The Vessti founder is leading a revolution in investing, providing individuals with information and access once reserved for institutions and high-net-worth investors.
Q: How did you come up with the idea for Vessti?
Earlier this year, I was sitting with two friends, one of whom is a commercial real estate broker. While he was telling me about how his firm sources and closes new deals, my other friend, a doctor, was casually swiping through a dating app. It just hit me. If we can put these two concepts together, we can easily deliver a full view of the alternative investment landscape. Like a dating app, we can link the investor with the right offering—a drastic departure from the status quo, where only clients with advisors can view alternative opportunities, and then, only the options on their financial advisor’s platform.
But more broadly, Vessti is the culmination of an even longer journey. Four years ago, I began entering the broker-dealer space because I saw benefits, both in being able to use it as a tool to raise capital for real estate and because I believed in the industry and wanted to be a part of it. While I initially explored the non-traded REIT space, I went on to raise money in a Reg-D fund, where I got an up-close look at inherent gaps in the system: the need for greater transparency and direct distribution. Today, I am dedicated to making a shift within the industry, providing investors with tangible added value, and the ability to make raising capital more efficient, modern and streamlined.
Q: I know that you raised a Reg. D fund, what was your experience and what did you learn?
When we were in the process of raising capital for the Reg-D fund, we had so many issues to contend with primarily due to great inefficiencies in how capital is currently raised in such funds. We got to the point where we were only a few weeks away from the fundraising deadline and needed to quickly raise almost all the capital. To top it off, our wholesaler wasn’t performing. I knew I could go out and look for a new team, but the likelihood that it would be ready to raise capital in time was still slim to none. More importantly, if we took the risk and failed, we would not be able to try again.
So…I locked myself in my office for days at a time, called every advisor within our distribution platform, got on a plane to have coffee with anyone willing to take the time and, ultimately, ended up raising all the money just days before the deadline. Sure, there were lots of other things going on. This was not my expertise nor was it what I envisioned when we went out to raise the fund. However, if a similar situation came up tomorrow, I would do the same at the drop of a hat.
Q: Why is it so important to provide people with this kind of information?
If you have a full-time job and a decent income, you’re probably invested in the market through retirement accounts, annuities, college funds for your children, or just savings. Even if you are happy with your financial portfolio, most investors want to know that they have access and exposure to everything out there—that they have all the resources and opportunities to invest like an institution.
In the past five years or so, alternative investments have become far more accessible, not simply reserved for institutions and high-net-worth investors. However, for the general public, there still isn’t as much transparency as with stocks and other traditional investments. All individuals should have access to the full array of investment options, including alternatives.
The reason is simple: alternatives are generally less volatile and serve as an integral part of any investment portfolio. The Yale Endowment Model as well as many of the largest investors in the world all emphasize the importance of allocating a significant percentage of their portfolios to alternatives. We want to bridge the gap to make investing in alternatives simple and accessible to all.
Q: How do you see the role of individual investors in the future?
First, let’s consider any institutional investor although it may be a few layers removed is really just a collection of individual investors.
Historically, institutions have always been the whales of any financial market. They could sway and influence public companies both by investment as well as divestment, and hedge funds and private equity firms have molded their funds to meet the institution’s needs.
With the general public being far more educated today than ever before about investing and the financial markets, they are actively seeking direct access to manage, or at minimum, be involved in the management of their assets.
I’ve seen it quite clearly since being exposed to the broker-dealer landscape that individuals are constantly growing stronger. I predict this trend will drastically continue in the years to come. We are already at the point that very respectable institutional investment firms are raising retail (individual) funds, an idea which many of them wouldn’t have considered 20 years ago.
With Vessti, we are really just providing a platform for individuals to easily view alternatives available to them, and alternative sponsors to engage directly with individual investors through their offerings.
Individuals should continue to be empowered, and to facilitate this communication is a crucial next step in empowering them within a non-traded investment landscape considered more sophisticated and historically reserved for institutional investors.