LP Profile: Truffle Invest

Truffle Invest's modus operandi is to accommodate smaller sophisticated investors – typically those wanting to invest anywhere from £5,000-5m – to access high quality funds, but who lack the sufficient scale to do so.

"We aren't a traditional LP or fund-of funds," says Jason Proctor, co-founder of the firm. "We allow our clients to choose individual funds by reviewing information on our platform before deciding whether or not to invest."

The online platform will aggregate individual investments from Truffle's investors, using custom-fit technology that allows its clients to invest in funds in a short time frame, and without any paperwork.

"We have seen a significant trend over the last few years in terms of broadening access to private markets," says Proctor. "This has been led both by some of the larger multi-strategy GPs as well as intermediaries such as private banks and others. In a market where there is increasing emphasis on long-term saving for retirement, we believe further broadening of access to private market funds for sophisticated smaller investors is inevitable."

Proctor explains that Truffle believes many individuals are currently under-served when it comes to investments, with few high-quality options outside of traditional public stocks and bonds. "While institutional investors have been able to increase allocations to private market funds in the low risk-free rate environment that has persisted since the financial crisis, most sophisticated individuals have not been able to follow-suit – for the simple reason that they don't have access."

The firm's key to accessing private markets is relationships. The team behind Truffle has extensive experience within private markets – having worked at fund investors and asset allocators – and has relationships with multiple top-tier funds. It has previously been involved with managing and selling private businesses and raising institutional capital for private markets funds. It also has a track record of discretionary investing in private market funds and advising large institutional investors on private market investing.

Truffle says its USP is its relationships with senior fundraising professionals at leading managers, partner-level private equity professionals, top managers, placement agents, advisers and fund investors, among others.

Differentiated proposition
When it comes to private markets, the platform provides access to private equity funds, private debt funds, venture capital funds and private real estate funds. The firm is currently in discussions with a private equity fund that it is expected to launch with and a top-tier direct-lending manager.

Truffle's platform aims to provide access to three to four funds at any one time, split across private equity funds, private debt funds, venture capital funds and private real estate funds. Each fund is likely to be available on the platform for around three months, with new funds added to replace the previous ones.

"Our objective is to allow investors to build diversified portfolios through the Truffle platform," says Proctor. "Therefore, Truffle will offer an evolving mix of strategies – with each being available on the platform for a period of time that coincides with the underlying fund's timing."

Proctor says it is unlikely that Truffle will consider many first-time funds, though may do in certain cases, such as where a clear prior track record can be demonstrated.

The firm hopes to raise £100m from investors by the end of 2020, while the target for this year is £10m. Proctor believes there is a significant latent demand among investors for high-quality, long-term investments. He uses Crowdcube as an example, a UK crowdfunding site that raised more than £100m of new investment in 2017. "While it is a very different risk/return proposition to private equity, it demonstrates there is demand from sophisticated individual investors to diversify away from traditional asset classes," says Proctor.

As for its long-term vision, Truffle plans to become a large-scale platform providing access to a number of funds over the next 5-10 years. However, in the near term, the focus is on growing its investor base.

The London-based firm is initially launching in the UK and Ireland. It plans to invest globally, with an initial skew towards Europe and the UK, reflecting the nature of its investor base. The Truffle team consists of six people, with three lead executives in the investments, marketing and technology roles.

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