Wednesday, March 10, 2010

Pledge Update March 2010

March 2010 pledge update below; as mentioned in previous posts we are on track for a summer 2010 launch.  .

Past month was a strong month with just over $900,000 of pledges from about 45 new investors; this takes the total amount to 114% of the initial goal of $7M.  The "fund is funded" - at least virtually, will need to wait until the real thing this summer for the real iteration.   The total number of investors is now about 265.  I will continue with my normal conservative projection of a $300-350K monthly run rate of pledges go forward for the next 4-5 months, which will take us to our goal for funds necessary by summer.  From here, hopefully a buffer of pledges can be built in case some proportion of people will not follow through.


If you are a person potentially interested and new(er) to the website, here are the pertinent posts to become familiar with the specifics.

  1. The overall goal and why I'm aiming for $7 approx million [Jan 7, 2008: Reader "Pledges" Toward Mutual Fund Launch]
  2. Frequently Asked Questions [May 26, 2008: Frequently Asked Questions] Very important to read
  3. Why I need your state [May 23, 2008: Investment Pledges by State] Keep in mind a state's eligibility can be turned "on" overnight once we're up and running
  4. Most recent updates (this November)  [Nov 4, 2009: General Updates]
  5. Our story in Barron's [A New Kind of Fund Manager]

Let me copy the same caveats for pledges as always:

  1. Assume a pledge amount that is firm based on a fund opening in summer 2010.
  2. Assume at any point in 2010 the market may be down 30% from here
  3. Make your pledge based on liquid assets that are not currently in some high octane mutual fund that loses 40% when the market falls 30%, nor gains 50% when the market gains 40%. That money is not something that can be counted on in a volatile market.
  4. Please have whatever monies are pledged to the fund, in money market or equivalent by April 2010 so it is not at risk in the market.

Format for fund pledge: first name, last initial, pledged amount, and state you live in. To be clear, you are not sending me money that I'm going to hold until launch when you 'pledge' - you are simply making a verbal commitment: "when you are up and running, I have $X amount ready to invest". You can attach a comment to this post or as most people do, send me an email (my email address is found on the upper right of the blog) with the above information. I'd prefer an email if possible.


Rather than doing a full summary of individual names, which can always be found on the tab 'Fund FAQ / Pledges', I am going to break out the total by states this month.   If you are unfamiliar with the reason for state designation, line item #3 above explains it in a post from 2008.  In summary, to offset the fees required by each state, roughly $40-$50K of monies need to be available - otherwise it would be a no brainer to just open in every state while waiting for investors.  Foreign investors are outside of this discussion as there is no fee by country.

I've created 4 categories
  1. States with many investors and over $50K, open at fund inception
  2. States depending on 1 large investor or roughly $40-$50K
  3. States in progress, under $30K
  4. Foreign investors

In summary, the fund will open with the states in category 1 at inception due to many investors and/or large dollar amounts.  Category 4 is not part of this specific discussion.  Category 3 are states that still need more investors to hit the threshold to open.  Category 2 is the tricky one, because the majority of the states in this group are reliant on 1 large investor... so what will happen is when that investor opens an account, I will be notified, pay the fee to open the fund in that state, and then business as usual.   It won't be noticeable on "your end" - just a process of steps on my end.

The current allocations are as follows:
  1. Category 1: (69% of pledges)  AZ, CA, FL, IL, MA, MI, NJ, NV, NY, PA, TX, VA, WA
  2. Category 2: (21% of pledges)  AR, CO, CT, D.C., GA, KS, MD, MN, NC, OH, OK, OR, RI, SC, SD, TN, UT, VT, WI 
  3. Category 3: (1% of pledges)  AK, DE, IA, ID, IN, KY, MO, WV
  4. Category 4: (9% of pledges)  N/A

Of the states in category 2, AR, CO, CT, GA, KS, NC, OH, OK, OR, RI, SC, SD, UT, and VT will be reliant on 1-2 investors to open up.  You know who you are ;)

D.C., MD, MN, TN, WI are more tricky since there is not one large investor... but in sum there is enough to open the state with multiple investors.  So those will be based more on faith that everyone comes through in a narrow window of time at inception.


Are we having fun(d) yet? ;)

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