A Wealthsimple Trade app icon is shown on a smartphone.Jesse Johnston/The Canadian Press
Online investment manager Wealthsimple is now providing Canadian retail investors easier access to some of the largest venture capital firms in Silicon Valley that invest in health care and tech companies.
Through a partnership with Washington-based Accolade Partners, the company is launching the Wealthsimple Venture Fund I, a venture capital and growth equity fund that will be sold directly to retail investors. The fund will include firms such as Accel, Andreessen Horowitz and Kleiner Perkins – among some of Silicon Valley’s largest firms who put early bets on social-media platform Instagram, Airbnb and mobile payment provider Stripe.
The fund is one of the country’s first VC funds for retail investors, allowing for clients with as little as $5,000 to participate. Investors must lock in for the life of the fund, which the company estimates to be about 10 years. Funds can only be withdrawn in cases where it is legally required, such as death, divorce and bankruptcy.
Wealthsimple chief investment officer Ben Reeves said that it is an investment best suited for people who have a high degree of certainty that they won’t need to use their money for about 10 years.
Venture capital funds provide financing – typically raised through a group of institutional or ultra-high-net worth investors – to early-stage companies that have long-term growth potential. Traditionally, it is a market that has not been accessible to retail investors.
Mr. Reeves said opening up access to the VC market for retail investors has been on the company’s radar for “quite a long time.”
“We know that in private markets there are some really great investment opportunities as long as you provide access to the right funds and in the right structure – so for us it was just a matter of making sure we could provide the really good high-quality access,” Mr. Reeves said in an interview.
“Venture capital – and other private asset markets like private equity, credit and real estate – have been a core part of successful investors’ portfolios for years, but high account minimums, net worth requirements, and arcane paperwork have made these opportunities out of reach for most investors.”
The access Mr. Reeves was looking for was found in alternative asset manager Accolade, which specializes in technology and health care-focused venture capital and growth equity fund investments.
Clients will be able to invest in the fund through the company’s robo-adviser platform, Wealthsimple Invest. Contributions to the fund will be invested with multiple venture capital and growth equity managers, allocated primarily to technology and health care companies.
Mr. Reeves said the venture capital portion will be invested across the full venture lifecycle – seed stage, early stage and expansion stage. Growth equity capital will be invested in two types of firms: “founder-led, bootstrapped software companies” that are at or near profitability, and would need to increase their scale or to invest in sales and marketing, and “companies with strong business models in fragmented industries.”
Clients will have to speak with a registered portfolio manager to ensure the investment – particularly the longer investment timeline – is suitable to their financial goals.
“When we looked at our investors, a lot of them are really disciplined and long-term investors,” Mr. Reeves said.
Similar to other products on the Wealthsimple Invest platform, investors will pay a management fee of between 0.4 per cent to 0.5 per cent, plus the cost of the underlying security.
For the VC fund, those underlying costs include three layers of fees: a fund administration fee covering costs of about 0.2 per cent; incentive fees paid to Accolade of about 10 per cent; and fees paid to the underlying fund managers – the VC and private equity firms – which could include up to a 2-per-cent management fee and 20-per-cent incentive fee. Like most VC funds, incentive fees are only paid if returns exceed a certain threshold, and the fee only applies to returns, not the total investment amount.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
