THE SILICON VALLEY VENTURE FUND

HOW TO INVEST IN 51 OF THE MOST COVETED PRIVATE TECH COMPANIES IN THE WORLD

By Teeka Tiwari
 THE SILICON VALLEY VENTURE FUND
HOW TO INVEST IN 51 OF THE MOST COVETED PRIVATE TECH COMPANIES IN THE WORLD
By Teeka Tiwari

Your local financial adviser is praying you don’t higher—return.

get your hands on this research report. He’s go-
That math works. Here’s an example:
ing to be deeply embarrassed he didn’t bring this
idea to you first… Hypothetical
Investment Return Balance
VC Portfolio
That’s because in the pages below, we uncover
Early-Stage Investment 1 $100 -100% $0
one of the best-kept secrets on Wall Street. And
Early-Stage Investment 2 $100 -100% $0
we call it the “Silicon Valley Venture Fund.”
Early-Stage Investment 3 $100 -100% $0
It’s a backdoor way to own the world’s most cov- Early-Stage Investment 4 $100 -50% $50
eted venture-backed private companies. Powerful Early-Stage Investment 5 $100 -50% $50
people trade favors in exchange for getting into Early-Stage Investment 6 $100 -50% $50
these kind of startup companies. They’re normal- Early-Stage Investment 7 $100 -25% $75
ly reserved for the very rich and influential. Early-Stage Investment 8 $100 -25% $75
What’s amazing is we’ve found a way into this Early-Stage Investment 9 $100 -25% $75
market on better terms than what even the Early-Stage Investment 10 $100 1,000% $1,100
wealthiest investors in the world can receive. Total $1,000 48% $1,475
It’s truly a unique investment with the power to
trounce typical stock market returns with just a As you can see, if a VC firm bags one huge win-
fraction of the volatility. ner, it more than makes up for a string of losers.

It’s an exceptional way to own the most promis- In fact, some of the best VC firms record returns
ing companies in Silicon Valley—for a fraction of greater than 10x. And some turn more than one
the price. So let’s get started… winner out of every 10 investments.

Venture capital (VC) investing isn’t for the faint
of heart.
It involves using capital to back risky startup
companies—and waiting over a decade to see
how you make out.
The odds aren’t good. Typically, nine out of 10
startups fail.
Knowing those odds, VC firms look for early-
stage companies with hopes of landing a 10x—or
Take Sequoia Capital, for example.
Founded in 1972, Sequoia is one of the oldest VC
firms around. Headquartered in Silicon Valley’s
Menlo Park, its core focus is technology startups.
Sequoia funded some of today’s most well-known
companies before they became famous: Apple,
Google, Instagram, Oracle, PayPal, Stripe, Ya-
hoo, and YouTube.

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 And several of its investments have
recorded massive returns:

• Google’s initial public of-

fering (IPO) turned a $12.5
million investment into $4.3
billion. That’s more than a
344x return.

• Facebook’s acquisition of
WhatsApp turned a $60
million investment into $3
billion—a 50x return.

• Dropbox’s IPO turned three

seed rounds (the first fund-
ing stage) into an all-in aver-
age 467x return.

• Chinese online delivery VC investing is the perfect place to swing for the
service Meituan-Dianping’s IPO turned a fences.
$400 million investment into $4.9 bil-
lion—a 12x return. However, there’s one giant problem...

• Chinese shipment company ZTO Express’
IPO turned a $60 million investment into
$960 million for a 16x return.
But Sequoia isn’t the only VC firm cranking out
multi-baggers.
Other top-notch VC firms—like Andreessen
Horowitz, Kleiner Perkins, Accel Partners, Grey-
lock Partners, and Bessemer Venture Partners—
do it regularly, too.
As you can see in the chart above, the average
VC fund (as measured by global investment firm
Cambridge Associates) has crushed the returns of
public markets over the long haul...
Big “exits” (when VC investors sell their invest-
ments) add up to big-time outperformance over
time.
So if you’re an investor craving outsized returns,
Most people can’t invest with any of these VC
firms.
Their funds are restricted for “accredited” inves-
tors and large institutions.
[To be an accredited investor, you must have a
net worth of at least $1 million, excluding the val-
ue of your primary residence. Or you must have
an annual income of at least $200,000 for the
last two years (or at least $300,000 in combined
annual income if married) and have the expec-
tation to make the same amount for the current
year.]
Now, you might check the accredited investor
box. But good luck meeting the required
investment minimums. They often range from
$5 million to $25 million. Sometimes, they’re
much higher. For example, Sequoia launched
a fund last year with a whopping $250 million
minimum.

