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🤝Building a high-tech investment manager - Tory Reiss, Co-Founder & CEO of Equi

Who are the leading Founders and how do they think about raising capital via Funds, SPV’s and the like?

Today, we are excited to present an awesome interview with Tory Reiss.

Tory is a financial literacy educator, investment contributor at Kiplinger, and multi-time successful founder who has the unique experience of raising from several of the world’s most notable VC funds including Andreessen Horowitz, Founders Fund, GGV and others, and multiple syndicates / VC funds at his current endeavor Equi, which is building the high-tech investment manager for everyone, unlocking access to some of the top performing alternative investments in the world.

Given Tory’s unique perspective on the venture capital and syndicate ecosystem, we wanted to bring him on to share his experience fundraising from both traditional VCs and via syndicates as well as share a few insights for founders on fundraising. Notably, Tory is our first Founder spotlight – we’re very excited to share the Q&A with LMI readers here.

Let’s share more on this Founder…..

Founder Profile:

Our Founder spotlight is Tory Reiss, CEO and Co-Founder of Equi, which is unlocking access to some of the top performing alternative investments in the world and currently manages over $100M for customers in its first year since launch, and the prior Co-Founder of Archblock (formerly known as Trust Token), which is the creator of TrueUSD, which traded $4B-$9B per month across many of the world’s leading exchanges, and which raised $40M+ in venture funding from Andreessen Horowitz (a16z crypto), GGV Capital, Slow Ventures, Jump Capital, Foundation Capital, Distributed Global, ZhenFund, Stanford-StartX, Signia VC, BlockTower Capital, and many others.

We are multi-time investors in Equi through our Calm & Riverside Ventures syndicates. As a fun fact, there was so much interest in the SPV we ran for Equi that we hit the legal limit on the number of accredited investors allowed in an SPV almost immediately after launching it to our LPs.

We are huge fans of what Tory and the Equi team are building, and frankly they're crushing it. Two of their funds – the Equi Multi Strategy Fund & Equi Dynamic Alpha Funds – are beating the S&P by over 1,000 basis points each since inception in 2022. If you’re interested in applying for access, feel free to do so here.

Now, enough promotion, and on to the interview….

Our interview with Tory below:

What motivated you to choose Equi as your next venture after building successful businesses like TrustToken (creator of TrueUSD)? Could you share the key insights that drove your commitment to this new venture?

I wanted access to top 10% private funds! Really though, I was motivated to create Equi after achieving some outsize success from my investments and previous startups. It was late 2019, stock markets were frothy, we were over 10 years into a raging bull market, and I wanted to diversify my portfolio with alternatives. I was very concerned that a correction in interest rates would decimate a typical stock and bond portfolio and set us up for a decade-plus of volatility in equity markets.

When I went to speak with financial advisors and private wealth organizations, most of what was offered to me was the same. It was brand-name megafunds that weren’t very good with high fees and sub-par performance. I realized that financial advisors have very limited access to alternative investments, and often limited knowledge as well. This led to the second insight, if we could get more and better data on the universe of alternatives, we could find the best managers that produced top tier returns and become a manufacturer of financial products ourselves, that would be incredibly valuable.

Using data and technology to source the best fund managers in alternatives, combined with our tech-first user interface and our own proprietary trading know-how, led to the creation of our flagship Multi-Strategy Fund. Suddenly, we had the basis for Equi.

Could you share your experiences with fundraising for TrustToken and Equi? How did your prior fundraising experiences influence the way you approached fundraising for Equi?

At TrustToken, we raised with some of the biggest VCs in Silicon Valley. However, given Equi’s mission of bringing high quality alternative investments to individual investors, I took a different route and raised with angel investors with whom I thought the pain point would really resonate. Thus, in 2021, when we raised Equi’s Seed round, we went a different route by raising primarily from angels and a few smaller funds. None of the big name brand funds that the public may have heard of. We did this because we knew that angel investors really understood the value of alternatives - they’re already doing private market investing simply by investing in startups. We wanted alignment with prospective customers and to put ownership in the hands of customers.

