The iSelect Approach for Financial Advisors

Regulations, uncertain markets, monetary policy, and a thousand other factors are making it even harder for financial advisors to offer their clients reliable investment strategies. Retirees are watching retirement savings dwindle. Millennials don’t believe the S&P 500 is reliable. Few people trust Social Security to provide meaningful retirement benefits. It has become difficult for financial advisors to provide clients with solutions that offer long-term returns.

iSelect is working to solve this problem.

Looking for Alternatives

Many accredited investors and advisors seeking consistent, risk-adjusted returns that are uncorrelated to the market are looking for alternative investments. This category of assets grew at an 11% CAGR over the last decade. Indeed, a survey found 43% of financial advisors expect to increase client allocations to alternatives within the next 12 months, and 78% agree or strongly agree that alternatives are a critical component of overall asset allocation. Alternatives are expected to account for up to 50% of net new revenues in U.S. retail asset management by 2020.

The Case for Venture

Venture capital funds, one of the various alternatives, are investment funds that manage money from investors seeking equity stakes in privately held startups, small- and medium-sized enterprises with strong growth potential. These investments are high-risk/high-return opportunities.

The iSelect Solution

iSelect helps average accredited investors to invest as little as $5,000 into individual, carefully vetted venture deals. Because financial advisors want better solutions for their clients, we built iSelect for RIAs and BDs. We invest in the same deals as leading venture capitalists. We make it easier for the average investor to get in on the action.

An investment in iSelect Fund is diversified across a series of new businesses, each of which is subjected to our extensive three-tiered due diligence process, which includes review by a FINRA compliant broker-dealer, our Venture Team, and our industry-specific Selection Committees. This process addresses the following fundamental questions about each investment:

Is the venture commercially ready for business?
Does the venture have the ability to create entry barriers necessary for a sustainable competitive advantage?
Is the management team in place capable of growing the business responsibly?

Each company’s profile is summarized and packaged into an extensive diligence file made available to investors for detailed evaluation. Post-investment, iSelect requires each company to provide monthly reports, so investors can monitor the progress of their portfolio.

Co-Invest Alongside Top Venture Investors

In venture capital, it always pays to partner with others. iSelect co-invests alongside many of the top VC investors in the industry, including subject matter experts in agriculture, software, healthcare, resource efficiency and more. This ensures access to the best deals in the market, as well as giving our investors opportunities to invest with the best in the business, accessing deals that would otherwise be closed to them.

Consideration

With 2021 well underway and with public markets still strong, we think it is an important time to highlight some of the key private market, venture investment themes that iSelect fund has identified for the year. We believe technologies transforming the Agriculture, Food and Wellness markets will flourish, with a focus on four areas: technologies that enable better food choices to drive better health outcomes, technologies that drive better, more profitable farm operations, technologies that drive the Consumerization of Healthcare, and biome-based treatment technologies. At iSelect, we invest for impact AND performance. We offer qualified investors access to emerging growth companies through our national venture capital strategy. Our unique structure allows our investors to continue to invest in these companies as they develop.

Timing

Why is now the right time for venture? The answer is that now is not explicitly the right time. Venture is something we need in our economy at all times. Now is not better than any other particular time. The question is, why ever stop? When we look at the challenges we’re facing in food and healthcare the reality is there is someone, somewhere who has an insight about how to build a product that will solve those problems. And if they put the right resources to it, they will succeed. As long as we need new technology to make life better or make our lives more enjoyable, we need venture capital to help fuel those entrepreneurs.

What is iSelect as a product?

iSelect is a very unique product, but when you break it into its parts it’s fairly easy to understand. On the front end we’re a traditional venture capital fund. We have a diligence process. We have an investment process. We have categories of industries where we have focus and real expertise, and we invest in companies in those areas that meet requirements for the fund. On the back end we’re unique in that we don’t raise a large amount of capital at one time and deploy it over the life of our fund. Each deal that we bring onto the fund, our investors have to prove and determine to invest in that deal. We have to constantly prove our diligence standards. It’s accessible, transparent and easy for investors to come in and see our comprehensive process.

What is the ideal iSelect company?

We are looking for founders that are passionate and we want the problem they’re trying to solve to be big, real, and painful. We want the solution to be revolutionary and we want our capital to be able to help them solve that problem. We want to know that they have customers involved and that the solution they’ve come up with actually meets those customers’ and market needs. And we want the team to be capital efficient with the money they’re spending.

What does the ideal iSelect company look like?

We’re looking for a company that has an opportunity to have a 10x return to our investment or greater in a period of three to seven years. What excites us at iSelect are companies that are solving big problems. We want companies that are going to be the Monsantos of the future. Not just in the size and the scope, but the impact they have on people’s lives. We want to create positive impacts on people’s lives, so we invest in areas like agricultural production and areas like producing healthy foods for our kids. They are problems that impact real people’s lives on a daily basis. That’s what we’re trying to do at iSelect. We’re trying to solve the big problems out there. Find ways to bring capital to the entrepreneurs who are the real heroes out there getting up every morning, beating away at these things that are problems that you and me and everyone else faces in their everyday lives.

What is iSelect?

iSelect is a venture capital firm. What that means is we look at hundreds and hundreds of different companies and we apply tough diligence standards to each of them, looking at whether the team has a good plan for growing the business, whether the team is qualified and credible, and more. We do that to resolve the few who provide the best opportunities for investors. And then iSelect takes that smaller set of investments and goes to investors who are interested in venture capital and provides a way for them to invest in these companies, either individually or all at once. We co-invest alongside other venture capitalists. We source transactions through to an exit where the company would become public or get bought. And we manage that whole investment process on behalf of our investors.