General questions

• What are alternative investments or private investment funds?

  An alternative investment is an investment in an asset class that isn’t a conventional asset class (such as stocks, bonds and cash). Alternative investments include private equity, venture capital, hedge funds, managed futures, real estate, commodities and derivatives contracts.
  
  Investing into alternative investments in the correct way can generate higher returns and spread out investment risk for investors vs. investing in conventional asset classes.
  
  Due to the complexity and specialized skills required to invest into alternative assets, most investors invest into alternative assets through alternative investment funds which have teams with the necessary experience and skillset required to invest in a particular alternative asset class.
  
  Alternative investment funds are funds that invest into non-conventional asset classes. They mainly consist of:
  - Private equity
  - Venture capital
  - Hedge funds
  - Private debt
  - Infrastructure
  - Real estate
  
  These funds invest in alternative investments with an objective of seeking higher returns, achieving better portfolio diversification and lowering overall investment risk. Please note that private investment funds usually have long investment and lock-up periods (i.e. 3 – 10 years) i.e. investors may not be able to sell their investment when they desire.

• What does FundWiser do?

  FundWiser is a platform that aims to provide access to an asset class that is so far only accessible to institutional investors and ultra-wealthy individuals. FundWiser allows its users to gain access to institutional-quality, reputable investment managers and funds through a streamlined and intuitive web-based platform.
  Investors can access a variety of alternative investment funds (the Underlying Funds) in the following asset classes through the platform:
  - Private equity
  - Private debt
  - Real estate
  - Infrastructure
  - Venture capital
  - Special Situations
  - Hedge funds

• How does FundWiser work?

  Certified Sophisticated Investors and High Net Worth Individuals can invest in pre-vetted investment opportunities into Underlying Funds online, (via a feeder vehicle created by FundWiser to aggregate several investments) through a simple and secure website by creating an account, selecting an investment, electronically signing legal documents and funding their investment with a credit card (or with a few other alternative payment methods we make available).Fund managers expect to distribute funds throughout the life-time of the fund selected by eash investor as appropriate for their risk-return profile.
  Fund managers can raise an access vehicle for small-to-mid sized institutional investors as well as self-certified sophisticated investors and high net worth individuals through FundWiser. This can be done by contacting FundWiser at info@fundwiser.co.

• Who can invest with FundWiser?

  FundWiser's platform will open to Certified Sophisticated Investors and High Net Worth Individuals as defined by the Financial Conduct Authority (or FCA). This includes individuals meeting specific qualifying criteria related to assets and understanding of the relevant financial products. Nothing on our website or otherwise constitutes an offer of, or the solicitation of an offer to buy or subscribe for, securities to any person to whom, or in any jurisdiction in which, such offer or solicitation is unlawful.

• What are Certified Sophisticated Investors?

  As defined by the FCA, Sophisticated Investors are those that can confirm one of the following:
  - A director of a company turning over at least £1 million within the last two years
  - Have made more than one investment in an unlisted company in the last two years
  - A member of a network or syndicate of business angels for at least six months
  - Have worked in the past two years in a professional capacity in the private equity sector or in the provision of finance for small and medium enterprises
  

• What are certified High Net Worth Individuals?

  Those are the investors that can confirm that they either:
  - Have a net income in excess of £100K or
  - Have net assets in excess of £250K beyond your pension fund assets and your private residence
  

• Why should I invest through FundWiser?

  Historically, investors in private investment funds such as private equity have achieved, on average, higher returns than traditional investments in the stock market despite lower volatility.
  FundWiser provides certified sophisticated investors and high net worth individuals with the opportunity to invest in private investment funds that they would otherwise be prevented from accessing due to very high minimum cheque requirements (>$10m in some cases).We strive to make the investment process seamless and hassle-free as possible, allowing investors to invest online from the comfort of their offices and homes.

• What are the risks?

  Investing in private alternative investment funds is high risk, highly illiquid and there is no guarantee of future outcomes.
  Private alternative investment funds are subject to economic cycles and are exposed to wider macro-economic factors.
  Investing into private investment funds carry general investment risks such as Macroeconomic, Political, Regulatory and Legal, Financing and Illiquidity. Please read our Key Risks section, as well as the Investment Offering documentation from each manager on our platform.
  Unless otherwise stated in the specific fund documentation, investors’ initial capital is at risk and investors risk losing some or all of their capital invested into the fund. The maximum loss for an investor is capped at the amount committed to the Fund.

Alternative Investment Funds

• What Is An Alternative Investment Fund (AIF)?

