Equity Crowdfunding Just Got Awesome!
I am proud to announce that SumuFund, Inc. has formally registered with the US Securities and Exchange Commission to become a public, non-traded, closed-end fund. SumuFund will give millions of investors their first opportunity to invest in a professionally managed fund that invests in startups.
SumuFund is the culmination of seven-years of exploration and problem solving by me and one year of incredibly hard work by a passionate and talented team of people. We are now in a quiet period with the SEC so I am unable to share a lot of details, but below I highlight why equity crowdfunding just got awesome with SumuFund.
What it is: SumuFund is to startup investing what a mutual fund is to public stocks. SumuFund will be a professionally managed investment fund that will focus on finding the best and most innovative startups and invest in them.
Traditionally, eligible investors in private equity and venture capital funds have been high-net-worth individuals and institutions, or what is known as qualified accredited investors. This is where SumuFund is dramatically different! SumuFund will not only be open to accredited investors, but it will be the first startup investment fund that will be open to suitable non-accredited investors.
In most instances (though varying from state to state), people who make $70k a year and have $70k in liquid net worth (retirement, savings, investments, etc- not your home) will be eligible to invest in our fund. It’s hard to pin a number on just how many people this includes, but our research has narrowed it down to roughly 25 million American households!!
What it isn’t: SumuFund has nothing to do with the JOBS Act. It is not related to the Title IV rules recently approved by the SEC. SumuFund is created based on legislation Congress passed decades ago. The governing laws are fully baked and we will be regulated according to the Investment Act of 1940.
The type of investment structure SumuFund is using has frankly been obscure in finance. This structure is used by some Private Equity firms, but focused traditionally on making debt investments to large private companies.
We are innovating on this investment structure to focus on equity investments in startups, and blowing it up with awesome technology to open the investment opportunity to millions of people!
For investors: Investing in startups and early stage companies is risky, but if done well (and with plenty of luck), can be a great vehicle to build wealth.
SumuFund gives individual investors the same opportunity most institutional investors choose; to invest money in a professionally managed fund with managers who have the experience, time and bandwidth to employ thorough due diligence and make justifiable investment decisions. (I share more about our rockstar team below the post)
Investor capital in the fund will be diversified over a portfolio of startups, reducing the risk of total loss of capital in an asset class that is inherently risky.
Though investors will not make the final investment decision, they will participate in a lot of the fun had with helping startups launch. SumuFund’s sister company, Startup Factory, is building technology that will allow fund investors, the fund management team and the invested startups, to work collectively to build great companies.
This community is what I am most excited about!! As a tech founder who has had failed ideas, I know how difficult it can be to 1) motivate people to believe in your idea and 2) stand out in a very crowded world. The startups that SumuFund invests in will benefit not only from the experience and network of the management team, but from the awesome power of our community of investors who I believe, without a doubt, will directly impact the success of these companies.
SumuFund will not be a short-term investment. Anyone who invests in the fund should expect their capital to be at work for 5–7 years, hopefully growing in value over that time period! At the end of the day, our goal is to provide an investment opportunity for millions of people that outperforms current investment options (stocks, mutual funds, ect…) adjusted for the risk and illiquidity.
For startups: The prospect of equity crowdfunding is attractive. However the obvious downside is the regulatory burden startups will have to carry.
SumuFund will provide the best of both worlds. We will have a “crowd” of investors anxious to promote the startups we invest in, and SumuFund carries the regulatory burden, so startup teams are free to do what they should do, build great companies!
To close: There are only a few things in life that move me in a deep way. Convictions and passions that drive me to a point of obsession. The problem that SumuFund solves is one of those. I believe a fundamental transformation has begun in finance that will change the private equity world over the next several decades.
I believe that good, sustainable business models will be created that protect investors and provide private companies with new opportunities to access capital.
I believe SumuFund is the best solution for startups and the millions of people eligible to invest in startup companies through our fund. In less than 4 months we will be live and our journey will truly begin!
Below this post I share about our team but I want to give a special shout-out to our attorney, Larry Cohen with Gibbons P.C. in New York, who has helped in tremendous ways to get us to this point. From receiving a cold-email from this country boy in Ohio, to entertaining my crazy, world-changing plans, he has provided thoughtful, balanced counsel every step of the way. So on that note, I close with this:
*This post shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. The securities to be offered by SumuFund may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective.
Check out more at sumufund.com
We are at the Collision Conference in Vegas May 5–6.
The SumuFund team: A talented group of investors, entrepreneurs and developers have assembled to build SumuFund.
Flavio Lobato- Flavio has over 20 years experience on Wall St, including with Goldman Sachs & Co. and Liongate Capital Management, an alternative investment company that grew to $7bn in assets under management. Flavio launched IKOVE Capital Partners in 2014, a venture capital firm focused on commercializing technologies out of research institutions.
Rodolfo Bellesi- Rodolfo built a successful real estate company in Brazil before coming to the United States to launch IKOVE Capital Partners with Flavio Lobato, to commercialize technologies at his alma mater, The Ohio State University.
Phil Tassi- Phil has worked for the last 5 years in finance focused on risk management and process control. He will lead compliance for SumuFund.
Schonne Eldridge- Schonne is the CTO of Startup Factory, sister company to SumuFund. Schonne has built and launched several tech startups and is an amazing technical, product and marketing leader.
Josh Angelucci- Josh is our resident hacker for Startup Factory passionately building awesome tech!
Me- I started investing in 2006 focused first in real estate. Since then I have started several companies from two tech startups, to a coffee shop and bakery (with my beautiful wife Beth) and most recently Nikola Labs, a company bringing breakthrough wireless power technology to market.
Startup Factory: SumuFund is actually pretty complex to build and manage. In order to be successful we need awesome technology. Startup Factory is building that technology for SumuFund as well as many other awesome features for startups. It’s a beautiful product that I am excited to share with the world when we officially launch. Learn more at startupfactory.org.