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19 Comments

Thoughts on rolling funds? Will you invest in one?

All the news around raised crowdfunding limits and Gumroad opening up to investors got me more interested in rolling funds, so I started poking around.

I'm a little surprised at all the indie hackers running their own funds:

Have you invested in one?

  1. 4

    I belive you need to be an accredited investor in the US to invest or run one. The SEC relaxed the rules some last year (i.e. passing the Series 65 exam and registering with your state would qualify), but work still needs to be done on the regulatory side to open up startup investing to the public.

    @xavier - Interested in this space as well. There are some models not being currently utilized (such as co-op ownership and swapping pools) that could be a fit for what you mentioned. DM me if you want to bounce some ideas around.

    1. 1

      I run a rolling fund. You do need to be accredited. AL gives you three ways to prove it. No relaxed rules on investing in RF.

      That being said I can only have 99 Non-qualified investors (net worth <$5 million) and up to 2,000 Qualified.

  2. 3

    Seems like a cool way to dabble in investments that support people/companies you care about. I made a £500 investment in a startup company on Seedrs in 2018, and it's done well, and even then I can only withdraw if they exit, or if someone else on Seedr's buys my shares on their 'secondary market'.

    So I might continue to 'dabble' here and there with this stuff, but I'll be sticking to more conventional ISAs/index funds I think :)

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      Great one @jasraj - I am also considering contributing on platforms like Seedrs, CrowdCube, and Republic. How do you see the return so far? And what's your thought process when making a bet?

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        hey Felix - so my £500 investment has nearly trebled. I can only withdraw the funds if someone buys my shares on the 'secondary market' though (it opens at set times, next in April), or if the company exits. I'd definitely be sure to read the full terms fully to know what you're getting into, as these early-stage investments are risky and, even when you make gains, withdrawing the money may not be the easiest thing to do (on Seedrs, not all companies opt into the secondary market, so you might literally have to wait for an exit to access your initial deposit/any returns.

        Re: my Seedrs investment, I might try to sell a portion and re-invest into another company or two. Not sure just yet. It's nice to 'dabble' in these little investments into cool companies I believe in; though I think these will always be more 'fun' little investments for me, made sparingly.

        My priority atm is getting myself investing consistently into index funds (Vanguard)... it suits me to have slow growth & minimal participation once I invest (my friend Peg helped me realise it's the 'strategy' for me). Opening my account this weekend :)

  3. 3

    I am curious @channingallen - care to share (if public) some of your investments?

    1. 5

      sure:

      1. stripe
      2. stripe, and
      3. stripe

      😉

      alright, on a more serious note: i haven't done much investing but will soon. i put a few grand into bitcoin four-ish years ago, which is nice. and i've also invested in twitter somewhat recently because how could you not?

      but i'll have far more interesting things to say on this 12 months from now.

      1. 1

        I'm super curious to know more about your Bitcoin investment four-ish years ago. Did you sell it or are you still holding?

        For those still listening, four years ago (2017) was around the peak of the last big bull market for Bitcoin. If you happened to have bought around the peak your investment would be up about 200% today. Not bad, but not great for crypto.

        But if you happened to have bought near the bottom of the 2017 market your investment would now be up a whopping 1300% :)

      2. 1

        12 months - that's a long time! any spoilers?

  4. 3

    I'm all for the ability to invest in rolling funds. However, speaking form experience, it can either be geographically prohibited, or exist in a legal grey zone that can come back to bite you during tax season.

  5. 2

    I haven't invested in a Rolling Fund yet, and only know a little bit about them, but I certainly would consider it.

    Currently have some SAFEs (simple agreement for future equity) with one company who raised some capital on Republic.

    Also have invested in an entity on the public stock exchange, that entered the stock exchange through a SPAC-like process. Trading pretty low atm, but it's run by someone I have a lot faith in (founder of Atari).

    So, I'm definitely not risk-adverse.

    Main things would be for me to:

    1. Find a rolling fund that I feel good about
    2. Understanding when to expect a return / distribution
    3. Invest only an amount I'm willing to lose
    1. 1

      How I present my rolling fund:

      • I share my background, what I've done, and how I specifically support my portfolio
      • While I am working to make this the best investment for my investors, there is a high probability that their investment could go to 0 because it's a high risk asset class. I de-risk by being involved alongside the founder in most cases.
      • 100% agree!
  6. 2

    Hi @channingallen thanks for the post and the twitter to the moon plug.

    How does the angel list fund different than the Republic fund? Are they both open to non-accredited investors?

    1. 1

      I wrote about the Republic scenario specific to Gumroad (https://vikduggal.com/the-crowd-safe-and-gumroad/).

      The AL fund requires you to be accredited, the Republic fund does not and limits your investment level (based on your personal financial situation).

      1. 2

        Thanks @vikdug for the clear essay and the article. I found it short and to the point!

  7. 2

    I have to say I'm interested but I'm even more interested in watching all the drama happen - https://twitter.com/nathanbarry/status/1371549184701067265

    But on a serious note, maybe it's better to wait for things to play out more before parting with cash?

  8. 2

    Rolling fund are super interesting indeed, and being to invest small amount in company you love is super fun (and maybe profitable)

    What would be a game changer for us is a mean to invest in each other projects. We don't need $3M funding, but a simple way to get $10-50k to speed up our ventures would be awesome! And invest a few hundreds in other IH project would also be super exciting.

    If anyone in here is motivated to talk about it/build it let me know!

    1. 1

      If you're building something and looking for funding, feel free to read more about my fund and apply (vikrant.vc).

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