I remember taking the flight over to New York and I’m like, I’m asking for money at a time where everyone’s trying to figure out if the world is going to be around…
That’s what Samir Kaji told me (with a laugh) about Allocate’s Series A that was raised in the middle of the pandemic.
Allocate’s newly announced Series B fundraise came about in a much better fundraising environment. Portage and a16z joined as new investors. We caught up with Samir last week to hear more about the capital raise, and to learn more about what the Allocate team is building.
The key takeaways:
- Vision: Making private markets “as easy as the public markets” for the growing number of investors who need alternatives exposure (think family offices and RIAs) but lack institutional infrastructure
- Round: $30.5 million Series B by Portage Ventures with participation from Andreessen Horowitz, M13, and Fika Ventures
- Traction: $2.5 billion invested through their platform since launching in 2021
- Products: Access (curated deals), fund administration solutions (including SPV/feeder fund execution), and LP reporting/insights
- Recent M&A: Acquired Coterie (SPV platform) to accelerate capabilities
- Coming soon: Liquidity solutions
The Problem Hidden in Plain Sight
Here’s what Samir saw during his time as a Managing Director at Silicon Valley Bank and First Republic: After Sarbanes-Oxley made going public harder, private markets responded with more funds, bigger funds, and companies staying private longer. Meanwhile, institutional capital alone couldn’t fund this growth, so the industry had to tap into new capital sources—namely, high-net-worth individuals, RIAs, and family offices.
The catch? As Samir told us:
The infrastructure wasn’t really set up for this long tail of investor to be able to invest with the same type of characteristics and luxuries as the big investors.
While pensions and endowments have teams, budgets, and the ability to write massive checks, the average investor attempting to transition from a 60/40 public market portfolio to one that layers in 10-20% alternatives doesn’t have those resources.
Despite building for the broader market, emerging managers remain core to Allocate’s strategy. Samir told us that his colleague Cammie Gil talks to 300-400 emerging managers annually.
Why Allocate Chose the Hard Path
Rather than building a point solution to a single pain point, Allocate chose to go full-stack, which Samir admits is much harder that a single track approach. For Allocate, that full-stack comprises:
- Access: This was Allocate’s MVP / beachhead. They provided curated investment opportunities (40-50 per year, typically 5-10 emerging managers) designed to eliminate guesswork for investors that wanted exposure to venture but lacked institutional due diligence resources
- Execution: Digital SPV and feeder fund creation that removes paperwork headaches for wealth advisors/RIAs and fund managers
- Reporting: Consolidated portfolio tracking so you know how much exposure you have to any one underlying asset (company)
A fourth pillar—liquidity solutions—is coming to address the challenge of getting exits without waiting 10-15 years.
Much of this product direction comes from Samir’s personal experience as an LP:
I didn’t like using four different providers. I’d get cost bloated. They didn’t talk to each other.
While offering a complete solution, Allocate is aware that they’ll need to plug into the platforms that their RIA customers use. That’s why they’re building integrations with existing wealth management platforms like Black Diamond and Tamarac.
The Venture5 Take
Samir has strong founder-market fit for the business he’s building, has done a great job at building brand through his Venture Unlocked podcast and Allocate’s live events, and has proven out the “access” thesis to the tune of $2.5 billion in AUM. So it’s not a surprise that Allocate has been able to reach the milestone of closing a healthy size Series B.
I didn’t get a look at the Series B pitch deck but I would wager that the “how will this be a multi-billion dollar exit” story centered around continuing to grow the AUM running through the Allocate platform, while building out the additional product pillars we heard about from Samir. I’m particularly interested to see how the VC fund administration leg of their product strategy plays out. That market has some big players driving collectively hundreds of millions (if not more) in annual revenue, including some with VC backing. But it’s also quite fragmented.
How will it all play out? As with most VC backed companies, we should check in after about, oh, 8-10 years 😉
If you’d like to learn more about Allocate, their website is linked here.
