Breaking the Rules of Venture Capital
The Origin Story of Sweater Ventures
Last Updated: By TRUiC Team
Traditional venture capital funds are only open to accredited and well-connected investors. This means that many people who might want to invest in a company or technology they believe in are unable to do so, at least through a VC firm.
Sweater Ventures offers the first mobile app to give all investors, not just accredited ones, direct access to a VC fund. The platform aims to open up an asset class that was typically reserved for the ultra-wealthy. This is Sweater Venture’s story.
Too Many Restrictions
Jesse says he got the idea for Sweater Ventures when he wanted to create a traditional VC fund but couldn’t because he lacked the proper qualifications.
“I realized that I wouldn't be able to invest in my own fund because I wasn't an accredited investor,” he says. “I quickly pivoted and worked tirelessly over the next few years with the SEC to identify a structure that would allow all investors, not just wealthy people, access the asset class.”
In other words, he set out to democratize the VC funding world and allow many more people to participate than traditionally have been able to.
“Typically it's… 1% class that's putting the money in [to a VC fund] and making the decisions of what gets funded and what doesn't,” he says. “And we fundamentally believe that everyone should be able to participate in determining who those companies are, as well as benefiting from the growth that those companies produce and the wealth that they produce.”
Venture Capital for the Masses
In light of that belief, anyone can download Sweater’s app and invest in a promising company. It’s faster and much cheaper than a traditional VC.
“instead of a $500,000 minimum investment, which is what typical VC funds have… we make it a $500 investment instead,” he says. “The vast majority of people can afford that.” In addition, there are handy features like the ability to set up recurring investments.
Jesse looks at Sweater as more than just another way to invest. “One of the things that's so important to Sweater is [that] it's a community. It's a feeling. It's a movement that people can relate to and that they want to be part of their brand, their personal brand and be associated with it.”
He compares using Sweater to “having courtside seats to the game of venture capital.” Users are much more involved and invested in the process, to everyone’s benefit.
“You don't get to shoot the ball and you don't get to coach the team, but we will give you a tour of the locker room. And you get to meet the players and you get to be right there…. It's almost like you're a part owner in the team, because you get the benefit of everything that happens. We've taken venture capital, we've simplified it, we've lowered the barrier, and we've provided an experience that everyone can really appreciate and participate in.”
What's Next for Sweater Ventures
Jesse says that Sweater Ventures has big plans for the future, but they will take time – sort of like constructing a commercial building vs. a house. One of those plans, naturally, is to launch more funds beyond the Cashmere Fund, which is the company’s first.
“So when you come into the Sweater app, you'll be able to see the Cashmere Fund. That's very consumer focused. You'll be able to get into a late-stage fund. You'll be able to see a climate tech fund. You'll be able to see an impact fund. And then you can put your dollars in the effort that you feel is most aligned with who you are.”
Sweater Ventures also wants to work with other investor groups to expand its reach.
“We're actually taking all of our technology and all of our expertise of operating these highly regulated funds and packaging them up so that other groups could come to us and… basically build their own fund,” Jesse says. “They bring their own community, they bring their own deal flow, they bring their own investment committee, and we do everything else for them. And then they list that fund in our community so that our members and their community can come in and participate in that fund and see everything else that's going on.”
The goal in about five years is to have 30 or 40 funds in the company’s ecosystem – both its own funds and those that it’s hosting for others.
“We want to have hundreds of thousands of members,” he says. “We want to have millions of people in our community that are all adding to this feeling. So that… when five years from now you're like, hey, I've got this crazy idea…. You can come into the Sweater ecosystem, and if you earn an investment from Sweater, you're automatically tapped into an aligned base of people that could bring you your first $250,000 of revenue in 60 days, instead of having to grind through it for like a year, which is the path right now.”
Ultimately, Sweater’s goal is to help founders realize their dreams. “I want more founders to be able to build successfully build their vision…. Ultimately, we want to help shape the world and shape the future and allow everybody to have a voice in how that takes place.”
