Thank you @mohitagrawal for bringing this to my attention, Iām really surprised by this overvaluation also by BlueCrow just in one year of performance. Does this mean that they have truly grown 50% in just one year? This sounds too good to be true, has anybody seen any proof on what supports this increase in NAV? If I go in now will I be buying at peak value and end up with little to no return?
Is there anyone here that has invested in BlueCrow and can help me on this?
Thank you @jb4422! I recently spoke with my lawyers regarding this as it concerns me and they said at this point it may not be an issue however if SEF Immigration ever decides to audit the fund to ensure that the Management Regulation fulfils this obligation it may raise a problem since it does not explicitly ensure that al least 60% is invested in Portugal as per the requirement:
"vii. Capital transfer of the amount of 350 thousand Euros, or higher, for the acquisition of units of investment funds or venture capital fund of funds dedicated to the capitalisation of companies, capital injected under the Portuguese legislation, whose maturity, at the moment of the investment, is, at least, of five years and, at least, 60% of the investments are realized in commercial companies with head office in national territory; " (SEF website)
From what I have read they have multiple assets already in the fund however this makes it difficult because now one has to truly see the domiciled company and where they are fiscally and legally headquartered, not just office/mailing address, to see if they fulfil the requirement. Honestly, it would be much easier to invest in a different fund that actually has this explicitly stated in their MR.
Sveltana
Interesting. I agree that this situation is not ideal. The SEF regulations do not require a specific percentage to be set forth in the management regulations but rather only that the fund invest at least sixty percent in Portuguese companies.
Thank you very much for this kind post @petermuennig! Iām trying to open a bank account with Novo Banco for the last 3 weeks now and itās been such a mess now they want me to physically go to the local Portuguese Embassy and certify every single signature and each signature cost 15$ and there are several signatures to do, we do not have a local embassy where I am it is 4-hour drive from here. It is nice to know that your experience has been positive. I believe it is a real plus of POF that they are providing you with this service even if you end up not investing the whole 350k because in my case the experience has not been the same. Unfortunately, Iām already committed, otherwise, I would reconsider.
Well, while itās been a few weeks since I looked at their materials, and I cannot say that I did a ādeep diveā on either of them, they both looked like very professional, and more along the lines of a more typical ātrueā venture capital fund that I have seen in my work.
What I mean by that is most VC funds invest relatively small amounts of money (often anywhere from $250k to a few million dollars) in early stage financing rounds (seed series, series A or B, etc.) of promising technology companies. That is, the simple analogy is the investor looking to hit the next āunicornā like Google, Apple, etc., although in reality the large majority of the successful companies they invest in have some sort of other exit such as a sale to a more established industry player. And some of the companies they invest in simply go bust ā that is a bit why it is called āventureā capital, because it can be risky, although a good VC fund will have one or more of their good investments make up for any potential losses.
This is in contrast to many of the other funds that I have seen, which are not ātrueā VC funds (even if they are called that by the CMVM). That does not mean that all of the other funds are bad, although there are some of them that simply look like opportunistic real estate developers who are taking advantage of the current environment to get access to capital that they could not otherwise access.
Anyway, hope that helps!
Bill
It is generally quite unusual for PE/VC funds to ask for additional contributions beyond their investorsā initial subscriptions ā it is not something that would sit well with the investors for obvious reasons. Not to say it canāt happen, but it is probably unlikely to happen.
Obviously, it is important to do oneās homework. As a general rule, however, the default position for funds is ā2/20ā, which breaks down to a 2% management fee and a 20% ācarryā. As we have all seen, different funds offer different variations of this, which can for various reasons (whether as an incentive to investors, the wherewithal of the fund managers, the nature of the investments, etc.). I will stick with 2/20 by way of example.
The 2% management fees are what ākeep the lights onā if you will. That is, it is to pay rent, employees, and other day to day costs during the life of the fund. The 20% ācarryā is where they really make their money. And because they only get that ācarryā after meeting a āhurdleā (i.e. an initial ROI that the investors get before the fund managers), they are obviously incentivized to invest wisely.
The reason that I say I am less worried about these numbers is that none of it matters if they fund isnāt profitable (or worse, loses money), so youāre much better off with a strong fund that is more likely to generate returns than one that has lower fees. In fact, often one of the main reasons that fees will be higher is because the fund is backed by an experienced manager with a strong track record, who has no incentive to discount their fees ā they know their investors will come back, because they are confident in the managerās ability to make money for them.
Bill
@svetlanasolset, It took me about 4 weeks to get an account setup at Novo Banco. I originally wanted to go with Millennium, but they ghosted me so I went with NB. After three rounds of signatures, they finally validated (I hope). After the second round, they did say an Apostille could validate. I am worried about being able to access my funds at a branch if the signature is so important.
