Except MR, I originally suppose investors would have other legal binding docs with these funds but seems they wonāt. Moreover, there is no formal Purchase Agreement rather than a subscription form, which is only one page sheet addressed nothing related to fund operation.
Honestly, I am really uncomfortable with that.
Hey Larry, have been talking to them myself. Would you care to share your experience so far? Its surprising on the investments being eligible to be split - I am not sure that is the case and have not been advised such by GCS? But will re-ascertain. Thanks
I hate to say it, but welcome to the world of hedge/VC funds. Thereās not a ton of covenants involved here. I happen to work for a hedge fund and am a (tiny) investor in it, so I can speak to the point fairly clearly.
This is at least some of the reason for the āaccredited investorā rules in the US and why so many āgreat investmentsā are closed off to āthe normal joeā - itās because once one of these funds have your money, things are pretty covenant-lite, and your recourse is kinda minimal unless you want to sue the manager for fraud/malfeasance.
In ordinary circumstances, funds will generally get operated in the manner described by the prospectus simply because if the manager doesnāt do that and screws over the investors, theyāre not going to get a lot of money in the future. Most of these funds WILL get run as theyāre described. Just that not all of them will; thereās always a bad appleā¦ but itāll have been clear in hindsight. You have to do your due diligence. You have to understand what youāre buying into and you deserve for them to be able to spell it out clearly, and if they canāt then you walk away. That is what hedge fund investors do, and thatās what our marketing department does for those investors, and why our accounting department spits out reports and answers questions. Our marketing people are an actual annoyance to compliance/accounting because they keep needing information to give to investors.
Legal protections only get you so far. What are you going to do, file a lawsuit in a foreign country? You kind of have to take a different perspective here. Would you buy a used car from this person? Thatās the right perspective.
People are raising good questions here. They need to be asked of these funds, and people should be getting clear answers back. If those answers arenāt good, then they/we need to get better answers, or walk away.
That is very well stated. One of the first things that I discuss with clients when they are negotiating an investment (of any type) is whether they will have any recourse against the counterparty. And the answer to that question comes down to a number of factors: 1) do you have the right to bring a claim under the terms of the contract, 2) will you be able to enforce it against the counterparty in the jurisdiction in which they are located. And then the two most important questions: 3) will they have any assets left to enforce against, and 4) does the size of your claim justify the (usually very considerable) time and expense in suing them?
If a fund has gone completely sideways, the answer to 3) is no, and so even if you have a valid claim, it doesnāt matter. You wonāt be suing them. More importantly, although ā¬350k is a lot of money, and MAYBE you might (if the answers to questions 1-3 are all yes) try to sue to get your money back (this depends on a lot of factors - if it is reasonably affordable to do so in the relevant court/arbitration forum, and whether you would be awarded your costs IF you win). But honesty, the chances that you would actually sue to recover your money is highly, highly unlikely. (The costs to sue can frequently be much higher than the investment any of us will be making to invest in a GV.)
So as noted, you are putting your faith in the fundās management team (remember, these types of funds are often referred to as āblind poolsā). And so when my clients invest in funds, the thing they look at most is the experience of the team and their track record. Anyone can put together a nice, shiny PowerPoint presentation, but whatās the substance behind it?
This is my first (and likely only) time investing in a fund myself, and thatās what Iām focused on. I like the ideas and economics of a few of these funds, but then I look at their track record. If they havenāt already done a fund (whether in their current offering or with a previous fund), I am concerned. It doesnāt mean that I rule them out completely, but it is an important factor I take into consideration.
Many thanks for your incredible comments and suggestions @william.reichert @jb4422 
I have yet put any money in VC/PE or hedge fund. Thatās why I am used to assess these funds base on my experience on public funds, which is actually a mis-matched approach.
If track record is supposed to be one more reliable indicator along with every fundās broad MR, Bluecrow probably is the only one worthwhile exploring. However, their target of 90Mn euros looks too aggressive to be reached. I have yet given up fund option, but donāt expect too much.
Thank you all for the excellent insights you provide and all the important points you raise.
So far, the fund Iām aligned most with its investment strategy is Rock Capital. Their rationale adds up for me yet, my concern is that its their first fund. However, the fact theyāre also investing in it is a good indicator. I scheduled a call with Artur on Friday. I will let you know if anything new comes out of it.
I am settled on investing in a fund as itās the most straight forward option. The fees are also favourable. As for the return, a good return would be amazing however, the focus is on the residency and eventually citizenship which is worth a lot in itself. Whether you aim to raise a family in Europe or retire, you would probably be saving money otherwise spent on expensive schools, universities and healthcare in North America and other regions. So I believe it should be addressed as an investment for the future rather than hard figures.
