Yeah, thatās really bit mystery. I have yet got clear pic on how the fund options works on GV application although obviously private issues of VCs are growing rapidly. sounds the biggest selling point is RE investment might be tightened in certain areas by Portugal gov.
Got it. Is there data that indicates how many foreigners have been able to secure PTGV via investment? Although, probably not an indication of anything much. So as I digest the contents of your post, I think that my take away is how āwillingā am I to risk 350k euros on visaās? Best case- I can get my principal back, minimal to no growth with some fees (additional costs). Worst case, I lose a portion (or all) of my initial āinvestmentā.
Do we know how many people apply for GV via invstmt. that arent approved for visas?
Thank you Roger! I love the data. Have any members of this group secured GVās already? or is this community still determining their best investment approach? Thank you for your insight into this important process.
So the original investors brought cash and property. They hold the same participation units that others will commensurate with their share.
Iām still trying to read through the MR, but Duarte had said they keep part of the fund liquid so participants can exit at any time, however Iāve not read anything in there officially memorializing it. It also raises the questions of what if everyone runs for the door? There is the right of first refusal to buy units participants have put up, but it doesnāt appear to have anything official about exiting after 5 years.
The fund policy does say itās investing is focused on projects and SMEās in Portugal, but it does not explicitly say 60% goes to Portuguese investments.
Honestly, if the environment is right, the exit after 5 years is less important if weāre seeing returns. I mean you have a fund producing income in Euros, we would bank it or reinvest as a currency hedge if the dollar falls so we didnāt have to exchange at a bad rate.
Hoping to have more time to focus on this again. September was so busy for work, it literally evaporated.
Bluecrowās MR just has broad and generic descriptions on investorsā exit. In contrast , the MR of Gateway Fund has details on fundās winding up and exit of investors. Moreover, one of Gatewayās founders offers a buy-back agreement at@15% discount of NAV of share unite if investors want to sell before the 10th year. Actually, if VCs go well, investors would largely likely to hold unites until expire date.
If less than half of the units decide to run for the door, youāre screwed, no oneās getting out, because the majority of the units are going to say āto hell with thatā and not let you out.
Funds like this depend on the idea that most people are staying in. They need sticky money. This is just par for the VC world; Iām subject to the same covenants elsewhere.
They donāt really need anything official anyway; if the majority of participants decide at year 5 to liquidate, they vote to initiate liquidation. So your safety in that respect is that most of the investors are GV and are thus going to vote to get their money back, or be understanding about letting everyone else out.
I dont think that is the case. It is not all or nothing. Most of the funds I have spoken with have clear investment periods - usually two 3-year cycles. At the end of the 6th year, they begin full divestment, which may take another year (possibly longer to be complete). That frees up capital to fulfill their desire to close after 7 years - the typical (and ideal) duration for most GV investors. If you need more time, it does not take a majority of shareholders to decide to keep the fund open for those who desire to continue. Those who want to leave, can leave and those who want/need to stay for GV purposes can stay. Most funds have a provision in their regulations which allow usually up to two 1-year extensions if approved by the general assembly of investors.
I do see the 6 yr fund term as a risk in term of GV process at SEF and the extension is at approval of majority investors. I saw some people took one yr to get first temp resident permit. My friend took 20 months to get her first renewal in 2015. Although renewal delay does not impact the 5 yr GV duration, it gives you a flavor of the bureaucratc process.
If you are the last batch investors where the fund term has started for 6 months or so, the 6 yr fund term may not be sufficient for you.
It makes complete sense to have have money locked up to achieve the fund goals, however in our conversations with Duarte, we were definitely left with the impression there was no lock up period. Again, I am fine with the duration of the fund laid out by the MRās, however there seems to be slightly differing messages from the marketing material, conversations, and MRs for many of these funds. Not sure if thatās just the way it is for these types of funds or the message not quite making it through translation.
Agree. Thatās why I like the 7 year terms that most have. In discussions with the managers however, they know that most investors will be for GV and fully expect to keep the fund active longer to make sure you are able to meet your visa needs.
I saw several funds propose 10 yrs lock-up as itās a normal life cycle requirements for VCs, at least by their fund mangersā comments.
That is one aspect you need to ask about and decide if you want that. I have been very clear that 10 year lock-in is too long. As I said, I like 7 years to be safe.
