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Sweater Ventures - VC Funds Accessible for Everyone
Transforming the Private Markets
This week’s Startup feature is sweaterventures.com. Sweater is democratizing Venture Capital by allowing the general public to make small investments in VC funds.
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Company & Team Introduction
Sweater is the FinTech platform unlocking one of the best-performing asset classes in the world to everyday investors. Sweater was founded in 2019 by Jesse Randall after he set out to start a traditional VC fund. However, he was dumbfounded after learning about the outlandish accredited investor requirements; he aspired to shift the industry and broaden access to the private markets. Before founding Sweater, Jesse held numerous roles at startups like AI platform Guidely, where he served as VP of Operations and director of strategy at ClearVoice. He also had a stint in private equity as a Partner at Citrine Capital Partners. Sweater’s vision is that “every founder should be able to build their vision, and every person should be able to support the startups creating the next generation of influence and wealth.” The company was founded in 2019 and is headquartered in Boulder, Colorado.
Product Overview
The company has two different products on the market. Its pilot fund, the Cashmere Fund, has a laundry list of improvements compared to traditional VC funds, as it is accessible to everyone and has an extremely low investment minimum of $500. The fund has over 14M in AUM, and over 5,500 investors have invested. Some additional benefits to Sweater’s technology include no restrictions on the number of LPs in a fund, controlled liquidity options, and a modern mobile-first experience. The company’s second product, the Partners fund, allows other private market investors to launch their funds using Sweater’s technology, allowing them to raise from both accredited and unaccredited investors.
Total Addressable Market
Sweater is tackling one of the largest markets in the entire world. Initially, the company has been focused specifically on VC funds, but the technology is applicable across all private markets. Multiple verticals of private markets raise hundreds of billions of dollars yearly, including private equity and real estate, which raised $784.93B and $138.83B in 2023, respectively. Across all verticals, the private markets currently have an astounding ~$13T in assets under management. Coupling this massive existing opportunity with the accessibility features of Sweater’s technology opens these markets up to the 158M retail investors in America alone who couldn’t participate previously.
Business Model & The Numbers
Sweater utilizes a hybrid SaaS + management fee business model. Companies are charged a one-time 150k implementation fee to set up the fund, a 150k yearly recurring subscription fee, and a 1% management fee on the fund's Net Asset Value. This gives Sweater a favourable gross margin profile of 70-85% over the contract's lifetime. Sweater also went from 0 in revenue in 2022 to ~$270k in 2023. The company has also landed three large partner contracts that could potentially generate ~30 million in revenue.
Traction
Sweater Ventures pilot fund, the Cashmere fund, which allows the general public to invest small amounts of capital, has gained significant early interest from investors and startups raising capital. So far, the Cashmere fund has 5,500 investors, raised $14M and invested in 33 companies since its launch in 2022. Companies in their portfolio include trybeem.com, accredible.com, and featclothing.com, which 2.0 Ventures acquired a majority stake in 2024 at an undisclosed valuation. The company’s partner fund product has also seen impressive market pull, with an estimated $4.6B in AUM in its partner pipeline.
Competitors
The market dynamics of the private investment industry are incredibly favourable for Sweater. Their pilot and partner funds are highly differentiated from anything currently available on the market as they’re the only funds accessible to everyday investors and have small minimum investment sizes. This allows Sweater and its partners to raise funds from hundreds of millions of potential investors who, until now, haven’t gotten the opportunity to participate in the highest returning asset class in recent history. Many high-quality traditional VC firms like Sequoia, Kleiner Perkins, and Benchmark are all fighting for the same 1% ultra-high net worth LPs. Funds built on Sweater allow them to raise capital from the other 99% of the world’s population.
Funding
Sweater has raised two equity funding rounds since its founding in 2019. The company’s first capital raise was a $2.3M pre-seed round in mid-2021 from backers such as Motivate Venture Capital, MRTNZ Ventures, Spacestation Investments, and angel investor Aaron W. Sweater raised an additional $12M seed round in 2022 due to the capital intensity and regulatory burdens of the technology. The funding was spearheaded by David Wieland from Motivate Venture Capital and Akuna Capital, with participation from additional firms like Monsen Ventures, Litquidity Ventures, Zilliqa Capital, Bison Venture Partners, Spacestation Investments, First Chair Ventures, Rule72, Jeffrey Cruttenden (Co-founder, Acorns), Eli Broverman (Co-founder, Betterment), Nick Perez, Jeb Bush Jr. (Former Governor of Florida), Ryan Holtzman, Aaron Wolko, as well as YouTube creators Peter Hollens (2.6M subscribers), Andrei Jikh (1.9M subscribers), Nate O’Brian (1.2M subscribers), and Jake Tran (924K subscribers) also participating. The company has also raised multiple SAFEs, including a crowdfunding SAFE in January 2023. To date, Sweater has raised a total of 18.3M. The company is currently raising a crowdfunding campaign valuing the company at 48.98M. https://www.sweaterventures.com/cashmerefund
Venture Scout has no position/affiliation with Sweater Inc.; this may be subject to change in the future. This breakdown is for educational purposes; please conduct your own research before making any investments.
Sources: sweaterventures.com, crunchbase.com, pitchbook.com, startengine.com, pymnts.com, builtincolorado.com, linkedin.com,
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