The first question most people ask when talking about alternative investments is: ‘What are they?’ Interestingly, they are generally defined by what they are not, i.e. anything that is not shareholdings in listed companies, bonds or cash, which may be made through an ISA or other traditional investment vehicle or property.
That means there is a wide sphere of possible alternative investment markets that are open to investors. These include Collectables like stamps, coins, antiques, wines, classic cars, jewellery and art; Scarce Resources like precious metals, oil and land; or Finance Solutions such as invoice trading, peer-to-peer lending, hedge funds, PE funds, VC funds and right through to direct tax incentivised equity investments in early-stage businesses.
So why do investors want to look outside of the traditional investment types? There tend to be two simple drivers - following a passion or the potential for greater returns. Whatever the motivations may be, these investments often share some basic characteristics which can include: A much higher risk of losing some, or all, of the capital invested; difficulty in determining market value; illiquidity; and limited available data points.
That is why professionals would argue that investors limit their exposure to these assets to less than 10% of their overall investment portfolio. This is enough to give them access to some potentially interesting returns whilst limiting their exposure to a risky sector.
Historically, gaining access to alternative investment opportunities has been difficult for private investors, often requiring a very high minimum investment that would put them beyond the reach of the many. Consequently, investments in private/early-stage companies was limited to institutions such as VCs or Angel syndicates.
VentureFounders was created to help change this. We aim to make Angel and VC-style investing more accessible and straight forward for private investors. We believe in a meticulous approach to interrogating and qualifying every investment opportunity prior to presenting it on our platform. That is the surest way to mitigate the risks and maximise returns for investors. See our live investment opportunities here.