One prospective investor, who asked not to be identified, described the shift this way: While it used to be almost impossible to get into Tiger funds, he has received calls from multiple banks in the past year inviting him to invest.
There’s room to go even further.
“There is an expanded interest among private equity funds in chasing high-net-worth retail money, and they can expand their offering on these retail platforms in a bigger way,” Vailakis said. One banker offered her access to a portfolio of eight private equity funds, but she refused because it would mean paying a double layer of fees at a moment when returns looked less certain.
JPMorgan’s Conduits
JPMorgan took on multiple roles for PIP 15, sourcing both investor capital and debt financing.
For Tiger, JPMorgan Private Investments set up onshore and offshore conduits to raise money from the bank’s wealth-management clients and employees, regulatory filings show. The channels, allowing a much lower minimum investment than the venture fund itself, began soliciting capital in October.
While Tiger’s main hedge fund has lost more than half of its value this year, PIP 15 isn’t sharing in that misery. It deployed billions before the downturn, but it also had billions left, potentially positioning the firm to scoop up additional holdings at better prices. The shift in focus to early-stage venture stakes could, theoretically, spare PIP 15’s backers from the worst pain because the assets hadn’t yet soared in value.
The ultimate outcome may not be evident for some time because it often takes several months for private markets to settle on new valuations after a significant downturn. Investors at a number of funds, such as Dan Sundheim’s D1 Capital Partners, are waiting to see what happens with their portfolios when marks are shared after the end of this month.
Coatue began marketing its Growth Fund V in early 2021, filings show. Last June, JPMorgan began offering a conduit to its wealth-management clients to pool cash and invest in that vehicle. That channel alone raised almost $2.9 billion by the end of September, according to regulatory documents.
That contribution is big enough to run a full-fledged growth fund. It can be harder to put bigger pools of capital to effective use when investing in companies not yet mature enough to be public.
In April, Coatue prevented some investors from withdrawing all of their cash in its main hedge fund, which bets on public and private assets. The policy puts hard-to-sell stakes into so-called side pockets that can be liquidated later.
The fundraising shift to millionaires is an experiment that will play out in coming years. Venture-capital firms used to focus on tapping investors able to write the biggest checks -- such as endowments, foundations, pensions, sovereign-wealth funds and the ultra-wealthy.
But after years of watching those firms post robust returns, individual investors were eager to get in, and banks, hungry for more ways to generate fees, helped them do it. As the valuations of private companies neared record highs, those investors were let in last.
--With assistance from Katherine Burton and Marion Halftermeyer.
This article was provided by Bloomberg News.