For investing-savvy individuals, the main routes to growing wealth are still stocks and bonds. And, more recently, crypto — but we know how that’s going right now.
There are, of course, plenty of other ways to invest — however, they’re mostly only available to institutional investors.
Now, a new generation of fintechs is trying to open up those private asset classes to deep-pocketed retail investors.
In Europe, that includes private equity platform Moonfare, VC platforms Further and Sprout, and real estate platforms like Louve Invest and Brxs.
Others, like Britain's Sidekick, let quite-rich people access the kind of active portfolio management that the super-rich enjoy. Then there’s good old crowdfunding, of course.
These platforms promise diversification — and higher returns than vanilla equity, though with higher risks.
Now there’s a new UK entrant — Darksquare — which announced today that it’s raised £260k from angel investors and retail investors through crowdfunding platform Seedrs.
The company wants to make assets like distressed credit, forestry, renewable energy projects and real estate available to retail investors.
“There's frustration out there amongst people that want to invest in different asset classes. You've got more access to information now than ever before. That's why Robinhood [the retail trading platform] has been so successful,” says cofounder Daniel Harman.
“As people learn more and more about investing in general, they'll naturally want to diversify into other asset classes — just like hedge funds and banks do — and we're hoping that we can help them do that.”
Minimum ticket sizes of between £2k-5k
You still have to be pretty wealthy to get in on the action. The minimum tickets will be anywhere from £2,000 to £5,000 (although that is significantly less than Moonfare, which has a €50k minimum ticket size). Harman says users will also have to self-certify as a sophisticated investor and Darksquare will verify and identify “all of our customers to make sure they understand the risks”.
Darksquare plans to go live this quarter with two or three projects offered to 100-150 people of the 300 on its waitlist, and then open up the platform later this year. Projects in the pipeline that might be available at launch include a publicly traded corporate bond, an investment into a 100-acre commercial forest in the UK and a development real estate project.
Users will have a maximum of 30 days to commit to a project that’s listed on the site, and funds will be returned to customers if an investment doesn’t reach the target amount.
Harman says another advantage of the platform is the environmental contribution of many of the projects Darksquare plans to list, including wind and solar farms, EV charging stations and forestry. “You can protect your portfolio and the planet at the same time.”
He says natural resource and energy investments also “act as natural inflation hedges”. Wood prices have been known to be fairly stable, unlike other commodities.
And now for the fine print. How much will Darksquare charge individuals for the pleasure of forest investing? It’ll take 1% upfront from individuals and a 1% annual management fee on a project basis. But that 1% annual management fee won’t be taken as cash. Instead, it’ll take 1% ownership of the asset each year.