![]() ![]() It’s really a kind of elite club for Tesla drivers, a high-performance venture-capital fund throwing off returns that also make investors feel virtuous.It's no secret that Silicon Valley has more resources to build a company than anywhere else in the world. Therein lies the power of Legacy’s model. This investor’s passion for conservation was so great that Legacy was persuaded to host an event with Iain Douglas-Hamilton, head of nonprofit Save the Elephants, and a number of the fund’s investors subsequently also donated to the charity. Another investor has earmarked a chunk of his windfall to save African elephants. ![]() None of these investments have fully played out yet.Īnd where does the moola wind up? One investor we heard of is funneling a portion of his Legacy-made corpus to nonprofit Apopo, a strange but oddly ingenious outfit training rats to detect land mines in Cambodia, a deadly legacy from the country’s civil war in the 1970s. But the fund has also scored by investing in 16 of the 20 largest privately held companies in the tech industry, including Xiaomi, which is a Beijing smartphone producer, and Pinterest, the photo-posting virtual hangout occupying your kids’ attention. Among Legacy’s biggest wins were pre-initial-public-offering investments in Facebook and LinkedIn. Some even had rather juicy double-digit annualized returns. ![]() WORTH THE INVESTMENT? The results that Barron’s Penta got to peek at-and which we were asked not to publish because the firm’s investments are for very wealthy investors only-suggest that four of the six funds Legacy has launched since inception have produced annualized returns, net of fees, that clearly beat their Cambridge and PitchBook benchmarks. But remember, all of those fees are on top of the 2-and-20 fees the underlying VC funds are charging for their work. That’s attractive considering that fund of funds typically charge 1% off the top and then siphon another 5% of profits, after investors have earned 7% per annum. Legacy then levies a 0.7% management fee it doesn’t take any of the profits. Investors must commit a minimum of $1 million, with committed funds tapped over a period of five to 10 years. Of course, investing in Legacy comes at a price. Even very wealthy folks don’t always have a line on the hottest start-ups in Silicon Valley-but Legacy does. In the most recent round of funding, Legacy easily raised $250 million from investors and sank that capital into 20 underlying VC funds. “Some of like the idea that the money goes to charity,” Hall says, explaining why these billion-dollar-plus players today still save a sliver of their deals for Legacy investors. Legacy still leverages those early relationships established with venture-capital heavies like Andreessen Horowitz, Accel Partners, and Index Ventures. During the bust, VC funds were starved for funding and suddenly more open to outside interest. “It was a horrible time for us and the industry,” Hall says, but it helped Legacy get access to venture funds that would previously have turned down the start-up’s approach. Furthermore, the 2000 to 2001 tech bust badly hurt the early returns of Legacy’s first two funds.Īnd yet, ironically, the burst bubble also helped the fledgling operation get a toehold. Back then, Hall collected $40 million from a handful of Cisco Systems vice presidents and venture capitalists, considered a paltry sum in those go-go tech days. LEGACY VENTURE WAS co-founded in 1999 by venture-capital veteran Russell Hall, along with Jim Anderson both had previously worked at Merrill Pickard Anderson & Eyre. Nice, but let’s be clear, this is high-risk philanthropic giving that’s not for the faint of heart. Sixteen years after it was launched, Legacy’s investors have transferred $450 million to charitable causes, and about a billion dollars still invested in Legacy funds are sunk into low-cost stakes in tech highfliers like Uber, Airbnb, and Dropbox that will also benefit cash-strapped nonprofits. Four of the original 40 billionaires that signed Warren Buffett’s Giving Pledge, including Pierre Omidyar and Jeff Skoll, have invested a portion of their philanthropic dollars with Legacy Venture. But we discovered that reasonably priced Legacy was attracting a sophisticated and decidedly eleemosynary set of investors. When we first heard about Legacy, we were, we confess, suspicious that it was a cynical marketing gimmick to lure investors into a fee-choked fund of funds. ![]()
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