Plum Alley Investments FAQs
1. What is Plum Alley Investments?
Plum Alley Investments is a private membership platform with a mission to collectively invest capital via syndicates into innovative and high impact private companies led by female founders and gender diverse teams.
2. How does one become a member?
Becoming a member of Plum Alley Investments can be done easily and quickly online by visiting www.plumalley.co. Membership is open to both accredited and non-accredited investors and we are currently offering three different tiers of membership--Members ($1,000 annually) , Active Investors ($2,500 annually) , and Game Changers ($5,000 annually). Your membership will be automatically renewed . For more information, please refer to the “How it Works” section of our website here.
3. Who defines the term accredited investor and why do I need to qualify as one to invest?
The Securities and Exchange Commission (the “SEC”) set the guidelines for what it means to be an accredited versus non-accredited investor.
An accredited investor, in the context of a natural person, includes anyone who:
-earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR
-has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence).
The SEC sets these criteria because they want to be sure that investors have both the knowledge and financial ability to make investments with risk.
4. What can I do as a Plum Alley Investments member if I am an aspiring investor but not yet accredited?
Plum Alley Investments encourages non-accredited individuals to join as members. Even though you cannot invest in investment opportunities at this time, we believe these members will find value in learning about investing in private opportunities, seeing the types of companies brought forth to our members, and meeting with and learning from other members of the community who are more seasoned investors.
5. How many showcases are in annual membership?
Members will be invited to attend quarterly showcase events during the 12-month membership cycle. These showcase events will feature ventures that are both potential investment opportunities as well as those that are ones to watch for future investments. Not all ventures featured at showcase events will be presented for investment.
6. What is a syndicate?
A syndicate is formed when Plum Alley Investments members who are accredited investors decide to invest as a group in a venture raising capital. The individual contributions of investors are aggregated into a single investment vehicle known as a Limited Liability Company (LLC). Each member owns shares of the LLC in accordance with their percentage of the overall investment. The LLC appears as a single entity on the capitalization table of the venture, rather than showing the individual names of its members.
7. What Investment fees and expense should I expect to pay?
At this time, Plum Alley members do not pay a management fee when investing in a Plum Alley Syndicate LLC. Should the investment make a profit above the initial invested amount, members of the syndicate receive their principal investment amount along with 85% of the profits, split according to their share of ownership in the LLC. The remaining 15% is paid to Plum Alley Investments for serving as the lead arranger of the investment (known as deal carry).
Members of the LLC split the costs associated with legal and accounting documentation in accordance with their share of ownership. The costs of each syndicate vary based on the number of investors and amount invested but will generally be in a range of $50,000 - $75,000. The expenses are the actual legal, filing and reporting costs and Plum Alley receives no compensation from these expenses
8. What are the benefits of investing in a syndicate?
Plum Alley Investments makes investments via syndicates in order to enable our members to pool their money and have a stronger position in the investment. This also enables investors to potentially receive more favorable terms and/or a more prominent role with the company then they might have by investing as an individual.
9. How does the syndication process work?
Plum Alley Investments engages in ongoing conversations with prospective ventures. Those that generate early indications of interest from members interested in serving as lead investors are then proposed to the larger membership. Plum Alley Investments syndicate sizes vary depending on the opportunity and member interest.
10. How frequently will members be shown investment opportunities?
Membership in Plum Alley Investments is a 12-month cycle that can be renewed annually. Members will be shown periodic investments during the membership cycle, but are not obligated to invest.
11. What if I hear about a Plum Alley investments opportunity from a friend and I want to invest--do I need to join as a member?
If you are not a member, you will need to join as a member in order to participate in any of our syndicates, events or to access the private members only portion of our website.
12. What is the typical timeline for making an investment decision?
Investments can close within 6-8 weeks from the time opportunities are presented to the general membership. This accounts for time needed for accredited members to perform their own due diligence as well as for preparation and administration of legal documentation by Plum Alley Investments.
13. What is Plum Alley’s investments focus?
Diversity - Gender diverse founding teams or in the C-suite with significant equity stake
Innovation - Companies that should exist in the world because their product, service or culture is designed with a unique or new lens and makes a positive contribution
Growth/Traction - Live product with revenue production, milestones, sales, and an established track record
Financing - Series A financing with lead investor secured, late seed financing will be considered on a select basis; Raising $3-10mm in equity ﬁnancing priced round (will consider convertible note financing on a select basis for certain industries like biomedicine companies with clear traction)
Industries - Our focus is always evolving but today we are interested in consumer, enterprise, education, healthcare, marketplaces, media, technology and wearable tech.
