Fuel Venture Capital, an early-stage investor in technology and digital companies, will conduct a roadshow in Asia next week as it looks to raise money for its next fund, which uses an innovative, new funding structure positioned to transform the private markets landscape.
What is the structure of Fuel Venture Capital’s fund?
Institutional investors will be able to participate in its upcoming Fuel Venture Capital Flagship Fund II, aimed at raising $300m, via The Fuel VC Note, a listed, centrally cleared transferable Note that can be sold and traded throughout its duration. Fuel and its advisers will meet investors in Singapore, Hong Kong and South Korea as part of a roadshow in early May.
Investing in the fund in this way enables the potential liquidity and transferability of a stake in an underlying asset class that was traditionally illiquid, while any distributions from underlying liquidity events (e.g. IPOs) can be passed through to investors in a tax efficient manner.
Investors can potentially exit their investments easily and quickly, compared to traditional venture capital investments. Investors can purchase, value and custody the Fuel Note through their existing brokerage accounts, making the process seamless and hassle-free.
The innovative structure also allows exclusive access to the fund with smaller investment minimums, making previously exclusive opportunities more accessible to a wider range of professional investors. The Fuel VC Note will invest directly into the Fuel Venture Capital Flagship Fund II with a discounted fee structure. Investors will gain a unique 1:1 exposure to the underlying fund, gaining exposure diversified across the global creative economy.
What is the mission behind Fuel Venture Capital’s fund?
The fund will target disruptive tech companies that transform how businesses and consumers transact, consume, work and enjoy their life journey. The fund is already primed to invest in seven warehouse companies, all previously backed by Fuel Venture Capital funds. These are: Betr, RecargaPay, Soundtrack Your Brand, Curve, CookUnity, AEXLAB and Novopayment.
Fuel Venture Capital is not the first to pursue innovation of this type within the private markets landscape. Private Equity platform Moonfare uses various forms of feeder vehicles to give investors access to private equity and venture funds in a similar way. The Fuel Note takes this accessibility to the next level, with some unique features and advantages.
Another unique feature of the Fuel Note is that it will have a CUSIP/ISIN and be centrally cleared, via central clearing systems including Euroclear, Clearstream and DTCC. This eliminates the need for KYC/AML, application forms, wire transfers and tax forms, such as W8-BEN Forms, streamlining the investment process further for investors.
The pricing of the Fuel Note will be available via Bloomberg, SIX Financial, and the relevant Stock Exchange where it will be listed, adding an extra layer of transparency and accessibility to the investment process. Also, the Note will have blue chip counterparties acting on behalf of the noteholders, ensuring a high level of security and trust in the investment.
The note will be issued by S1Series Designated Activity Company (DAC), an Irish section 110 tax status firm, sponsored by London-based Sequence Capital and structured by Lynk Capital Markets, a Fintech platform for the creation and distribution of alternative investments.
What were the executives’ remarks on the fund?
Commenting on the Fuel Note, Jeff Ransdell, Founding Partner and Managing Director of Fuel Venture Capital, said: “We believe that the Fuel Note will be a game-changer in the private markets space, offering investors a new level of accessibility, liquidity and transparency. We are excited to be at the forefront of this innovative funding structure and look forward to its successful launch. We believe it will transform the private markets landscape.”
Mario Rivero, Founder and Director of Lynk Capital Markets, commented: “With the Fuel Note, we aim to revolutionize the way investors access private markets, making it easier and more efficient than ever before. We are proud to have created a transparent, listed, and freely transferable structure that democratizes investing in private market transactions.”