New Liqid fund: Invest in private equity from 10,000 euros

Christian Schneider-Sickert is CEO and co-founder of the digital asset manager Liqid. In an interview with Gründerszene, he explains how and who can invest in private equity from 10,000 euros.

For a long time, investments in alternative asset classes such as private equity (PE) and venture capital (VC) were only reserved for large institutional investors. Because: Minimum investment amounts in individual funds are sometimes in the double-digit million range. The digital asset manager Liqid pools its customers' investments in order to exceed the minimum investment threshold and invest in the top funds.

The fintech, founded in 2016, was able to reduce the minimum investment amount in private equity for its investors to 200,000 euros. That's still a lot of money when you consider that investors should diversify their investments widely and not invest everything in one asset class. Now the European Union (EU) has made changes to the existing regulations. These came into force at the beginning of the year and are intended to simplify access to private equity for individual investors. The whole thing is called European Long-Term Investment Fund (ELTIF) 2.0.

Based on this, Liqid has developed a new product. Starting today, investors can invest in “LIQID Private Equity NXT” via Liqid’s digital platform. And that starts from just 10,000 euros. What is behind this product? And how does such an investment work? This is what Christian Schneider-Sickert, CEO and co-founder of Liqid, explains in an interview with Gründerszene.

Not a classic PE fund: More liquidity and no ongoing distributions

The new Liqid Nxt fund allows private investors to invest in private sector companies. So not in private equity funds, but with private equity managers in unlisted medium-sized companies. To achieve this, Liqid is cooperating with the global asset manager Neuberger Berman, based in New York. “We set up the fund together as partners,” says Schneider-Sickert. The structure of the fund differs from a classic private equity fund.

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The product has a so-called evergreen structure, with no fixed term. Investors have the option of either selling their shares in Liqid Private Equity Nxt to other investors or returning them to the fund after a certain term, in this case two years. This structure offers investors a certain level of liquidity that is not available with conventional private equity funds.

Nevertheless, Schneider-Sickert recommends a long-term investment horizon of at least five years in order to achieve the typical PE returns. “Under no circumstances should you make a private equity investment if you have a short-term investment horizon,” says the Liqid CEO. In addition, in contrast to private equity funds, there are no ongoing distributions when portfolio companies are sold. The profit from the sale of companies is continuously reinvested. “The payout comes when the investor returns his shares to the fund,” explains Schneider-Sickert.

Similar to an ETF savings plan

Investors can choose how they want to invest their money: either 10,000 euros with a monthly savings plan of at least 200 euros or as a one-off investment of 20,000 euros. With the savings plan model, Liqid is aimed primarily at the younger generation, who can build up their wealth in the long term. For example, the daughters and sons of existing customers, says Schneider-Sickert. Hence the name. Nxt stands for “next”, i.e. the next generation of investors. But it should also indicate the “next step towards democratizing the asset class”.

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Liqid and Neuberger Berman take a diversified investment approach. Investments are to be made in around 100 companies worldwide. However, the majority would be invested in America and Europe. As far as investment strategies are concerned, there is a clear tendency towards classic buyouts. However, investments in high-growth companies (growth equity) as well as private credit and private debt investments are also part of the strategy. The underlying investments are therefore broadly diversified. Therefore, the risk classification of the new Liqid product is like an “ETF on the MSCI World,” says Schneider-Sickert.

New target group for Liqid

Since its founding, Liqid has invested around one billion euros in private equity for its customers. With Liqid Private Equity Nxt, your target group would now be significantly larger, as the minimum investment is now 10,000 euros and not just 200,000 euros. In addition, the product is accessible to all investors and not just to (semi-)professional investors within the meaning of the Capital Code. This means that Nxt investors no longer have to demonstrate as much as before that they have gained sufficient experience with alternative investments. However, this is still recommended. “Every investor must understand what they are investing in and under what conditions. The investment is only partially liquid and investors should be able to do without the capital for a certain period of time,” explains Schneider-Sickert.