I wouldnāt put any weight on the target or whether itās reached. Thatās going to be a regulatory number. Theyāll probably run out of capacity (ability to find and manage enough adequate investments) well before 90m.
I do imagine Lince and Iberis probably manage funds decently. Probably the right approach is to ask for materials on their OTHER funds - ask for annual reports on the funds they run that have been around a while. One way to find those:
https://web3.cmvm.pt/english/sdi/capitalrisco/pesquisa_nome_fcr.cfm
That doesnāt tell you details (maybe the PT language version does) but it tells you they exist.
First fund for any new team is a scary one. Sizable capital from the founders is good, but still I donāt think I could bring myself to go there aside from in small-beer size; I donāt have that kind of money to throw away like that.
Hi All - I am Dan, new to Nomad, and this GV process.
If there are any up-to-date links on comparison tables, etc. for the funds, please let me know. My wife worked for ~8yrs at a big law firm in the US managing fund formation and private equity, so weāll have a very seasoned attorney looking at these funds with a high degree of scrutiny.
I agree with that. You canāt get too caught up in the numbers alone. How much money a fund raises, and whether it is too much or too little, depends very much on their investment outlook. For example, a major buyout fund that purchases majority stakes in late stage companies may need to raise several hundred million dollars/euros to be successful, whereas early stage venture capital firms often raise as little as $20m (or less). And so, depending on the investment mandate, if a firm doesnāt have enough capital to execute the deals they are hoping to, that will be a problem. But at the same time, if a firm raises too much, and their arenāt enough decent investments, they will end up investing in lesser assets that will not get the kinds of returns they would hope for (because they have to invest the money ā they canāt just sit on it).
So all in all, you canāt look at the target fund size in a vacuum.
Will be very glad for her input (and as an attorney myself, will be very happy to speak with her!). As you will see from the earlier threads, I suspect she will find these funds very different from what she is used to seeing.
I just got a reply to my questions from Rock (about 2 pages worth of q&a). I must admit they are very responsive and fast unlike any other funds I tried to contact and schedule a meeting.
I share the doc with q&a here: Q&A_Rock
I was about to ask same question about BlueCrow before digging into underlying numbers.
I am comfortable with Cat B unit value for now and will need to dig into the underlying number if and when I choose them.
Great info, thank you!
Would you mind sharing the documents from BlueCrow? I asked Duarte for them a couple of days ago and hadnāt heard back yet. My concern is if any of the funds are buying into assets owned by their long term clients or if fund members were subordinate to those clients. TIA!
Hi Matt,
Attached is the MR of BlueCrow.
I have same concern and it seems somehow touched in MR. Yet to read word by word and understand, due to āauto-translationā?
Pls share the answer with us if any.
Hi Alex,
Can you share Management Regulation of Rock? TIA
The key concern for Rock is they have yet got apple on their basket. If they are looking for seed capital without proved track record, I am skeptical on what they are planning now. On the other hand, the perspectives on RE in Lisbon would be sill remained gloomy in short run, and the fate of the fund would fully relay on this sector 's performance, which adds more uncertainty.
what is your actual concern? Iām not understanding.
I have had follow-up discussions with several funds. Am focusing on BlueCrow and Rock Capital and perhaps SIF. May consider investing in all three as a way to further diversify, given the inherent lack of clarity with these funds. I think part of that lack of clarity is that this is PT and not the US. Part of it is just VC funds and you canāt avoid that.
I am 100% sure I can split my investment - it is a bit more work but so long as it adds up to 350k Euro, it is fine.
Concerns about BlueCrow were that their regulations are different than many of the other funds. I had to walk thru them with the managers and am now more comfortable with their regs. I also better understand the rise in NAV from 5000 to 7500 and am comfortable with that as well. I like their diverse holdings and that it is not the usual RE everyone else has.
Have another follow-up with Rock Capital tomorrow. I want some exposure to residential RE and I think they are my choice for that. I like that they have invested in it themselves and they have a decent hurdle rate. The fact that they are managed by Lince is also somewhat reassuring. My hesitancy is, like mention by others, this is their 1st fund but they really seem to know the micro aspects of real estate in Lisbon. Best to invest in the experts. My other residential real estate option would be Dunas/Golden Bridge but I definitely want to make an investment before the end of the year, just in case there are changes made by the government to the GV process, and this find remains inactive without any current investments.
SIF is my question mark whether to invest. I generally like the fund but they have not had a lot of investors recently. They were one of the 1st into the market but since then of sort of dried up from what I can tell. I want to ask him about that and also the fact that they have jumped around in their investment choices a bit gives me but a pause. Have not completely decided to do anything with them yet.
PFIEF is very interesting to me but I do not think I feel comfortable investing the minimum of 250k with them. they are more of a true VC fund.
I was thinking to post after I reading Management Regulation word by word.
I general like BlueCrow. However, I have two major concerns for now: