On a related note, Shilling just sent a note to all their investors that they are doubling the size of their fund from 20-30M to 45-60M. In venture capital it gets non-linearly harder to return the same expected return with a larger fund - especially so in a slim pickings market like Portugal. This would change how anyone should value the risk adjusted returns that can be expected from the fund.
Of course as GV investors, we are stuck and cannot change much anyway. But FYI for any others considering Shilling.
Unless their pipeline is just so huge that they have more opportunities than they can shake a stick at. Which isnât impossible, what with the flow of tech entrepeneurs seeming to flow into Lisbon. I think the non-linear thing is true but it depends on the relative sizes of the deal flows available vs capitalization too - doubling the size of your 20mm VC fund in the US is not so much of a challenge. Iâd like to think they wouldnât be up-sizing unless they really thought they had deal flow - but who knows? Nothing like grabbing cash while itâs available too. I imagine folks are expecting that thereâll be a flood of cash before EOY, then after that itâs going to go dead, since the rule change will have effectively just pulled future demand forward.
Regarding bluecrow, the size and the uncertainty of early exit require some attention. in my view, expectations should be adjusted but neither is a dealbreaker. Return expectations are easier to accept in this case because none of us has the illusion that we are in this to get rich. The early exit uncertainty should not be ignored because 30% of the investors so far are Not GV investors and the fund will stay open until 2023. So thereâs a risk of current GV investors votes getting further diluted. Investors joining later will be more likely to vote against early exit because they run a higher risk of not meeting the holding period requirement which put the citizenship application in jeopardy. Donât get me wrong, I still think the odds of an early exit is still better than even but the risk of no early exit is not trivial either. It all comes down to what we are comfortable with.
I invested in Shilling so might be biased, but I believe that they were at the 30M original cap several months ago and had set a new cap of 35M-40M sometime before July/August. The increase to 45M-60M is recent, but they say the increase is from âlarge strategic investors and several private individualsâ which doesnât sound like GV money but not sure. I also have in my notes that they were only about 1/3 GV money, but I donât remember exactly when that was measured. The added capital is intended to mostly go into the âfollow onâ funding strategy they had been wanting to implement to allow them to maintain/increase the ownership share of their most promising startups that move into later funding rounds so doesnât necessarily mean they need more âdeal flow.â
There is a surprising tech./crypto startup community in Lisbon so I am actually not worried about that part of it, but everything in this space seems expensive right now so will be keeping fingers crossed.
Donât conflate the concept of an early liquidation of the fund with whether or not the GV investors will be able to redeem their shares.
BC is being run like a more normal PE fund, which is to say people can leave - just that itâs subject to lockup and liquidity; you have to announce an intent, then theyâll work your request for liquidity into the deal flow and let you out when the cash frees up. However, any number of the investors intended to stay from the beginning - all the non-GV money that came in initially - and if they do well, many investors may well say âshucks why am I taking my money out?â. Iâm sure thatâs their hope.
I imagine that how this will play is that in year 4 theyâll ask what everyoneâs intent is, and then theyâll plan to sell off enough property over the following couple years to meet peopleâs redemption requirements - which are going to be spread out quite a bit anyway: look how many people are going to need their investments to run extra long thanks to SEF?
So you wonât get out exactly at year-5-plus-1-day, but youâll get out sometime in whatever year 5 is for you, assuming all goes to plan.
Duarte has been pretty up front about this AFAICT. Yes, itâs not hard-written in the MR. But youâre already trusting them to not throw your money into a bonfire.
Thanks Jeff for clarifying! When I asked the manager about exit options for GV investors, he went to some length about the vote for early exit and the listing of the fund, redemption never came up. But I am glad that you cleared that up. Much appreciated!
In fact, the follow-on allocation of the dollars is actually lower risk and lower return option to deploy this additional capital. All things equal, given the risk I am taking overall, I would have preferred that they get more shots on goal with the additional capital and deploy into more companies.
AFIK, seed investments donât have higher risk adjusted returns than a Series A or B (some analysis says they actually have less). The increased chance of failure generally cancels out the extra returns.
Whether the follow on strategy will increase or decrease the total returns will depend most on how well they pick the âfollow onsâ. And if you are at all worried about the depth of the startup pool to pick from, the follow on idea makes a lot of sense. Given the hurdles and performance incentives, Iâm sure they think the better option is the follow on or they wouldnât be doing it, so who am I to argue.
Fantastic thread, took me a while to go through all of it, all the thoughts and research are greatly appreciated!
I can see that activity has slowed down, does it mean that most people here are going to make it this year? Anyone researching the topic for the next year investment?
I have been trying to contact the most notable mentions in this thread, Rock capital has scheduled an intro call with me to cancel it 10 minutes before the meeting, as they have closed the fund. Good for them, I guess, but not the greatest impression.
Seems like there are quite a few funds being registered now, so hope to find something a bit more attractive than prime real estate in the bubble market next year.
@tordude - yes invested in both MedCapital and BlueCrow. Theyâve both been great to work with and have seen some growth in the short time. On a related note, weâre still waiting for SEF biometric appointments to open up. Crazy delays and will likely impact acquiring new investors.
Re: Medcap, what growth are you referring to? When I spoke to them a couple of weeks ago, I didnât think theyâd put any of their capital to work yet.
Question for the forum: Has anyone looked into Aston Gold? It has some favorable items such as 7 years, dividends, lowest fee structure 0.75%/year and even compared to IMGA at 2.38%/year. Granted you can pullout with IMGA being that it is an open fund. Doing an IRR analysis Aston comes on top of IMGA or even Ibris due to dividends and lower cost/fee structure. Appreciate any feedback.
Aston gold is my top choice and I have talked to the fund a few weeks ago. I agree with most of your points and I would not put too much weight on the IRRs, either historical or projected. I also like their relatively long history of asset management. Compared to Blue Crow, my other top candidate, itâs simpler but less sexy. But I am ok with boring in this case.
Great to hear the feedback. I too looked into Blue Crow but seeing it having the longest maturity date going at 10+ years and the fund manager being unresponsive if not uninterested as they are the biggest kid in the block. In fact, Gustavo/Aston fund manager was the most responsive and client oriented manager of all conversations I have had with Blue Crow, Ibris, IMGA, Mercan. Surprised that there hasnât been much discussions over Aston Gold in the PE space. Looking to sign up with them unless I find something against them from other forum members.
I am also interested in Aston Gold. They have a mix of commercial and residential real estate. So, it is more balanced. Did anyone ask for more detailed financial projections of their individual investments? Itâs also good that they are committed to issuing the documentation for US taxpayers to make the QEF election.
Beside Aston Gold, I also am considering Linceâs Navigator II. Lince has a long track record in real estate development. Thoughts about this?
Regarding Iberis-- I used to like them until I discovered their involvement in the Benfica scandal. Kudos to the Nomad Gate member who posted the news article about it in this forum.
Regarding Iberis: I questioned them during their mid-year call about the reporting. They said in full transparency they had no direct involvement and that they were investigated purely as part of the paper trail in relation to Benfica investments, etc⊠The Iberis organization and all affiliates have not been implicated in any way regarding this matter.
BC was one of the first, and at this point I imagine they have their hands full dealing with the cash they have, so they may well be uninterested in new clients. Of course you might wish Duarte would just say so, but it seems to be the Portuguese way to just not answer phone calls / emails that donât interest you. Aston Gold was late to the game relatively. I glanced at it once, but I didnât find it interesting.
I would be somewhat cautious with that 7 year term at this point. If they close the fund in 7 years, and you donât yet have your PR/citizenship, things could well suck - and given all of the delays and slowness with SEF (bound to get worse as SEF gets re-organized), any assumption that you are going to get your papers in a mere 5-6 years may well be folly. Flip side, BC has a 15yr term but that doesnât mean you have to stay in for 15 years - though I expect some investors will. You have to look at exactly how the given fund is going to be operated to determine how long youâre really in. This has been discussed up-thread, Iâm sure. Given all thatâs going on, Iâd recommend going with a fund that has a longer term and a clear exit strategy that includes flexibility on when you actually can get out. At least thatâs what Iâve done.
The fee structure doesnât seem particularly the lowest. Itâs a real estate fund, and they intend to make money on rents, basically, hoping for price appreciation. Letâs assume an annual income of ~ 5% from rents, which plus or minus seems market. They take 0.75% off the top for the admin fee. Now they take 50% of that. That 50% appears to be capped at 3% but net-net on your 5% it looks like theyâre getting 2.125 + 0.75 = 2.875% on that nominal 5%, which is NOT cheap. Especially given that then they get 20% of all returns above 5%. Versus your normal 2/20 hedge fund benchmark, that doesnât look very good.