14. How does Plum Alley Investments source its investments and what are the criteria for the ventures you look for?
Plum Alley Investments has strong connections within the investment community and leverages these deep relationships to source investment opportunities. These include ongoing dialogues with prominent accelerators, active angels and angel networks, venture capitalists, and even referrals from our own members, which include seasoned investors with individual and institutional experience investing in public and private companies. Plum Alley Investments seeks to co-invest alongside our partners, adding the capital of our members to enable high growth ventures to efficiently maximize fundraising.
15. How does Plum Alley oversee its investment opportunities?
Each time Plum Alley Investments provides access to an opportunity to invest in a private company, we form a new investment Syndicate Company to hold the securities of that private company. Importantly, each investor will be purchasing an ownership interest in the syndicate company, rather than directly buying the securities of the private company. This simplifies paperwork both for the investors and the private company. Each new syndicate is formed as a Delaware limited liability company (an "LLC"). Each LLC is managed by Plum Alley Management LLC. The investors are the “Prospective Investor Members” of the LLCs. The relationship between the Syndicate Manager and the Prospective Investor Members is defined by the LLC's “Operating Agreement.”
16. What reporting should I expect?
Plum Alley Investments will provide all prospective investor members of its syndicates with K1 filings and will also share periodic material information and announcements in accordance to the terms of each investment opportunity.
17. When might I see a return on my investment?
Investing in private companies is risky and there are no assurances that a particular company will produce a positive return. Plum Alley Investments seeks high potential companies with strong products and services and leadership teams, however there is no guarantee of a financial return on investment. The investment horizon for private companies can take time. Investors should anticipate a 5 to 10 year time horizon for each individual investment. Some companies can go far beyond that before having a liquidity event.
A return occurs when a company has an event that will produce money for the investors—i.e., company goes public, sells to another company, or returns capital through a dividend or liquidation. If a company ceases operation you may have a loss for tax purposes that can potentially offset other gains. You are advised to consult your tax advisor. We recommend all investors consider a portfolio approach when allocating capital and build a portfolio of companies to diversify risk. Just as with public market securities, most investors diversify their portfolio with different companies.
18. What if an investment does not succeed--Will I have a capital loss for tax purposes?
19. Can Plum Alley Investments guide me in making my investment decisions?
Plum Alley Investments reviews many companies and investment opportunities and we present only companies that we believe our members would have an interest in considering for investment. While we present opportunities to members, the sole decision to invest or not resides with our members based on their individual circumstances.
20. How much should I invest?
The amount to invest in one company or in a group of companies depends on each member’s individual circumstances and things such your other investments, your need for money and your desire to support companies for reasons beyond a financial return. We do not advise or recommend what may be suitable or appropriate for members. Some investors consult outside advisors when considering these decisions, but ultimately can and should make their own choice.
21. Is there a minimum investment amount?
The minimum investment amount for participation in a syndicate is typically $10,000. In specific cases this may vary.
22. How many investments should I make?
The number of investments that you make depends on the amount of disposable income you have to invest and how many companies you wish to have in your portfolio. While there is no specific ideal amount or quantity to invest, it is generally recommended that investors diversify the companies they have in their portfolio similar to public company investing.
23. What is due diligence?
Due Diligence is defined as "research and analysis of a company or organization done in preparation for a business transaction". The particulars of what a person does and what material is reviewed depends on a number of factors such as: is someone else doing due diligence and can you use their materials to review and make a decision? Does the potential investor have access to enough material to feel confident to make the investment, knowing that there are unknowns and assumptions based on what may or may happen in the future. In all cases, the investor should not make a decision to invest if they are not comfortable with the information they have been provided.
24. How do I measure the impact a company may have?
Measuring the impact of a company depends on the type of company and the nature of the business. Measuring the impact starts with knowing what the company can do, in what scale and who is affected. We help our members see the potential a company can achieve but there are no guarantees the company will meet the goals.
25. How should I view investing with Plum Alley Syndicates along with my other investments?
Investing in private companies is an important part of an overall investment strategy. We do not make any recommendations as to your individual portfolio construction and the allocation of assets. We write thought pieces on the pros and cons of private company and public company investing and show trends in the market. However, the final decision about your asset allocation is made by you.
26. Are there other ways I may be involved with the company?
Yes. We offer opportunities for our members to try the products and services of some of our companies that we feature or offer for investment. There are also opportunities interaction with companies for some of our members with particular expertise that may help drive growth for the companies.
27. How might I be on the Board of a private company?
If you have an interest in serving as an advisor or on the Board of one of the companies we know or work with, please send us a note with your area of expertise. The decision for any possible involvement will be made by the company.