It’s safe to say private market investments — that means asset classes like venture capital, private debt, real estate and private equity — have been having a bit of a moment the last couple of decades. (Everyone's an angel investor now, right?) There's growing awareness of the potential for moneymaking in these sectors, and people in the tech industry — from founders to operators — want to help the next generation invest more easily.
Cue Berlin-based investing platform Bunch, which has just raised a €7.3m seed round for its operating system (OS) that aims to open up access to these asset classes for individual investors.
What does Bunch do?
Bunch has built a software platform with three target customers: founders, business angels and venture fund managers. In other words, people who work in and around startups and have money to invest.
Why founders? Bunch says that by enabling investors to pool their investments it helps founders keep their cap tables clean by adding one single investor of record rather than 20-50 individual investors, thus avoiding the administrative costs they come with.
Business angels can use the Bunch platform to pool and manage their deals, while venture fund managers can quickly set up special purpose vehicles (SPVs) to invest into their portfolios.
Bunch launched a beta version of its investment pooling platform in Germany and the Netherlands three months ago, and has already transacted close to €150m of assets for 500 customers across startup investments and funds.
So far, these customers have included prolific angel investors wanting to get in on more deals; ex-operators that have invested in VC funds that previously backed their companies; and fund manager and serial entrepreneurs plotting several new SPVs a year on the platform.
Cofounders Enrico Ohnemüller and Levent Altunel founded Bunch in late 2021, having previously worked in institutional and VC investment — where they became acutely aware of how difficult it is to set up investment entities in Europe.
Investors can create their own investment syndicates using Bunch, and then use the platform to track all their investments in one place. “This helps them to share access to unique deals with their close network and lower capital requirements while diversifying their risk in early-stage and private investments,” Ohnemüller and Altunel tell Sifted.
Who’s investing in Bunch?
- Berlin-based early-stage VC firm Cherry Ventures.
- Embedded capital, which led its undisclosed pre-seed round.
- Angel investors including founders and C-level executives from Adyen, Klarna and Juni.
What’s the market like?
Historically, only large institutional investors and high net-worth individuals have had access to investing in asset classes like venture capital. But a recent wave of fintechs has been founded by individuals with a background in investment who realised how closed off it all was to other investors.
London-based Further launched last month to allow "everyday" investors to discover, compare and back funds with cheques starting at “as little” as £1,000. Berlin’s Moonfare has raised $200m to help individuals invest in private equity and other private assets, but with a minimum of €50k.
What’s next for Bunch?
- Bunch has begun hiring in Germany and Netherlands, where it’s already live, and it’s now looking to expand across Europe — mainly into the Nordics, Ireland and the UK, where it’s just hired its first team members.
- The company wants to grow its current headcount of 12 to around 30 by the end of the year — mainly across tech, sales & ops and legal & tax roles.
- So far, the majority of transactions on Bunch have been into startups and venture capital funds. Next, the company plans to expand into other asset classes such as real estate and crypto.
When it comes to returns on investment, private assets have outperformed public markets for the last couple of decades. In fact, average returns for private equity firms have outperformed the MSCI World Index in each of the past 20 years by an average of more than 1000 basis points, according to Hamilton Lane data. This naturally makes private market investing very attractive, and it’s great that startups like Bunch are trying to make it easier to access these assets.
But investing in high-risk, early-stage startups and equally volatile venture capital firms is a risky business: you only need to look at the downturn in tech valuations right now to see how your "fortune" can change very rapidly. So these investments are only suited to those who are in it for the long run or who can afford to lose some cash.
The key to any good investment portfolio is diversification, which platforms like Bunch make faster and easier for investors. If it successfully opens up investors’ access to a broader range of quality investments — rather than throwing their hard-earned cash into random family-and-friends angel investments that turn out to be pipe dreams — then that’s for the benefit of the startup ecosystem.