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 Heck, even if you had the money, you’d still need
to know someone important to get in. All the
billionaires want to invest with the smartest VC
firms in the world, but even they can’t always get
access.
Then, there’s the fees. Most VC firms charge a 2%
management fee, plus 20% of all profits. Some
charge as much as 3% and 30%, respectively.
The ugly truth is regular investors are blackballed
from these amazing opportunities to invest.
But today, we’re changing that.
Through our extensive research, we’ve found a
unique way for Palm Beach Letter subscribers
like yourself to access the VC space.
You’ll be able to invest alongside the world’s best
VC firms, the largest institutions, corporate ty-
coons, and billionaires.
We’ve found a way in that’s cheaper, safer, more
transparent, and more liquid than even the VC
funds offered to the uber-wealthy.
We believe it will outperform public equity mar-
kets by roughly two to six times over the next 10
years. That means we think you can make be-
tween 15% and 25% per year over the next de-
cade.
Here’s how you’ll do it…
The Silicon Valley Venture Fund
The name of the company offering access to these
lucrative investments is SharesPost Investment
Management. It manages the SharesPost 100
Fund (PRIVX)—what we call the Silicon Valley
Venture Fund.
Founded a decade ago, the San Francisco-based
SharesPost has satellite offices in Menlo Park,
New York City, Dubai, Singapore, and Hong
Kong. The company has two main divisions: a
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brokerage firm and an investment management
firm.
I’ll tell you why that’s important in a second. But
first, I want to acknowledge how skeptical we
were of its service.
It sounded too good to be true. Why would a firm
allow small investors into the very best private
deals? That’s why I insisted my chief analyst
Grant Wasylik fly to San Francisco to meet with
the team members, look them in the eye, and
make sure they passed the “smell” test.
We wanted to know what was motivating them
to make this product available to the everyday
investor.
A few weeks ago, he flew out to SharePost’s office
in San Francisco. From what he reported back,
the office takes up the entire 14th floor of a down-
town high-rise, 16-story building.
The SharesPost office
As mentioned, SharesPost is the parent company.
Its brokerage division is SharesPost Financial.
What’s special about this division is it deals exclu-
sively with finding buyers and sellers for shares of
private companies.
Being a trusted liquidity provider to Silicon Valley
has given the firm an enviable list of contacts in
the startup and VC community. That lead Grant
to his meeting with chief operating officer and the
fund’s portfolio manager—Kevin Moss.
 Why Launch a Startup Fund for the Masses?
Grant grilled Moss for two hours.
Grant with SharesPost COO Kevin Moss
Moss joined SharesPost in 2012 to co-head its
brokerage division.
He and his team organized deals between buyers
and sellers of Twitter, LinkedIn, Facebook, and
other private companies. If a private shareholder
or investor needed liquidity, Moss’ team found a
matching buyer and orchestrated the deal privately.
Moss realized SharesPost could buy startup com-
panies because of its experience brokering private
market trades for years. The company had connec-
tions... knew the space inside and out... and had re-
lationships with lots of Silicon Valley’s big players.
Here’s what Moss said on why he decided to cater
to the mass market instead of the uber-rich: It’s
an untapped market with huge potential. Hun-
dreds of thousands of financial advisers didn’t
have access. And hundreds of millions of ordinary
investors had no way to get in.
So why cater to the masses? Because Moss thinks
his firm can make a fortune doing so. We can’t
fault that logic. To him, this was a commercial
decision backed by solid research.
And in 2014, Moss and his team launched the
SharesPost 100 Fund (PRIVX). The fund invests
in a portfolio of l ate-stage, venture-backed pri-
vate companies.
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The fund was seeded with $100,000 from em-
ployees. Immediately, it collected $7 million to
$8 million in assets from interested parties.
Today, the fund has $193 million in assets. While
that sounds like a lot, in the fund world, it’s tiny.
So why isn’t it bigger?
The answer is simple: Moss and his team are
