TECHCRUNCH: In what may be one of its first investments in a Series A round, the investment firm KKR has pulled from its $98.6 billion in assets under management to lead a $15 million investment in fundraising platform Artivest.
The deal is part of a broader push from the private-equity firm to invest more actively in startup technology companies. To date, KKR has backed companies including Magic Leap, FanDuel, Ping Identity, Arago, ClickTale, Next Issue Media, and The Hut Group.
In the past, KKR invested primarily from a joint-venture fund it had set up with the venture investor Accel Partners, called Accel-KKR, but now the firm is also doing investments from its $13 billion balance sheet (a pool of capital larger than the top five largest current venture funds combined).
“Our balance sheet [investing] is very opportunistic,” said KKR CIO Ed Brandman. “I don’t think this is going to be a significant portion of the balance sheet [but] it can be meaningful. Over time [investments] could be hundreds of millions of dollars.”
With Artivest, there was a clear strategic benefit for KKR’s involvement. The company has created a technology and investment structure that allows accredited investors and the registered investment advisers that manage their money to invest in the private equity funds and hedge funds that had previously been the purview for ultra-high-net-worth individuals.
The problem for private-equity firms and hedge funds is that they don’t have the capacity to manage a relationship with thousands of individual investors — the documentation alone would be a nightmare.
Artivest solves this problem by creating investment funds that it manages, pooling the assets of the individual investors into a single, special-purpose vehicle that will invest in a private-equity or hedge fund.
It’s a variation on the marketplace theme that has enabled companies like AgFunder, CircleUp, AngelList, OurCrowd and others to take a page from the private investment playbook and create investment opportunities for qualified investors to act as their own micro-venture capital and private-equity shops.
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