Thoughts on the Year Ahead From Sweater's CEO

As the CEO of Sweater, I couldn’t be happier to welcome you to what is going to be a very exciting 2024! As a part of your financial journey, we are striving to make your investment in the Cashmere Fund an outstanding bright spot for you in 2024. Together, let's look toward the year ahead for Sweater Inc. and its Cashmere Fund.

First, Sweater Inc.’s strategy is quickly evolving. Each of you has helped to prove to the investment world that Public VC Funds, like the Cashmere Fund, are a force to be reckoned with. You have unlocked the opportunity for the general public to invest into the private markets like never before.

This expansion strategy will allow qualified partners to raise VC funds with a similar structure to the Cashmere Fund on our platform, enabling access for accredited and non-accredited investors to the private market. This won’t just be for venture capital but for any alternative asset class that has traditionally been cordoned off from you, the public-- including private credit, commercial real estate, art, and many more.

In the coming years, you will see announcements from us regarding partnerships to launch new funds across many of these categories. Sweater’s expanding footprint will bring the benefits of these “Public Funds” to even more people. Your involvement has influenced the future of the investment ecosystem for unaccredited retail investors and accredited investors alike. And together with each of you, we remain committed to broadening access to venture and alternative assets for everyone.

During the last 18 months, macroeconomic indicators greatly affected venture capitalists’ outlooks for the startups they invest in. Now the tables have turned and it's the venture capitalists in the power seat with founders across from them—this includes the Cashmere Fund.

From a valuations perspective, early stage investments have largely maintained their valuation status when compared to 36 months ago, while later stage startup valuations have plummeted by more than 50%. Carta, a cap table tool used across the venture capital industry that tracks valuations and investment data in startups and venture capital funds, has documented this phenomenon with real-time data.

The Cashmere Fund’s portfolio companies are largely in the early stage category–-this was part of our strategy from the Cashmere Fund’s launch in mid-2022 and it has played in our favor.

Capital deployment numbers - aka the amount of money VCs invest in startups - are down by more than 50% from 36 months ago for both early stage and late stage startups. This means there are fewer dollars available for startups to jockey for from VCs. This provides a power vacuum for funds who ARE deploying capital because there are more deals and less competition—we believe the Cashmere Fund is benefiting from this as well.

The Cashmere Fund’s capital deployment team worked tirelessly throughout 2023 to help our 33 portfolio companies navigate this complex and ever-changing fundraising environment. We believe the overall health of the portfolio is very strong. Growth and progress metrics across the portfolio are largely positive, despite tough economic conditions. While the portfolio is very young at less than 18 months, it is exciting to see the early leaps so many of the companies have already taken in their growth journeys, such as Accredible and others closing rounds valued over Sweater’s initial investment.

As an evergreen fund, Cashmere takes a very long-term view of its investment strategy. This affects every aspect of our strategy. We are extremely bullish on the medium and long-term views of investing in innovation through the venture capital model.

Without your support and belief in our vision, Sweater's mission to democratize private assets would not exist. As we dive headlong into 2024, we wish you a prosperous year across all aspects of your personal and investment endeavors as we seek to create outsized returns on your Cashmere Fund investment and bring more investing opportunities to you. And may you enjoy many days of Sweater Weather.

Kind regards,
Jesse Randall
CEO and Founder