build portfolios of intentional investment. It is a place for investors who want to be investing in breakthrough technologies and health care but haven’t had access before.
We give our members exposure to disruptive companies, such as Aclima, which is delivering environmental intelligence through sensor networks to improve the health of humans and the planet, and Epibone, which is transforming skeletal repair and healing by growing bones from your own cells.
We like to say we invest in companies we want in the world.
Our members can lean on the Plum Alley investment team. We do the vetting, the research, the analysis. Our members can then learn about these companies and decide if they want to invest.
One of the many things we do for our members is host events, featuring founders, investors, and analysts so our members can learn more about the venture asset class and how they can be the best aspirational investors they want to be.
At an event last week, we heard from Ashvin Chhabra, former CIO of Merrill Lynch, and author of “The Aspirational Investor.”
In his book, Chhabra suggests using a framework of three different buckets for your assets: safety, market and aspirational. The safety bucket is focused on protecting you and your family to meet your financial needs despite the performance of the markets. The market bucket allows you to earn a rate of return that equals or tops the increase in the cost of living. And, the aspirational bucket is the place for more risk, which could lead to more financial wealth, such as investing in start-ups that could turn out to be the next big thing.
Intentional investment is very much part of the aspirational bucket, said Chhabra, who is now president of Euclidean Capital, which manages the investments for James H. Simons and Marilyn Simons and their foundations.
It is very important to be interested in the area you are investing in intentionally, he said. Part of the joy is learning about that area. You become a better investor because you want to learn about it.
Chhabra also said it’s important to be mindful of what’s going on around you when you are investing and not blind to what else is happening. For instance, he pointed to the case of Uber versus yellow cab companies, and how Uber has dramatically impacted the financial success of yellow cabs.
It’s not easy to figure out when you are doing the right thing or not, he said. It’s good to be aware.
What we are seeing at Plum Alley are people yearning to take some pocket of capital and whether it’s because of curiosity or an element of meaning and purpose, invest in things that solve real problems in the world. They are also able to invest with scale and expertise.
The other benefit to investing in the aspirational bucket is it allows you to stay relevant and have a seat at the table.
Do we really need space travel, or do you think it’s better to put that money into problems of the climate? We are broadening the base of people with options, who can vote with their money.
We obviously think that’s a healthy thing because every single investment you make has an implication or impact somewhere.
If you are intentional and you have a framework, you can say, “This is my money. This is where I want to have my agency in the world, and this is where I want to team up to get opportunities I wouldn’t have on my own.”
Warren Lee, who had been a venture investor for about 18 years, as one of the founding partners of Canaan Partners’ New York office, an early stage venture firm, also appeared at our event last week.
Asked if this is a particularly strong and unique time for the venture asset class, Lee said in terms of technology, we are in a unique time, but not in terms of impact. Lee said we are seeing start-ups expand in all industries, including older stage industries such as real estate, hospitality and transportation.
But these industries face regulatory as well as political constraints and it’s unclear if they’ll be able to overcome them.
Venture capital flows in pretty quickly with people chasing returns, but access to talent isn’t necessarily scalable, said Lee. There will be “big winners” and “a lot of losers,” he said.
In terms of the most exciting areas for investing, Chhabra pointed to health care, where there is a ton of innovation, while at the same time, people are living longer, and health care systems are willing to pay lots of money if researchers find cures.
This quote from the Boston Consulting Group in its May 2018 piece on “Why Women Owned Startups are a Better Bet” resonates with us in a big way: “The people who write checks are the ones who have the most power to make change.”
Everyone has an opportunity to define the future they want to put capital towards and to do so with some agency and intention.
What gets us excited is to be a partner and in many ways a platform that affords access and opportunity to ventures that historically have only been for multimillionaires and above.
We are increasing the number of investors who have incredible areas of experience and leverage. The economic system benefits from diversity, tapping capital that has historically not had access to this asset class.
At Plum Alley, your money has meaning.
