SyndicateRoom has announced the closure of Fund Twenty8, with a total of £4.5 million invested, but we understand that a new fund is already in preparation, and will be available later this year.
FundTwenty8 is a unique offering in the world of early stage equity, as far as we know. We've seen it described as a fund without that uses technology to pick investment, but the truth is a lot more interesting than that, if you ask us.
FundTwenty8's algorithm picks stocks by tracking the appetite of investors and investing its own money alongside them. And these investors aren't just anybody. They are experienced angels, high-net-worth individuals and sophisticated investors. They are part of the Syndicate Room community, because Syndicate Room believes in investor-led syndicates, tended by wise women and men with deep expertise in one or more fields.
The ideas are sound, and deserve to be copied - but only by platforms that have the same level of expertise that Syndicate Room has at its disposal . A robot that studies the behaviour of a heterogenous group of well-informed experts is as close as we've come to James Surowiecki's original explanation of 'The Wisdom of Crowds.'
Since it opened in June 2016, 233 people invested into the fund, with an avarage investment of £19,500. The fund aims to generate a 20 per cent per annum from a portfolio of EIS-eligible shares.
The fund is named, rather geekily, after two curious but memorable statistics.
NESTA research discovered that 20 per cent per year is a realistic sustainable return for this type of angel investment. The number 28 came from Intelligent Partnership, whose research showed that a portfilio needed to hold at least 28 companies in order to have a ninety percent chance of success.
And so the idea was born, of a passive EIS fund, curated by a computer that learns from the decisions of a group of wise men and women.
We will be sure to tell you when Fund Twenty8 opens again for 2017.