OpenVC - Inaugural Post
An introduction to our mission of making venture capital more accessible.
For those who don’t know us well, OpenVC (or OPEN as I’ll more commonly refer to us going forward) aims to broaden the set of investors with access to private market opportunities. Alongside our largest external shareholder and corporate sponsor, the New York Stock Exchange, we are launching fund strategies that meet long-overlooked private market investor needs – lower fees, enhanced liquidity, and diversification across the asset lifecycle.
Why We’re Doing This
At its best, venture capital has been the best-performing asset class of the past two decades – but it is illiquid, expensive, and inaccessible to many investors. We believe virtually the only asset class where fees have gone up over the last ~20 years is ripe for innovation.
We believe there are a lot of inefficiencies in private markets, particularly in VC, and we’re obsessed with uncovering these inefficiencies and creating solutions to address them with a network of industry partners that we’ve built along the way. Our venture indexes, and index-tracking fund strategies, will be the first step in eliminating some of the pain points that we feel exist in VC (namely high fees, lack of diversification, lack of transparency & long liquidity timelines).
Snapshot of our first fund, the OPEN Unicorn Index Fund (UIF): The OPEN Unicorn Index Fund is a secondaries fund that tracks an overlying index of the Top 50 largest US private VC-backed companies, including names like SpaceX, Stripe, Fanatics, etc. The fund will hold 3-4x more companies than a traditional secondaries fund. OPEN will charge investors a 2% management fee and no performance fee, and intends to offer distribution flexibility best aligned to investors' individual liquidity needs 12-24 months after the final close (target Q1 2025).
Why We’re Doing This…Now
We think the current market conditions present a timely opportunity to get into pre-IPO secondaries. The Top 50 largest US private VC-backed companies have seen material declines in their valuations over the last year (~42% on average), but despite these declines, the index constituents are fundamentally sound companies. The average annual revenue of the top 50 pre-IPO companies is $2.2bn and several of OPEN’s Unicorn Index constituents would qualify for the S&P 500 if they were public companies. All to say, we firmly believe that these companies will go public once IPO markets recover and that purchasing now in the secondary market is timely, with significant potential upside.
What you can expect from this newsletter:
Subject Matter Focus: Innovation in private markets. We’re constantly updating and iterating our research and will share what we can here. Lots of pretty graphs and data!
Cadence: Believe it or not, raising a fund in this environment is fairly time-consuming, so we’ll aim to start by delivering updates here 2x per month with the goal of increasing that over time.
Updates on Our Business: In addition to sharing our insights in VC, readers can also find news on our venture index launches, fundraising milestones for the Unicorn Index Fund, and updates on the growth of our operating company.
Closing Thought: Many of the best conversations we’ve had as a company have started from people or places we didn’t expect. I hope this newsletter is an extension of that phenomenon and that we can bring people together who have a shared interest in innovation in the private markets but come from various backgrounds, experiences, and opinions. If you know any who fits the description, let them know!