A.R.I.’s Fund Brings Exclusive Access to Wealth Advisors and Affluent Clients for First Time
Applied Real Intelligence LLC (A.R.I.), an investment management company based in Los Angeles, has launched its A.R.I. Venture Debt Opportunities Fund for Qualified Clients in response to significant interest from Registered Investment Advisors (RIAs), wealth advisors, and their affluent clients who are seeking higher returns, greater safety, and low correlation to other assets in their portfolios.
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“Venture debt has delivered annual returns of 15% to 20%-plus with loss rates of less than 0.25% over the last two decades. Moreover, its returns have been less volatile and exhibited minimal correlation with other asset classes, establishing it as a highly effective investment strategy for leading lenders like Silicon Valley Bank, Hercules Capital, Western Technology Investment, and now A.R.I.’s Qualified Client Fund. Considering the increasing demand for capital from startups, rising interest rates, and reduced availability of venture capital, the current opportunity is unparalleled. We already have an excellent pipeline of very attractive deals to fund and anticipate that the next few years will be among the best in the history of venture debt,” said Zack Ellison, CFA, CAIA, A.R.I.’s Founder and Managing General Partner.
While this type of fund offering has traditionally been available only to institutional investors with minimum commitments greater than $1 million, A.R.I. is now providing access for the first time to Qualified Clients and Qualified Purchasers via Schwab, Fidelity, and other major custodians.
A.R.I.’s Qualified Client Fund delivers exclusive investment opportunities with equity-like returns and the risk of senior debt by providing short maturity, floating-rate loans, combined with equity participation rights, to the most promising high-growth technology companies in North America.
These secured loans generate mid-teens yield and are made to high performing venture capital-backed companies in sectors including Enterprise Software, AI, FinTech, HealthTech, AgTech, Cybersecurity, Clean Energy, Robotics, Supply Chain and Logistics, among others. To qualify to be a Fund investment, companies undergo rigorous due diligence and must have predictable revenue, ample collateral, and several rounds of equity financing completed.
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The Fund is a 3(c)(1) Regulation D private placement offering open to Qualified Clients with a net worth greater than $2.2 million, excluding primary residence.
Investors receive a 10% Preferred Return, paying no performance fees until a 10% annual return is achieved. Income earned on loans is distributed quarterly to investors, who also benefit from long-term capital appreciation through equity participation.
The initial closing of the Fund is targeted for spring 2023 and the final closing will be held in the second half of 2023.
“Advisors are facing a very challenging investment environment and their clients are increasingly demanding better performance and more access to attractive alternative investment strategies that offer exclusivity, minimal risk, high current income, and significant equity upside. For sophisticated RIAs and their clients, venture debt should absolutely be considered as an attractive alternative to corporate bonds and other fixed-rate securities,” said Ellison.
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