A first-of-its-kind venture capital fund open to everyday investors for as little as $1,000 has suspended sales to the public, and in a statement said it plans to release plans for the future in the coming days.
Zell Capital LLC has sold $714,000 worth of $20 shares to date – double the total as of March 31, according to the company and its annual report. Shares were first available to the public in June 2021. Notices on the company's website said it was targeting more than $18 million in the first year, toward a goal of $50 million to invest in early-stage startups.
But the fund also has been busy deploying capital as it came in, as of March building a portfolio of four companies including a popular high-tech home espresso maker.
"Effective immediately, Zell Capital ... has suspended its offering of common shares of beneficial interest until further notice," the fund said in a July 5 notice on its website. "The company has suspended its offering to consider current operations and future plans, and will continue to manage its assets in accordance with its current prospectus."
Founder and CEO Will Zell said via email he has met for the past months with advisers to develop the plan to go forward, and is preparing to send that plan to shareholders soon.
An affiliate owned by Zell has paid $638,000 of the fund's expenses and does not expect repayment. That affiliate and Zell himself own 7% of the fund, according to Zell. Gravity Investments, a fund owned by Columbus developer Brett Kaufman, owns 21% of shares.
Until now VC investing has been limited to large institutions such as banks, or SEC-accredited individuals with at least $200,000 annual income or $1 million net worth. A serial entrepreneur from Bellefontaine, Zell used a 1940 federal law to create an "access fund" that opens VC investing to non-wealthy individuals.
"Concluding our first fiscal year, Zell Capital remains in our own startup mode," said a letter to shareholders in the annual report filed in May. "To date, we have invested in four companies that we believe will have significant impact in the markets they serve."
Those are:
- Dolr: The DBA of Noether Rudin Inc., a Columbus-based app to find outside sources of cash to pay down down student debt.
- Breshna: A platform by Washington, D.C., startup GRID (Gaming Revolution for International Development) that provides free web-based tools for anyone to design their own video game.
- Terra Kaffee: The Brooklyn-based startup is collecting rave reviews on design and performance of its $825 espresso maker. The Zell report says the tech company is working on an internet of things platform "to provide the best at-home experience for coffee enthusiasts."
- The fourth startup, listed in the Zell portfolio as in stealth mode, is developing an engagement platform for news and media content.
- Since that annual report, Zell said, the fund has invested in a fifth undisclosed startup.
"All of the companies we have invested in continue to make great strides in their growth plans and milestones they are working toward," Zell Capital's annual report said.