  Alternative investment funds are funds that invest outside of these conventional asset classes into non-conventional asset classes such as private equity, venture capital, hedge funds, private debt, real estate etc. These funds invest in alternative investments with an objective of seeking higher returns, achieving better portfolio diversification and lowering overall investment risk.

• What Is Private Equity?

  Private equity is a form of investment into companies in return for an equity stake in the business. The goal of private equity is to make a profit from growing the value of the business through a combination of active management, growing the business, enhancing operations and optimizing the capital structure of the business.
  
  Private equity firms are behind some of UK’s best known and most innovative businesses such as Alliance Boots, Centre Parcs, Odeon & UCI Cinemas.
  
  Private equity firms raise money from investors i.e. a private equity fund, which they use to make investments in companies. Private equity firms comprise of highly qualified individuals who have a track record or investment strategy that delivers superior returns to their investors.
  
  Leading private equity firms target gross returns* of 2.0x – 3.0x your initial capital invested over a period of 10 years (*returns before taking into account any fund management fees).
  
  Investors in private equity funds are generally large institutions/ professional investors such as pension funds and endowments, sovereign wealth funds, fund-of-funds and ultra-high net worth individuals.
  
  Private equity investments are good for investors looking to get long-term returns which are not as volatile as stock market investments.

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  The key attributes of a typical private equity fund are as follows:
  Investment timeframe: 10 years
  Liquidity/ redemptions: No
  Number of investments: 5 – 10 investments in different companies held on average for 3 – 7 years each
  Management fees: 2% per year on funds under management
  Performance fees: 20% on any capital gains achieved by the fund

• What Is Venture Capital?

  Venture capital (VC) is money provided to early-stage, emerging growth companies in exchange for an equity stake in the business. The goal of venture capital is to make a profit from growing an idea/ start-up company into a large and successful company, thereby increasing the value of the investment.
  
  Many of the best-know entrepreneurial success stories owe their growth to venture capital firms e.g. Uber, Airbnb, Google etc.
  
  Venture capital is generally provided by venture capital firms. Venture capital firms raise money from investors i.e. a venture capital fund, which they use to make investments in companies. VC firms comprise of highly qualified individuals who have a track record of investing-in and helping start-up companies in their growth phase.
  
  Leading VC firms target gross returns* of 2.0x to 3.0x+ your initial capital invested over a period of 10 years (*returns before taking into account any fund management fees).
  
  Due to the high risk of start-up businesses, VC firms diversify their risk by making investments into 5-20 different start-ups of which on average 1/3 of the investments are extremely profitable, 1/3 break-even and 1/3 fail.
  
  There are three general stages in venture capital financing. The earlier stages are more risky, however, could reap higher financial rewards for the investor.
  • Seed stage: capital to develop an idea
  • Early-stage: capital to scale an idea that has been proven/ tested in the market
  • Late-stage: capital for the business to grow beyond a certain point to become truly successful
  
  Venture capital investments are good for investors looking to bet on strong returns from start-up businesses over the long term.

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  The key attributes of a typical venture capital fund are as follows:
  Investment timeframe: 10 years
  Liquidity/ redemptions: No
  Number of investments: 5 – 10 investments in different companies held on average for 3 – 7 years each
  Management fees: 2% per year on funds under management
  Performance fees: 20% on any capital gains achieved by the fund

• What Is Private Debt?

  Private debt investments are loans or debt financing directly provided to borrowers by a fund manager, without the presence of a bank or intermediary. In this way, the investor (through the fund) gets direct benefit from the economics (interest payments etc.) of the loan provided to the borrower.
  
  Depending on the strategy of the private debt fund, investments could be in the form of direct loans to companies across various sectors, real estate financing, and specialized lending (e.g. project finance, leasing, trade finance, guarantees etc.). The type of loans provided will also vary depending on the investment strategy of the fund such as senior secured loans, unsecured loans, mezzanine/ equity-linked loans and distressed loans.
  
  The target returns of the fund will depend on the strategy (the higher risk strategies typically generate higher returns):
  • Lower-risk senior loans funds target returns of 7-10% p.a.
  • Mezzanine funds target returns of 13-18% p.a.
  • Distressed debt funds target returns of 20-30% p.a.
  
  Most private debt funds give investors semi-annual or annual interest coupons based on their underlying portfolio investments.
  
  Overall, private debt fund investments provide better risk-adjusted returns to investors vs. bonds or other fixed income instruments due to higher returns achieved through active investment selection and lower risk as investments are spread out between 10-40 borrowers in each fund.
  