MMD, itās not really mixed messaging so much as āhow funds like these often work.ā There are generally out-trades between āwhat we intendā, āwhat weāre willing to commit to legally (and in what way)ā, āwhatās possibleā, and āwhatās practicalā. Everyoneās going to make different trade-offs in the design and operation of the fund. Iām sure thereās some issues in translation with you and Duarte, but Iād say itās more just that itās all kinda flexible.
Example - one fund Iām in, I can put in a request to leave any time, but exits are at quarter end only, and is presumptive on liquidity - they reserve the right to tell me āwe canāt liquidate assets to raise cash fast enough to meet your call without everyone else taking it in the shins, weāll let you out when we reasonably canā. 99% of the time, I can sell units when I want. Just not 100%. Itās hard to write that in the MR in any detail that wonāt cause real pain if thereās an actual disagreement, so thereās just some really broad language.
So wrt BC, thereās nothing about any of it that bugs me based on my experience.
Julia - Maybe Europe is different, but IMO, for the fund managers to say that a 10 year lockup is a normal life cycle requirement for a VC is crap; itās simply a choice, and the right answer depends on what the underlying asset is and how they intend to run the book. Iād actually say that these guys are all getting a huge drool-worthy gift as it is to have a class of investors who need a 6 year lockup in the first place; asking for 10 is insane. Thereās no way I personally would give my money to any of them. YMMV.
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Thanks, I donāt think itās a translation issue, but more how these funds work too. Pouring through the minutiae of everything just raises questions, but itās a matter of due dilligence and feeling comfortable with the situation. BC just happens to be one of the funds Iāve spent more time looking into so Iām a bit more focused on them.
Yes, in terms of duration of funds, the logic behind sounds like why donāt we guys lure investors via such āgolden opportunityā ? You want GV, we want capital, thatās the game gambling. Such as New Edge and Gateway Fund, they all require 10 yrs lock-up.
BTW: Does anyone will or have put the money in Bluecrow?
Yeah. I mean this in a kind way, but you/we GV investors represent the dumbest money around as well. Foreigners, motivated by something other than the fund itself, not knowing the local rules, almost guaranteedly without any experience in the VC space. (Even my experience is limited.) Ducks in a shooting gallery. Look, I know thatās how the world is. That doesnāt mean I have to like it, or like seeing it. Iām glad there are at least some sane choices available.
I am talking to Rock and I think they fall under the āthis is a good choiceā category from my convo so far but I think Iāve chosen BC because I tend towards the offbeat. I really wish I could split funds but Iāve been told by a lawyer that no you canāt do that.
My frustration at this point is in choosing a lawyer; I still havenāt been able to. I want to lowball, this should be plug-n-chug crap, but I also donāt want to screw it up either. at least in this case I donāt feel like Iām dealing with shysters, so much as a normal competitive market of vendors with different levels of experience selling the same thing packaged differently and charging somewhat more or less than others - and, just ask my wife, leave me in an American grocery store with 20 choices of salad dressing and Iāll be there for an hour choosing. 
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I think your thinking is appropriate. There is some risk - Iām just hoping to preserve capital and walk out with Portuguese citizenship in the end. Even if I lose some money, that is worthwhile. Iām hoping I can make some but who knows.
I spoke with multiple lawyers. There is a bit of negotiation ability in there but not a whole lot. Prices do vary quite widely, so I would look around.
I agree about Rock and BC. I am getting the final word on splitting funds but initially my lawyers said it was possible. Not sure why you could not if it adds up to 350k euro. It adds some complication and paperwork but spreads the risk at least a bit. I asked the funds themselves and they said other GV investors have done it and were open to it so long as I met their minimum (50k for RC and 75k for BC). You can split into multiple investments with real estate, so why not with funds?
So far, I have to admit Bluecrow might the only one remained on my list besides of Gateway Fund(I have other concern on its JV structure btw Portugal Capital Ventures and Africa PE , which would brings more implication and complication in operation level).
I have the same headache on choosing lawyer. Duarte of BC recommends two law firm although I have yet took a details look. I note most of Portugal lawyers are more knowledgable on RE cases , so if a lawyer is capable and experiences on dealing fund cases would be a key challenge. When I talked to some fund mangers, my impression is even their engaged law firm is actually more familiar with finance and RE sector etc rather than GV application. Thatās why I have to keep cautious on the issue cos at the end GV is the key goal.
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Dear Julia,
I encourage you to review our Portugal Opportunities Fund qualified for GV. Happy to have a zoom conference call to discuss.
Rahim Lakhani
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