great investors... but lousy marketers. Most inves-
tors—both amateur and professional—still have
no idea this fund exists.
The fund isn’t offered on any full-service bro-
ker-dealer platforms (Raymond James, UBS,
Wells Fargo, etc.). And it doesn’t appear in most
financial databases or screening tools.
This has made it virtually invisible.
That’s why—unless you eat, breathe, and sleep
investment research the way we do at The Palm
Beach Letter—you aren’t going to just stumble
upon an idea like this.
Getting Diversification
As mentioned, the SharesPost 100 Fund invests
in a diversified portfolio of late-stage, ven-
ture-backed private companies. It’s an actively
managed, closed-end, interval fund.
That’s a mouthful. So let me explain…
• “Actively managed” refers to portfolio
managers Kevin Moss, Jonas Grankvist,
and Maureen Downey. The trio has more
than four decades of collective experience
in VC and private equity investing. They
make all the decisions about where to in-
vest the fund’s money.
• “Closed-end” means a fixed number of
shares are issuable (25 million, to be ex-
act). SharesPost can file for more shares
with the Securities and Exchange Commis-
sion (SEC) if needed.
 • “Interval” means you can only sell the fund
once per quarter. Typically, it’s the 25th
day of the last month of the quarter. How-
ever, it’s buyable at net asset value (NAV)
daily, just like a mutual fund.
The fund’s mandate is to buy private shares and
have an exit just like a traditional VC fund.
How Does SharesPost Buy Private Shares?
In two ways...
• Primary market: A company is
issuing new shares (seed round).
Maybe a major VC firm leads a round.
SharesPost can participate, too.
• Secondary market: An employee
or early investor of a private company
wants to sell their shares. SharesPost
can purchase them.
Note: The secondary market can open
a path back to the primary market. For
instance, once SharesPost buys shares on the
secondary market, it often reaches out to the
CFO of that company.
It’ll say: “As a shareholder, we’d love to
participate in your next round. We want to
be partners with you. We’re passive (quiet
shareholders), not activists.” Sometimes,
SharesPost can gain access to future seed
rounds this way.
According to SharesPost, its holdings are made
up of the best, fastest-growing venture-backed
private growth companies.
The firm also maintains the SharesPost 100 list,
which serves as the fund’s shopping list. (See first
chart on the following page.)
These holdings have a meaningful overlap with
holdings of the top VC firms’ holdings.
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The fund must invest 80% of its assets in names
on this list. The remaining 20% provides room for
flexibility.
For example, let’s say a company outside the 100
list is really compelling. And the fund wants the
ability to move on it. With the 20%, it can start
building a position, knowing that company will
hit the 100 list in a quarter or two.
The fund’s strategy focuses on the VC “J-Curve”…
You can see the curve on the second chart on the
following page. The blue-shaded area in the chart
marks SharesPost’s sweet spot.
SharesPost’s strategy skips the riskier early ven-
ture capital stage… and zooms in on the growth/
late-stage period. Companies in the late-stage
phase tend to be more established and focus on
revenue growth. They also have lower risk pro-
files in technology, products, and markets.
Plus, the fund owns stakes in the same startup
companies that the best VC firms own, including
Uber, Lyft, Palantir, Pinterest, and Ripple.
You can see a list of its holdings on page 8.
Since inception, the fund has had 29 exits—25
of which have had positive returns (an 86% win
rate). The average return across its wins has been
close to 2x, or 100%. And with each new invest-
ment, the fund seeks a 100% to 200% return over
two or three years.
To be clear, just like any other VC fund, it’ll have
some positions that go to zero… and some that
lose half their value. But that’s normal in VC land.
What’s not normal is SharesPost’s overall win
rate. As mentioned, it’s a stunning 86%. The av-
erage VC fund’s win rate hovers around 10–20%.
And not only has this fund been great at making
money, it’s been incredible at insulating its inves-
tors from volatility, too…
 The third chart on this page
shows it has outperformed the
S&P 500 and Dow Jones U.S.
Technology Indexes in nine of
their worst 10 months.

