SoFi, a digital financial services firm aimed at retail investors, might be trying to reach a higher-net-worth audience by adding some private fund options to its investment choices.
Last week, the company revealed it is giving its users access to three private market funds, including a special purpose vehicle created exclusively for SoFi to hold Space X. SoFi will offer these funds through Templum One, an alternative investment platform.
All three funds will require minimum investments of $25,000 and an accredited investor designation, according to Templum spokespeople. Templum One, launched last December, provides access to alternatives to investment advisors, wealth managers, fintech firms, online brokers and TAMPs. Alternative products available on the platform include private equity, private credit, real estate, venture capital, hedge funds, tangible assets, private companies and commodities.
Earlier this year, SoFi started offering alternative investments on its SoFi Invest platform, including private credit, real estate, venture capital, hedge funds and other assets.
Investing in SpaceX might be particularly attractive for the kind of young/tech-savvy members SoFi likely attracts, noted Neil Bathon, managing partner of Fuse Research Network. However, to invest $25,000 into Cosmos or one of the other funds SoFi has added would require an investable asset base of approximately $250,000, which doesn’t seem to fit SoFi’s existing member profile.
“If I were to speculate, I would say that SoFi is trying to appeal to a higher net worth client … and get people to become members,” Bathon wrote in an email. “I suspect it isn’t a coincidence that Elon Musk, owner of SpaceX and the founder of the precursor to PayPal, has more than a few similarities with what SoFi is trying to do.”
SoFi’s additions include private equity funds Pomona Investment Fund and StepStone Private Markets Fund, as well as Cosmos Fund, an SPV created for SoFi through Templum subsidiary Templum Capital. Pomona Investment Fund is a registered closed-end fund focused on investment in secondaries, with a more minor focus on primary private equity stakes and co-investments in sectors ranging from industrials to health care to IT. Since its inception in 2015, the fund delivered a net return of 13.24% on its Class A shares.
StepStone Private Market Fund is a closed-end evergreen tender fund. Its strategy also involves a strong focus on secondaries in assets spanning private equity, real assets and private debt. The fund’s annualized returns since inception have been in the 21% to 22% range.
Meanwhile, the Cosmos Fund will create an opportunity for accredited SoFi users to access investment in Space X, which is privately held and has been historically hard for the general public to access. Space X is the only asset held in the Cosmos Fund. According to Nasdaq.com, the offering period for SoFi users to invest in Cosmos will run from Dec. 4 through Dec. 19.
“Historically, the retail investor community has had few opportunities to invest in privately held companies, but we firmly believe in broadening access to potentially valuable opportunities,” SoFi CEO Anthony Noto said in a statement. “Today marks yet another milestone on our path to helping SoFi members achieve financial independence by giving them an opportunity to invest in some of today’s most sought after privately held companies.”
SoFi did not respond to requests for comment prior to publication.
