Thursday, July 29, 2010

Pledge Update July 2010

Rather than the normal full blown pledge update I'll be doing a hybrid discussing  total status plus individual state status. As we get closer to launch (Oct-Nov 2010), and knowing some readers have been here for years (and others just eventually drift away), I asked yesterday for a 're re-confirmation' (for some readers this is the 3rd confirmation) of pledges focusing on the $25K+ group.  This group is roughly 125 investors with another 225 investors in <$25K group. (about 350 people in total)  After an unhealthy amount of emails in a 24 hour period, the reconfirmed pledges for the group targeted yesterday is about $5.4M.  Still working through it to catch people who don't come to the site every day but the follow through rate for those 125 people is in excess of 75%.

To gain accuracy, I've removed a handful (4 to be specific) of the larger legacy (older) pledges which have not been responsive of late to email [perhaps AWOL] so that my grand totals are more realistic to the coming reality.  This money is replaced by pledges that have come in the last 30-45 days.  So the new grand total of pledges is $10.2M, of which I confirmed $5.4M yesterday.

That leaves $4.8M, of which I will assume a 50% follow through rate (obviously one hopes it is much higher).... i.e. $2.4M when the time actually comes.

Together $5.4M confirmed past 24 hours plus the $2.4M if the remaining 200 some investors come through at a 50% rate will get us near to $8M.  So the $7M threshold that has been the multi year goal looks pretty darn good.  With a few more months before actual launch I am hoping another $1M or so of new pledges also comes in, creating even more buffer.  So these figures below are 'best case' with 100% follow through. (not going to happen)

Total $10,199,200
Goal $7,000,000
% of Goal 145.7%

To Go ($3,199,200)

For detail person by person, I have a tab along the top of the page called 'Fund FAQ/Pledges' so you can review it there, if interested.  I won't cut and paste it all into this post today.


Now onto the state discussion; each state has an annual fee to operate as a mutual fund.  Without investors there is no reason to open in that state.  I have placed a rough estimate of $40-$45K in pledges to open in that state and break even.  If your state is not "open" it's not much of an issue - a state's status can be changed same day or next day at the latest.  Therefore, I've put all U.S. investors into 3 buckets

  1. States that will be open before launch
  2. States depending on 1-2 large investors (MN, NV being the exclusions - these two are near or above $50K but still depend on a few people)
  3. States with some activity but not yet near the threshold
[Foreign investors obviously not affected]

Since the last update in May, quite a few states have moved up into bucket 1 so here is the new status:

Bucket 1 (23 states):  AZ, CA, CO, CT, D.C., FL, IL, MA, MD, MI, MO, NC, NJ, NY, OH, OR, PA, SC, TN, TX, VA, WA, WI

Bucket 2 (12 states): AR, GA, IN, KS, MN, MT, NV, OK, RI, SD, UT, VT

Bucket 3 (8 states): AK, DE, IA, ID, KY, NH*, NM, WV

[NH - special situation]

Again, once a state gets the required amount of money, the lights can be turned on within hours so please don't view it as a deterrent.  If all goes well, we should be launched in 35 states within a month, which is quite amazing really.  Lots of small independent funds open in 3-4 states to begin.


Everything below is boilerplate from older posts.

  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]

Caveats for pledges as always:

  1. Assume a pledge amount that is firm based on a fund opening in October-November 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 as of July 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". I prefer an email (my email address is found on the upper right of the blog) with the above information.

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