Applied Real Intelligence( A.R.I.) LLC, a Los Angeles-based investment management company, has launched its A.R.I. Venture Debt Opportunities Fund, responding to significant interest from registered investment advisors (RIAs), wealth advisors, and their affluent clients. This fund aims to provide higher returns, excellent safety, and low correlation to other assets in its portfolio.
The A.R.I. Venture Debt Opportunities Fund targets an annual return of 15-20%, with loss rates of less than 0.25% over the last two decades. In addition, the returns have been less volatile and exhibited minimal correlation with other asset classes, making it a highly effective investment strategy for leading lenders such as Silicon Valley Bank, Hercules Capital, Western Technology Investment, and now A.R.I.’s Qualified Client Fund. Traditionally, this fund offer has been available only to institutional investors with minimum commitments of $1 million. However, now A.R.I. provides access for the first time to Qualified Clients and Qualified Purchasers via Schwab, Fidelity, and other custodians.
The fund delivers exclusive investment opportunities with equity-like returns and the risk of senior debt by providing short-maturity, floating-rate loans, and equity participation rights to the most promising high-growth technology companies in North America. The secured loans generate mid-teens yields for high-performing venture capital-backed companies in sectors including Enterprise Software, AI, FinTech, HealthTech, AgTech, Cybersecurity, Clean Energy, Robotics, Supply Chain, and Logistics.
To qualify for Fund investment, companies undergo rigorous due diligence and must have predictable revenue, ample collateral, and several rounds of equity financing completed. 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. In addition, income earned on loans is distributed quarterly to investors, who benefit from long-term capital appreciation through equity participation.
A.R.I.’s Founder and Managing General Partner, Zack Ellison, CFA, CAIA, said, “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 attractive deals to fund and anticipate that the next few years will be among the best in the history of venture debt.”
The A.R.I. Venture Debt Opportunities Fund offers a unique opportunity for investors seeking high returns with low correlation to other assets in their portfolio. With its focus on secured, short-term loans to high-growth technology companies, the fund can potentially deliver equity-like returns while mitigating the risk of senior debt. The initial closing of the fund is targeted for spring 2023. The conclusion will be held in the second half of 2023, and investors will have the chance to participate in this unparalleled investment opportunity.
Image provided by Matthias Groeneveld
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