A Wealthsimple Trade app icon displayed on a smartphone.Jesse Johnston/The Canadian Press

Online investment manager Wealthsimple now offers Canadian retail investors easier access to some of Silicon Valley’s top venture capital firms investing in healthcare and technology companies.

Through a partnership with Washington-based Accolade Partners, the firm is launching Wealthsimple Venture Fund I, a venture capital and growth fund that will be sold directly to retail investors. The fund will include companies such as Accel, Andreessen Horowitz and Kleiner Perkins – among some of Silicon Valley’s biggest companies that bet early on social media platform Instagram, Airbnb and mobile payment provider Stripe.

The fund is one of the nation’s first venture capital funds for retail investors, allowing clients with as little as $5,000 to participate. Investors must commit for the life of the fund, which the company estimates at around 10 years. Funds can only be withdrawn in cases where it is legally required, such as death, divorce and bankruptcy.

Wealthsimple chief investment officer Ben Reeves says it’s an investment best suited to people who have a high degree of certainty that they won’t need to use their money for around 10 years. .

Venture capital funds provide funding – usually raised through a group of institutional or ultra-high net worth investors – to start-up companies that have long-term growth potential. Traditionally, this is a market that was not accessible to retail investors.

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Mr Reeves said opening up access to the venture capital market for retail investors had been on the company’s radar for “long enough”.

“We know that in private markets there are some really good investment opportunities as long as you provide access to the right funds and in the right structure – so for us it was just about making sure we could provide the very good quality access,” Mr. Reeves said in an interview.

“Venture capital – and other private asset markets like private equity, credit and real estate – have been an integral part of the portfolios of successful investors for years, but high account minimums, requirements net worth and murky paperwork have made these opportunities out of reach for most investors.

The access Mr. Reeves was looking for was found in alternative asset manager Accolade, which specializes in venture capital investments and growth funds focused on technology and healthcare.

Clients will be able to invest in the fund through the company’s robo-advisor platform, Wealthsimple Invest. Contributions to the fund will be invested with several venture capital and growth equity managers, allocated primarily to technology and healthcare companies.

Mr Reeves said the venture capital portion will be invested throughout the life cycle of the business – seed stage, early stage and expansion stage. Growth equity will be invested in two types of businesses: “Founder-Led and Started Software Companies” that are at or near profitability, and need to scale up or invest in sales and marketing, and “companies with strong business models.” in fragmented industries.

Clients will need to speak with a registered portfolio manager to ensure that the investment – ​​especially the longer investment timeframe – is suitable for their financial goals.

“When we looked at our investors, a lot of them are really disciplined, long-term investors,” Reeves said.

As with other products on the Wealthsimple Invest platform, investors will pay a management fee of between 0.4% and 0.5%, plus the cost of the underlying security.

For the venture capital fund, these underlying costs include three levels of fees: a fund administration fee covering costs of approximately 0.2%; incentive bonuses paid to Accolade of approximately 10%; and fees paid to underlying fund managers – venture capital and private equity firms – which could include up to 2% management fees and 20% incentive fees. Like most venture capital funds, incentive fees are only paid if returns exceed a certain threshold, and the fees only apply to returns, not the total investment amount.

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