In 2022 with our Series A, it was a very challenging environment that really shifted what we needed to do. We knew the funding environment was only going to get worse so we focused on securing a large anchor investor, Smash Capital, that would support our vision of turning Equi into a global, aspirational investment brand. They have a $1B multi-stage fund, which is ideal for supporting our continued growth as a firm. Better to have a backer with deep pockets when heading into a recession.

We put together an SPV to invest in Equi’s Seed+ financing and later invested in your Series A. Why did you decide to open part of your round to a syndicate?

I’ve always been a big fan of AngelList and the broader movement to put early stage investing in the hands of many instead of the few. We wanted to partner with a syndicate who we felt would best represent our brand while getting access to a broader LP base - as simple as that. I had heard from other founders that Zach truly embodied the founders’ first mentality, and after my first few conversations, I quickly confirmed that for myself. Working with Zach was a breeze since he truly had our best interests in mind.

From your point of view, what specific benefits did the syndicate bring if any?

We had an opportunity to get a lot of feedback from a wide variety of individuals who participated in the syndicate and also participated in our round. This is different feedback than we could have expected from a traditional VC. It’s also led to many customers, since our value proposition resonates with them and solves a real problem in their portfolio.

For founders going through the fundraising process, what's the most valuable piece of advice you can offer?

Download the free “pitching hacks” PDF, follow that format for your deck. Next, speak with 10-15 other founders that are one step ahead of you and find out what they’re seeing in the market at that exact moment in time. Base your strategy on the current market environment, develop your target list of investors and start pitching! Aim to get to 10 rejections as quickly as possibly, that’s the only way you’ll learn what’s working and what isn’t. Start with the Tier 4 investors and work your way up to Tier 1, so by the time you’re pitching your top choices, you’ve already had dozens of opportunities to hone your pitch. Rejections are just as valuable as pitches that result in dollars.

Do you personally invest in startups or participate as an LP via a fund or other means? If so, what criteria do you look for in great founders and businesses when considering investment opportunities?

I do personally angel invest in startups and VC funds, it currently accounts for ~7% of my total portfolio.

I have a policy of almost always investing in my friends because I’ve been able to follow them for a long period of time, and I have a lot of faith in the friendships and relationships I’ve built.

Generally speaking, my approach is to focus on the people behind the idea. Ideas are always important, but those ideas at an early stage are likely to change so much over the course of the company’s life that I need to believe the person behind the idea. They need to have the persistence necessary to put up with the hurdles it takes to start - and then run - a successful venture.

For those interested in becoming startup investors, what's one piece of advice you would offer to newcomers in the field?

Decide how much you’re willing to lose completely by investing in early stage startups before you start investing, rather than just doing it deal by deal. Startup investing is incredibly volatile so it’s best that you assume it will all go to zero.

Let’s say your portfolio is a million dollars and you say, “okay, I want 5% exposure to early stage ventures.” Now you have $50,000 to invest. You could put that whole $50,000 into one venture fund, or you could decide to write five $10,000 checks. If that’s the case then you need to really have very, very high conviction in all five of the investments that you make because you’re only making five and you need at least one of those five to pay out. By having a starting point of how much you want to invest, you can make better decisions on how to allocate vs. just investing in whatever comes along your way.

What is one hot take on what is happening or will change with retail investors & individual accredited investors over the next 5-10 years?

I believe over the next 5 to 10 years the amount individuals have invested in alternatives will be 5-8x higher than it is right now. Currently, the average accredited investor has only 6% of their portfolio in alternatives. I think that that number is going to get to over 40% in the next 5 to 10 years. It’s a superior way to structure a portfolio, especially in a volatile market environment, and institutional investors have already converged on 40-50% allocations to alternatives.

If people want to learn more about Equi, where should they go?

They can go to equi.com. You can learn a lot more about what we’re doing, or subscribe to receive our market analysis, or apply to the platform here.

Learn more about Equi:

• Equi’s strategy launch deep dive: Equi Dynamic Alpha

• Tory on Invest Like a Billionaire podcast

• Tory on The Deep End podcast

• Equi was on On Deck’s Top 10 companies list

• Tory’s investing advice for Kiplinger

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✍️ Written by Zachary and Alex