Imagine discovering the next Nvidia — before it becomes Nvidia.
Not after Wall Street has written three hundred research reports about it. Not after its stock has soared 40,500%. But while it’s still a private company, building something extraordinary.
That’s the dream of startup investing. And it’s a big reason why some of the world’s wealthiest investors have made fortunes.
Now, a colorful Wall Street analyst wants to open that door to investors like you.
His idea is intriguing. But before you rush in, there are three things you need to know.
Introducing Dan Ives
If you follow tech stocks, you probably know Dan Ives. For years, Ives has been one of Wall Street’s most recognizable — and colorful — technology analysts.
Formerly associated with Wedbush Securities, he became well known for his bullish views on tech companies including Apple and Microsoft, and for his enthusiasm for AI.
He’s spent more than 25 years on Wall Street, and has built a substantial following among investors. And now, through his new venture, Ives is taking aim at an interesting problem:
Some of the most important companies in AI are still private. That’s why Ives just launched a fund designed to give public-market investors a way to participate.
The fund is called Ives Ultra AI Opportunities, or IVAI.
The Big Idea Is Right
Here at Crowdability, we’ve been making a similar argument for years:
The biggest investment gains today are happening before a company goes public.
Consider what happens by the time a startup becomes a household name:
By the time its shares are available on the stock market, venture capitalists and other early investors have already enjoyed years and years of market-crushing profits.
That’s particularly important in AI.
Companies developing AI models, specialized chips, data-center infrastructure, and other critical technologies can attract vast amounts of capital while remaining private.
Now Ives wants to give investors access to a portfolio of these businesses — through a publicly traded closed-end fund.
The appeal is obvious. Investors can buy IVAI through an ordinary brokerage account.
And I give Ives credit for recognizing the opportunity. Getting access to promising private AI companies before they go public is incredibly important today.
But there’s a big difference between having the right idea… and offering folks like you the right way to invest in it.
Three Big Things to Watch Out For
The First is Price
IVAI is a closed-end fund. Unlike a traditional mutual fund, it doesn’t routinely issue and redeem shares at their net asset value, or NAV. Instead, its shares trade on a stock exchange, where the market price is determined by supply and demand.
That creates a problem.
Imagine the fund owns $100 worth of investments per share. If enthusiasm for AI pushes its stock price to $150, you’re paying a 50% premium to the value of those investments.
And the reverse can happen, too. Shares can trade at a steep discount to NAV.
Either way, you’re making two bets: one on the underlying companies, and another on how the market values the fund itself.
The Second Are the Fees
IVAI’s annual expenses are 3.10%.
That’s a heck of a hurdle.
As a comparison, most of us are paying about 0.03% for our broad-market ETFs. Ives’ fund is charging literally 100x more than that.
Third, You’re Buying a Fund, Not Choosing Your Own Private Investments
IVAI intends to focus on late-stage private AI companies. That leaves investors with limited exposure to earlier-stage startups, where much of a company’s exponential growth still lies ahead.
And there’s another wrinkle: The fund’s initial portfolio hasn’t been determined yet. Investors have to assess the fund before knowing exactly which companies it will ultimately own.
In other words, you’re putting your money behind a portfolio that’s yet to take shape.
A More Direct Way to Invest in AI
At Crowdability, we believe investors should have another option.
Rather than buying a publicly-traded fund that owns private-company investments, we focus on helping investors access private startups directly.
And that includes early-stage and late-stage companies. Why does that matter so much?
Because different stages offer different type of opportunities. An early-stage startup has exponentially more room to grow, although with greater risk. Whereas a late-stage company is more established, with a clearer line to a potential IPO or acquisition — and less room to grow.
We believe investors should have exposure to both types of opportunities.
Furthermore, when you invest through an offering that provides direct shares in a private company, you own an interest in that company itself — not just shares in a fund.
The Bottom Line
Ives deserves credit for highlighting a real problem: Investors often discover the most exciting companies only after much of their growth has already happened.
IVAI is one attempt to solve that problem. But given its high expenses, its premiums or discounts to NAV, and the limitations of it being late-stage-only, we believe you can do better.
We believe the bigger opportunity is to invest in private companies directly — both early and late in their development — and participate directly in their success when they reach an exit.
The AI revolution is creating extraordinary opportunities. So the question isn’t simply whether you should invest in AI.
The question is how to get access to the companies driving it — and how much of their potential upside you’ll capture.
Happy Investing,