  Private debt investments are ideal for investors looking to generate good annual income/ yield from their investments with the benefit of strong downside protection.

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  The key attributes of a typical private debt fund are as follows:
  Investment timeframe: 5 - 10 years
  Liquidity/ redemptions: No
  Number of investments: 20 – 40 investments in different debt instruments/ loans held on average for 2 – 7 years each
  Management fees: 1-1.5% p.a. on funds under management
  Performance fees: 10-20% on any capital gains achieved by the fund

• What Are Real Estate Funds?

  Real estate funds make equity and debt investments in property. Their investments involve an active management strategy investing in properties such as residential properties, office space, malls, warehouses etc.
  
  The investment strategies of real estate private funds can range from medium-risk investing in properties with stable cash flows/ rental yield in strong metropolitan areas, to riskier investment strategies such as investing in land, property development, property improvement or redevelopment.
  
  Leading real estate private funds target gross returns of 1.5x – 2.5x of your initial capital invested over a period of 10 years depending on the investment strategy.
  
  Real estate private investments are ideal for investors looking to get long-term returns from real estate through active management by specialized fund managers.

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  The key attributes of a typical real estate private fund are as follows:
  Investment timeframe: 5 - 10 years
  Liquidity/ redemptions: No
  Number of investments: 5 – 10 investments in different real estate properties/ projects held on average for 2 – 7 years each
  Management fees: 2% p.a. on funds under management
  Performance fees: 20% on any capital gains achieved by the fund

For Funds and Fund Managers

• How Can I Fundraise Through FundWiser?

  It is a simple process to raise funds through FundWiser and similar to the process you would have to follow if you were raising a fund targeted at institutional investors. To apply to raise a fund through our platform, send us an email with details of your fund at funds@fundwiser.co.
  
  Our 5 key areas of focus are:
  • Profile of the fund
  • Track record and pipeline
  • Management team
  • Fund manager alignment
  • Reporting and risk management

• What Types Of Funds Will FundWiser Offer On The Platform?

  FundWiser expects to make available on the platform alternative investment funds across the following different asset classes:
  • Private equity
  • Venture capital
  • Private debt
  • Real Estate
  • Infrastructure
  
  We do not aim to offer any stocks, bonds, mutual funds, exchange traded funds (ETFs) and direct investments on the platform. Our focus will be on fund managers who have deep knowledge of the asset class they are investing in and have demonstrated a strong investment track record.
  

• How Will Investments Be Structured?

  From a fund manager’s perspective, FundWiser will require the same administration and reporting as any other limited partner/investor they may in their Underlying Fund.
  
  FundWiser invests as a single limited partner (LP) into the fund manager’s Underlying Fund. FundWiser’s investors are pooled into a Master Fund (which is an AIF) which subscribes to the Underlying Fund entity as a single investor.
  
  FundWiser performs all the onboarding, AML/KYC checking, operational and reporting to all the underlying investors that have invested through FundWiser.
  
  From the fund manager’s perspective, FundWiser’s Master Fund is only the counterparty and all communication on the investment into the Underlying Fund will be handled by FundWiser’s investment and finance team.
  
  All drawdown notices and distributions sent by the fund manager for FundWiser will be for the aggregate amount that FundWiser Master Fund has subscribed into the Underlying Fund.
  
  Similarly, the fund manager only needs to send one report per reporting period to FundWiser based on the aggregate subscription amount of FundWiser’s Master Fund. FundWiser then processes all of the underlying reports and distributions for our investors.

• Does The Fund Manager Interact Directly With The Investor?

  No, all communication goes through the FundWiser platform.

• Does FundWiser Require Any Additional Governance Rights Or Oversight On The Underlying Fund?

  FundWiser is a passive investor. FundWiser will perform due diligence on the Underlying Fund before offering the opportunity to our investor base. At the time, FundWiser will confirm that the terms of the fund are satisfactory for fund in that specific asset class/ geography, in addition to ensuring that fund governance, controls, oversight and risk management procedures are in place at the Underlying Fund. FundWiser will not invest if any of these are found to be unsatisfactory.
  
  Depending on the nature of the fund and its terms, FundWiser may require some specific terms or additional governance rights, however, this will only be the case if fund documentation does not conform to market standards.

• How Will Capital Calls To FundWiser Be Handled?

  From a fund manager’s perspective, capital calls to FundWiser’s access vehicle will be handled in similar way as they would be for any other investor or limited partner in the fund. FundWiser will handle the co-ordination and management of the capital calls to its underlying investor base.