SoFi, a digital financial services firm that targets retail investors, may be trying to reach a higher net worth audience by adding some private fund options to its investment choices.
Last week, the company revealed that 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, launched last December, provides access to alternatives for 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 began offering alternative investments on its SoFi Invest platform, including private loans, real estate, venture capital, hedge funds and other assets.
Investing in SpaceX could be particularly attractive to the kind of new/tech-savvy members SoFi is likely to attract, noted Neil Bathon, managing partner of Fuse Research Network. However, to invest $25,000 in Cosmos or one of the other funds that SoFi has added would require an investable asset base of approximately $250,000, which does not seem to fit the existing SoFi member profile.
“If I were to speculate, I'd say SoFi is trying to appeal to a higher net worth customer … and get people to become members,” Bathon wrote in an email. “I suspect it's no coincidence that Elon Musk, owner of SpaceX and founder of PayPal's predecessor, has more than a few similarities to what SoFi is trying to do.”
SoFi additions include private equity funds Pomona Investment Fund and StepStone Private Markets Fundas well as Cosmos Fund, an SPV created for SoFi through Templum subsidiary Templum Capital. The Pomona Investment Fund is a registered closed-end fund focused on secondary sector investments, with a smaller focus on primary private equity and co-investments in sectors ranging from industrials to healthcare to IT. Since its inception in 2015, the fund has delivered a net return of 13.24% on its Class A shares.
StepStone Private Market Fund is an evergreen tender fund. Its strategy also includes a strong focus on secondaries in assets that include private equity, real assets and private debt. The fund's annual 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 investments in Space X, which is privately held and has historically been difficult for the general public to access. Space X is the only asset held in the Cosmos Fund. According to Nasdaq.com, the offer period for SoFi users to invest in Cosmos will run from December 4 to 19.
“Historically, the retail investor community has had few opportunities to invest in private companies, but we strongly believe in expanding access to potentially valuable opportunities,” SoFi CEO Anthony Noto said in a statement. “Today marks another milestone in our journey to help SoFi members achieve financial independence by giving them an opportunity to invest in some of today's most sought-after private companies.”
SoFi did not respond to requests for comment ahead of publication.