With a New Platform This VC Firm Aspires to Make the Asset Class More Accessible to RIAs
“It’s not a matter of if your clients are going to participate in venture capital, it’s a matter of when. And when that happens, are you going to be alongside them as an advisor?” Jud Mackrill, a general partner at Mammoth, said
A top neurosurgeon, a cardiologist-turned-serial entrepreneur, and three high-profile wealth management executives have started a venture capital firm and are simultaneously developing a platform they say will transform the way RIAs build investment portfolios.
Tommy Martin, a partner and CEO of Vestia Personal Wealth Advisors, a $515 million RIA in Fort Wayne, Ind., is a partial owner or angel investor in more than 35 private companies. Over the years, he’s also helped clients invest in private companies, including one started by Jay Yadav, a Cleveland Clinic physician who hung up his scrubs and became a wealthy entrepreneur behind novel medical treatments and alloys for medical devices.
Yadav, who collected more than 40 patents starting and selling companies, told Martin he wanted to start a venture capital fund when he retired. Martin wanted to be a part of it but didn’t want to wait.
“I called Jay back about two years ago and said ‘Why wait until retirement? Let’s do this now.’”
With a handful of others, they started Mammoth Scientific, a health science and technology venture capital firm currently raising its first fund of $100 million. Martin is the CEO and Yadav is the CIO. Matthew McGirt, a practicing neurosurgeon and consultant with other relevant experience, is VP of clinical and commercial development, and a scientific analyst at the firm.
Among others, two more well-known wealth management executives have also joined Mammoth: Jud and Kim Mackrill. In 2015, the couple started a creative marketing and digital product agency for wealth managers called Mineral Interactive. Carson Group, a $17.6 billion RIA, acquired their company in 2018 and they worked there until January. Now, they run Milemarker, a data and integration consultancy they started, and are serving as Mammoth’s chief experience and chief operating officers.
So, why is a venture capital firm in search of early and growth stage life science and biotech companies interested in the Mackrills? Mammoth’s startups aren’t the only companies that stand to gain from their knowledge and experience in technology and operations.
Mammoth is also building a proprietary platform that will make it easier for qualified and accredited clients of RIAs to gain access to its funds.
Everyone stands to benefit from the platform, according to the venture firm. Making the administrative process less burdensome means more RIAs can invest in Mammoth. In turn, Mammoth will have a bigger pool of investors to raise money from – the “highly underserved” $5.7 trillion RIA market.
The clients of RIAs will also gain access to an asset class that eludes the vast majority of RIAs, even while venture capital deal volume “skyrocketed” this year as mutual funds, hedge funds, corporate investors, and crossover investors pursue it.
“It’s not a matter of if your clients are going to participate in venture capital, it’s a matter of when. And when that happens, are you going to be alongside them as an advisor?” Jud Mackrill told RIA Intel.
Mammoth’s first fund already has more than 100 limited partners but has “plenty of room” for more and is actively raising money to fill it. “We have built, intentionally, lower than average minimums to allow investors who may not otherwise participate in venture to participate in this fund. We will have future announcements regarding where we are placing those funds,” Mackrill said.
No investor who understands risk management allocates the venture capital sleeve of their portfolio entirely to one fund. RIAs will want to invest in more funds than just Mammoth’s, and the venture firm knows that. Family offices, for example, carve out 10% of their investment portfolios for venture capital, then invest about half that allocation to a variety of funds (the other half they use for direct investments), according to a report by Campden Wealth, a research and networking organization.
Mammoth is only the tip of the alternative investments spear, according to Martin. The plan is to allow other private investment firms to leverage the platform to serve and attract RIAs. “Our ultimate ambition is absolutely to become the preeminent resource for private investments for the RIA channel,” he said.
The firm did not say when exactly it would make the platform broadly available.
Others are working toward similar goals. Proteus Capital offers a turnkey alternative investment platform for RIAs akin to what Mammoth is building. Tribe Capital’s Firstlook program has helped over 1,200 firms and individuals in its network deploy more than $520 million through co-investments in startups across stages, sectors and geography. InvestX is “democratizing pre-IPO private equity” through its trading platform – and alternative asset managers are eager to partner with companies like CAIS and iCapital Network, where more advisors are turning to invest.
Martin acknowledges that venture capital won’t be appropriate for many RIA clients. However, he argues advisors can’t ignore opportunities to improve client portfolios with private equity and private debt, which are broadly considered high-risk investments, even though many are not.
“I hate that our industry calls them alternative investments,” says Martin. “That makes them sound like they are optional.”