Animal Spirits Podcast – Episode Summary

Title: Talk Your Book: Direct to Consumer Venture Capital
Host: Michael Batnik and Ben Carlson
Guest: Elliot Infischelli, Partner at the Cashmere Fund
Release Date: January 6, 2025

The latest episode of the Animal Spirits Podcast, hosted by Michael Batnik and Ben Carlson of The Compound, delves into the innovative realm of Direct to Consumer (DTC) Venture Capital. Featuring Elliot Infischelli from the Cashmere Fund, the discussion navigates the evolving landscape of venture capital accessibility for retail investors, the integration of influence from the sports and entertainment sectors, and the operational intricacies of managing an interval fund tailored for everyday investors.

1. The Explosion of Private Assets and Evergreen Funds

Timestamp: 00:47 – 02:08

Michael Batnik opens the conversation by highlighting the significant growth in private assets, emphasizing how fund companies are simplifying operations to make venture capital more accessible to retail investors. He notes the shift towards evergreen, rolling, and interval funds that offer enhanced liquidity and lower operational burdens typically managed by institutional investors.

Michael Batnik (00:47):
"It's only going to get bigger because fund companies are now figuring out, let's take away a lot of the bad operational stuff about running funds... and give you a little bit of liquidity."

Elliot Infischelli concurs, stressing the importance of education in bridging the knowledge gap for investors unfamiliar with interval funds.

2. Introducing the Cashmere Fund: A Unique Venture Capital Approach

Timestamp: 02:19 – 06:20

Ben Carlson introduces the Cashmere Fund, highlighting its unique structure and the involvement of high-profile investors like Josh Allen of the Buffalo Bills. Elliot Infischelli shares insights into the fund’s inception, rooted in his background in Hollywood and his transition into formal venture capital.

Elliot Infischelli (02:58):
"Their whole thing is networking and finding people of influence... People trust people and brands as opposed to the incumbents."

The conversation underscores how the Cashmere Fund leverages networks from the sports and entertainment industries to identify and support consumer brands with significant growth potential.

3. Investing with Influence: Authenticity as a Cornerstone

Timestamp: 10:19 – 16:42

The discussion pivots to the importance of authenticity in influencer-backed investments. Ben Carlson emphasizes that influence alone is insufficient; the underlying product or service must resonate genuinely with consumers.

Ben Carlson (11:14):
"We think we have better data than most entities in this space... Are these people, do they have the drive, are they authentically engaged in what they're doing?"

Elliot Infischelli adds that authenticity separates enduring brands from fleeting cash grabs, a critical factor in sustaining influence and ensuring long-term success.

4. Fund Structure and Accessibility for Retail Investors

Timestamp: 13:30 – 22:33

Michael Batnik probes into the Cashmere Fund’s structure, contrasting it with traditional General Partner (GP) venture funds. Ben Carlson explains the fund's unique approach as an interval fund within the mutual fund ecosystem, allowing low minimum investments ($500) and providing liquidity through redemption windows.

Ben Carlson (17:04):
"We are creating an ecosystem in which a retail investor can invest... We have a $500 minimum investment... and liquidity with redemption windows without any penalty."

The fund operates under stringent SEC regulations, ensuring transparency and reliability for investors through regular audits and accurate Net Asset Value (NAV) reporting.

5. Managing Liquidity and Time Horizons

Timestamp: 22:56 – 38:44

A substantial portion of the conversation addresses the challenges of balancing liquidity with the long-term nature of venture capital investments. Ben Carlson details the fund’s liquidity mechanisms, including biannual redemption windows and distribution opportunities based on NAV performance.

Ben Carlson (22:56):
"We have bi-yearly redemption windows, allowing up to 10% of the fund to be redeemed each year... We've been able to redeem over 90% in previous windows."

He elaborates on how the fund adjusts NAV based on quarterly updates from portfolio companies, ensuring investors have an accurate and timely reflection of their investments' performance.

6. Leveraging Entertainment Expertise in Venture Investing

Timestamp: 34:45 – 35:58

Michael Batnik highlights the advantage of storytelling and branding derived from Ben Carlson’s background in the entertainment industry. Ben explains how effective communication and marketing strategies are integral to attracting and retaining retail investors, transforming the fund into a DTC brand.

Michael Batnik (34:45):
"You have to actually make a sale and market and tell that story... How has that helped you in this business?"

Ben Carlson (34:45):
"We are leaning into the retail investor... Building the tech stack, improving the fund, and raising the minimum viable fund are our priorities now."

7. Communication and Transparency with Investors

Timestamp: 40:14 – 41:26

Concluding the episode, Ben Carlson outlines the communication protocols with investors, including monthly newsletters, quarterly updates, and annual reports. The Cashmere Fund prioritizes transparency, providing detailed disclosures and accessible information on their website.

Ben Carlson (40:32):
"We do monthly reports, quarterly and yearly... Total transparency in what we're doing, which we think is a huge plus."

Michael Batnik (41:06):
"Send people to learn more at thecashmerefund.com and follow us on LinkedIn and Instagram."

Key Takeaways

• Accessibility: The Cashmere Fund democratizes venture capital by lowering investment minimums and enhancing liquidity through interval fund structures.

• Influence and Authenticity: Leveraging networks from sports and entertainment ensures investments are backed by authentic and driven individuals, fostering genuine brand growth.

• Transparency: Rigorous auditing and regular updates provide investors with a clear understanding of their investments' performance.

• Community Building: By adopting a DTC brand approach, the fund fosters a community of retail investors, enhancing engagement and support for portfolio companies.

Notable Quotes

• Michael Batnik (00:47):
  "It's only going to get bigger because fund companies are now figuring out... and give you a little bit of liquidity."

• Ben Carlson (11:14):
  "We think we have better data than most entities in this space... Are these people, do they have the drive, are they authentically engaged in what they're doing?"

• Ben Carlson (22:56):
  "We have bi-yearly redemption windows, allowing up to 10% of the fund to be redeemed each year... We've been able to redeem over 90% in previous windows."

• Ben Carlson (40:32):
  "We do monthly reports, quarterly and yearly... Total transparency in what we're doing, which we think is a huge plus."

Conclusion

This episode of Animal Spirits Podcast provides a comprehensive overview of the Cashmere Fund's innovative approach to venture capital, blending accessibility with strategic influence from the entertainment and sports sectors. By lowering barriers for retail investors and emphasizing authenticity, the fund is poised to redefine how everyday investors engage with the venture capital landscape.

Learn More:
Visit thecashmerefund.com and follow the Cashmere Fund on LinkedIn and Instagram for updates and educational resources.