How We Are Different
With respect to venture capital investing, there are alternatives to Private Access Network, but most have important differences.
How is PAN different than venture capital funds?
If you have the rare connections necessary to get into a high quality venture capital (VC) fund, then you should consider these differences:
- You will often need to commit at least $100,000 of capital – and possibly as much as $500,000 to a typical VC fund.
Private Access Network requires no capital commitment whatsoever – and you can invest in our deals with as little as $5,000 per deal.
- You will give up almost all control over your committed capital until the VC fund liquidates – you will have no say about what companies get your money or how much of your money they get and when.
With Private Access Network, you get both control and convenience. You can say “no” to any or all of our deals; if you say “yes,” you alone decide how much you are comfortable investing.
- The typical VC fund will charge you annually a 2% management fee that gets applied to your capital commitment, not just the amount that’s invested, which means that the actual management fee will be taking a bite out of your investment’s performance that significantly exceeds 2% annually.
Private Access Network’s management company charges no management fee to investment vehicles in which members invest.
How is PAN different than the online marketplaces?
There are a growing number of online marketplaces that offer access to private investments. Typically they are exposing investors to hundreds of deals per year, and then it is buyer beware for the investors. While some marketplaces offer some degree of quality control, they are typically not putting their own money into their deals. So, the investors are left to do their own due diligence on hundreds of lead investors and companies themselves. Also, the marketplaces make money by either charging the companies or by taking a cut from the lead investors’ fees; so the kinds of companies and investors that need to be on these marketplaces are, on average, likely to be lower quality.
Private Access Network only presents deals that Randy and Scott are both putting their own money into and meet their investing criteria – around 5 – 10 deals per year. And we clearly explain our rationale and our assessment of the risks. We do not charge our companies for accepting the money, and do not expose our members to the negative results from adverse selection.
How is PAN different than angel groups?
Angel Groups are clubs or membership organizations that typically charge a membership fee of between $1,500 and $2,500 per year. Typically comprised of non-investor business professionals, the members are all obligated to source deals and perform due diligence. Then, through a voting process which typically does not require unanimous approval, the groups decide whether to invest and the investing members that choose to participate pay a one-time management fee of up to 10% of the amount they invest. If the group has a leader or a manager, there may be a profit sharing interest that is paid to that individual and/or company for each deal.
With Private Access Network, Randy and Scott do all of the work and operate from one consistent investment philosophy and knowledge base. There are no explicit or implicit work obligations associated with joining PAN for our members. We find the deals, screen the deals and have to unanimously agree to invest our own money before sharing with the PAN membership. If you have ever tried a do-it-yourself (DIY) home improvement project, you can likely recognize the benefit of harnessing our experience, disciplined process and day-to-day full-time dedication to PAN.
To be clear, we are sure that there are some excellent investors in VC firms, on marketplaces, and in Angel Groups. However, our model is different in ways that align with our sensibilities and appeal to our members.