Moonfare is sourcing growth equity investments from relationship GPs, offering them as direct investment opportunities to its deeper-pocketed users.
Direct investing is only available to users with greater financial resources, such as single-family offices and ultra-high-net-worth individuals, Moonfare founder and co-CEO Steffen Pauls told Private Funds CFO.
The company is making direct investing available to people who prefer to make targeted bets and have high levels of relevant knowledge.
“They can benefit from a pick-and-choose approach if they have certain areas that they prefer, where they have expertise, where they have high convictions, they might enter into the core investment,” Pauls said.
Investors can also take blind pool risk off the table, he noted. And they can get lower fees if they make larger purchases.
These fee discounts apply both at fund and platform levels, Pauls said.
Moonfare gets invitations from relationship GPs to participate in syndicated deals, which it then makes available to users.
“This syndicate is not led by Moonfare,” he said. “It’s led by one of our GPs out of the 250 we have relationships with who invites us to participate in the deal.”
But he noted that the platform doesn’t just passively accept deals from syndication invites. Rather, it aims to join preferred ones that relationship sponsors have available.
“We are getting invited, but we are running our own list of direct deals that we are interested in,” he said.
Pauls touted the experience of Moonfare’s investment team, pointing out that it includes alumni from firms such as KKR – where he also used to work – and MetLife.
The company can tap into global deal sourcing in a way that individuals cannot, he said. And it handles due diligence, a task that Pauls pointed out is costly even for affluent people to conduct on their own.
“We have a team of 15 people from the private equity industry that run the due diligence on our investment opportunities,” he said. “A family office hardly can afford such a large team.”
Participating direct investors presently can’t sell their stakes, but Moonfare intends to add this capability in the future.
The company currently has a secondaries trading platform for fund interests. Pauls noted that this platform, which launched in 2021, has 75,000 registered users and counts on Lexington Partners to provide a trading backstop.
Moonfare may broaden the direct offering beyond growth equity. The founder is receptive to eventual expansion into buyout deals, although he said it’s unlikely it would offer stakes in early-stage venture companies.
“We are more focused on relatively late-stage companies,” he said. “Companies with a market proof of their business concept. Companies where we have strong confidence about gross margin growth and revenue levels with established teams.”
The private wealth platform’s inaugural offerings are AI companies Anthropic – called “the primary competitor to OpenAI/ChatGPT” – and Sakana AI, which counts Nvidia as a backer.