Although the VC/private eq-

uity approach is perceived as
risky, this fund isn’t volatile.
Remember, it doesn’t invest in
early stage companies. It invests
in the more conservative, late-
stage ones.

And with the quarterly liquidity

feature (shareholders can re-
deem up to 5% of the fund’s net
assets), it’s sticky money that
doesn’t run for the hills at the
first sign of a market pullback.

So far, it has an annualized

return of 7.2% since its incep-
tion, with less volatility than
you’d get from holding stocks.
Over the same period, the S&P
500 has returned 10.7% and the
Russell 2000 has returned 7.7%.

Now, a 7.2% return is nothing

to sneeze at. But you might be
thinking, “Why should I buy this
and not the S&P 500?”

• There are two reasons… The

first is diversification. We’re
big fans of helping you
create wealth outside of the
traditional stock market.
Having all your eggs in one
basket is never a good idea.

• Secondly, we think returns been on a tear over the last decade. (The S&P
will flip-flop over the next five years and be- 500 has an annualized return of 16.7% from
yond. Remember, public stock markets have February 2009 to February 2019.)

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 *Holdings subject to change. Not a recommendation to buy, sell, or hold any specific security. Source: SharesPost

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 But VC funds work over decade-long time horizons.
Recall our earlier chart… Over the last 20 years,
the average VC firm returned about 25% per year,
while the S&P 500 returned closer to 7% per year.
We think VC performance will take the lead
again. And the SharesPost 100 Fund will follow a
similar path.
Long-term shareholders should see 15% to 25%
annualized returns over the next decade.
Like other VC funds, the SharesPost 100 Fund
gets big moves in its NAV from exits.
For example, Lyft is the fund’s current biggest po-
sition. And the ride sharing app company recently
filed for an IPO. It was last valued at $15 billion.
But if it gets a $25 billion or $30 billion valuation
in the public market—which is definitely possi-
ble—that’s $10 million-plus in profit for the fund.
That could result in a 5% move higher in NAV.

In terms of leading asset manager forecasts
(4–5% annualized equity returns over the next 10
years), we believe the SharesPost 100 Fund could
outperform public markets by 200% to 525% over
the next 10 years.
And even if we consider higher long-term averag-
es (the S&P 500 has returned an average of 9.8%
per year over the last 50 years), the fund has
potential to outperform public markets by 50% to
150% over the coming decade.
Other fund holdings with a strong chance of having
IPOs in 2019 include Palantir, Pinterest, and Uber.
Assuming they go public at the high end of esti-
mates, that could add another 2–3% to the value
of the fund alone. And that’s just on three names
in the portfolio. Remember, it currently holds 53
investments and has a historical win rate of 86%.
As you can see, there are many profit opportuni-
ties ahead for the fund.

Buying the Fund and Choosing the Right Share Class

Compared to the average VC fund, the SharesPost 100 Fund is very cheap.

It has three share classes available:

• The main share class (PRIVX) is the load-waived A share. It can be bought via the Shares-
Post website. It has an expense ratio of 2.5%.

• The next share class (PIIVX) is the institutional share class. To buy this version, you must
have access to a financial adviser. It has an expense ratio of 2.25%.

• The last share class (PRLVX) is a broker-approved share class. Brokers would advise you
to buy this share class because they get paid off of it. It has an expense ratio of 2.75%. Do
not buy this share class.

These expense ratios might appear egregiously high. But remember, VC funds charge 2–3% in
management fees and another 20–30% for performance fees.

What’s special about the SharesPost 100 Fund is that it charges zero performance fees.

The good news is, there’s an expense breakpoint not too far away. Once the fund goes over $200

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 million in assets, all three share classes will decrease by 25 basis points in expenses. For the two
share classes we’re interested in (PRIVX and PIIVX), that will result in roughly 10% and 9% ex-
pense cuts, respectively.

Here’s how to buy the fund...

1. If you have a financial adviser relationship, ask your adviser to buy PIIVX for you. It’s
accessible through all major platforms.

2. If not, go with PRIVX. It will be a little more work. You’ll have to fill out a new account
application and fund an account. You can get started right here.

3. If you have questions, you can contact the SharesPost team by calling 800-279-7754.
Make sure you’re inquiring about PRIVX and not PRLVX.

As for IRA accounts, PRIVX is only available to purchase in a self-directed IRA. Entrust Group
and Provident Trust Group offer access.

SharesPost will be offering the fund through an IRA with UMB Financial in the near future. You
can check in on that through a dedicated SharesPost/UMB line at this number: 855-551-5510.
I’m told to give it until April. Otherwise, you can buy PRIVX in a taxable account.

For PIIVX, you should be able to buy the share class in any taxable or non-taxable account man-
aged by an adviser.

Note: The minimum investment requirement is $2,500—whether you buy PRIVX or PIIVX.
(SharesPost has waived PIIVX’s $1 million minimum for financial advisers.)

Bringing It All Together back at this investment five to 10 years from now.

Venture capital and private equity funds are cor-
nerstone investments for endowments, pensions,
and sovereign wealth funds.
As we showed earlier, that’s because VC investing
produces higher returns than all other asset class-
es. While this asset class has usually been reserved
for only the wealthiest investors, you can finally
even the playing field via the SharesPost 100 Fund.
This fund is the only legitimate way we’ve found
for non-accredited investors to get exposure to
startups.
Please understand... You must have a long-term
time horizon with this approach. We want to look
That’s one of the reasons we’re not setting a stop
loss on this position. Use position-sizing as your
defense discipline. Do not invest money that
you’re going to need anytime soon.
Action to Take: Buy the SharesPost 100 Fund
(PRIVX).
Buy-up-to Price: NAV
Stop Loss: None
Position Size: 1–3%
Asset Allocation: Alternatives
Note: If possible, use your financial adviser to
buy the SharesPost 100 Fund Class I share class
(PIIVX) instead, as its expense ratio is 0.25%
cheaper.

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 Customer Care: Toll-Free: (888) 501-2598, International: (561) 921-8774, Mon–Fri, 9am–7pm ET, or email support@palmbeachgroup.com.

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