The founder and CEO of a wealth management firm that recently launched a venture capital fund explains its strategy.

GoalVest Advisory, a female-founded RIA operating from the World Trade Center in New York, in October launched its Venture Growth Fund, aimed at high net worth investors. And in a recent interview, the firm’s CEO and founder explained the strategy.

The fund follows the firm’s approach of using multi-channel deal sourcing, covering market trends such as AI, climate technology, defense, software-as-a-service, certain consumer sectors, and fintech. GoalVest expects to raise at least $50 million for the closed-end fund.

The new fund represented an important move for founder and CEO, Sevasti Balafas (pictured). 

“We are looking to invest in names with a return potential of about three times over two to four years,” she told Family Wealth Report.  

“We believe long-term expected returns in private markets are going to be in the double digits of returns vs single digits of returns for public equities in the next decade,” she said. “Part of the increase in return potential comes from the higher growth potential mentioned above along with an illiquidity premium we see in private markets.”

GoalVest has already put money into scores of firms. It has invested in mid-to-late stage VC-backed companies in prior funds including: OLIPOP (soft drinks), CoreWeave (cloud computing), Anduril (defense), Insomnia Cookies (baked foods), Klarna (fintech), Apollo.io (sales tech), Redwood Materials (batteries), Armada Systems (supply-chain logistics), Shield AI (aerospace and arms tech), Aplazo (payments), Cents (business management software), Cargomatic (logistics), and Animoca Brands (game software).

As for the firm’s end-clients, there is a concentration of them in New York, Kansas and Texas but also California, New Jersey and several other states in the US. 

To take part in the fund, investors must be Qualified Clients. For the purposes of this fund, a QC is a person that (1) has at least $1.1 million in assets under management with the investment advisor immediately after entering the advisory contract or (2) has a net worth in excess of $2.2 million immediately prior to entering into the advisory excluding primary home. The fund has a minimum investment threshold of $250,000.

Balafas explained why VC is important. 

“There is high concentration in public equity markets. One third of the market cap of the S&P 500 is in 10 individual names. Given the high concentration, investors should be looking to broaden their equity exposure beyond the S&P 500 and public equities. The growth rate these top companies have seen is not as high in the next decade as it was in the last decade.

“The opportunity set for private markets is growing and the opportunity set for public markets is shrinking. 20 years ago, there were over 8,000 US public equities available. Now there is less than half that number,” she continued. “Growth-oriented investors able to take on some illiquidity should be looking at that broader opportunity set.”

Another reason for holding private market investments is that companies are not only staying private longer but more of their growth is happening while they are private, Balafas said.