Thanks, I understand that most are not, but I know some do have perspective. Appreciate the input!
Mine was done in about 2 days. I had to send originals by DHL within 15 days as Iām not in the country. My account is already funded and ready to go.
Thanks for all your informative posts on the funds! Iāve learned a lot from reading them. May I know how you were able to find out that is was possible to split the fund investment over different funds? Is there any official position taken by SEF on this now?
I was told by various people that it is possible to split the funds, so long as the fund does not have a minimum of 350,000EU. I picked the funds that I did because they appear to allow <350,000 as an investment. If they all allowed it, then it would be possible to really mix it up. But the tech venture capital funds (which are very attractive for high risk investors) seem to have a minimum of 350,000.
Maybe someone should add the minimum investment to the spreadsheet?
Yes the more true VC funds seem to have higher minumums ( in the 250k region).
Our legal team has verbal approval from SEF and have spoken with several others who have successfully split funds, so long as the total is 350k or more.
Any fund manager should give you domicile information if you ask.
I think every lawyerās gonna have a different take on this, much as they do about whether you can invest in multiple funds or not. I think a legal advisor is right to at least point at the risk. It doesnāt particularly concern me, but you have to do what youāre comfortable with.
@william.reichert , you think? I guess itās phraseology. We certainly open our funds up to additional subscriptions from time to time, which is at least akin to a capital call, and weāve given money back as well when weāve got more capital than capacity, too. Maybe itās different in pure VC versus hedge; I canāt speak to that. (Matt, donāt worry about that latter, I think all the MRs for these funds donāt allow for a forcible return of capital.)
There are plenty of good reasons to take on new investors and/or more capital, and plenty of bad reasons. āCapital callā has a bad connotation in that implies āhey, we really need more cash nowā and thatās bad, certainly. āWeāve got strategies with more capacity and we see room to expandā is a good signal.
@mmd I would be hyper concerned about any language that requires an investor to cough up. I havenāt seen it yet though. And as long as you have that language, then they canāt insist on you coughing up more, so thereās no real concern about having to keep money around for the purpose.
I was thinking more in the latter sense of requiring investors to ācough it upā as you say. I havenāt really seen that, although then again, I usually work with funds on the investment side rather than the structuring and internal governance side, so my assessment may be off.
@laurachan12, @petermuennig - My straw poll of ~ 6? 8? lawyers on whether you can split funds returns a whole set of mixed opinions from āNOā to āSEF said yesā to āI wouldnāt try itā to āitās not explicitly disallowed but itās not explicitly allowed eitherā to āno oneās ever asked meā to āitās just gonna depend on the SEF person youāre assigned toā - the last item being the most dangerous, and because this is Europe, itās civil law not common law, and therefore precedent is no guarantee of legality (or such is my understanding). I have NFI what to do myself either. That said, @drl - really? there are successful applications? If I knew I could split, Iād be 100x more comfortable.
and yea, exactly. Itās a small, not terribly sophisticated market, and more pointedly theyāre small funds in a small niche corner of the market. You have to do your own due diligence the hard way, by talking to them and comparing notes and seeing if whatās being said makes sense. And maybe you have a thread where other people are doing some of the same digging - but thereās limits about how much you can listen to other people too. shrug
I first ran into a section in BlueCrowās MR that worried me. It specifies that management has the ability to request additional capital contributions during the investment period. There is another section which conflicts saying you canāt be required to contribute more than subscribed. Iāve got a Portuguese version and am going to have a lawyer review. That was the biggest thing that jumped out to me. Some other funds had slightly āsofterā language on the subject.
BlockquoteYou have to do your own due diligence the hard way, by talking to them and comparing notes and seeing if whatās being said makes sense. And maybe you have a thread where other people are doing some of the same digging - but thereās limits about how much you can listen to other people too. shrug
Blockquote
Exactly!. This forum is helpful because there is so much uncertainly and not much precedent for the investment fund ARI. Just the fact that you can compare multiple opinions of different lawyers is very useful but in the end, you still need to evaluate the different information coming in and make your own decision. As we have seen even here, there are multiple conflicting opinions from lawyers on the same issue. Thatās not unusual in the legal world but the difference in the US is that there would often be published regulations where interested parties have the opportunity to comment on proposed legislation and ask questions and the regulatory body will attempt to clarify those question through the regulations. I donāt believe that process is prevalent in Portuga l.
No fund can force you to invest more money. And it makes no sense why they would do that. Most of them can use leverage if they have an investment that costs more than they have on hand, or they can open up for further investment - which is my read of the section you read. They are stating they can ask for more investors, not that they can force current investors to invest more.