Investors who learn about Xablu Venture Studio often ask a practical question: if I want to invest, what exactly am I investing in? There are two routes, and they should not be confused. One is participation in the Xablu Venture Evergreen Fund. The other is a direct investment in a specific venture. Each creates a different position, governed by different documents.
Studio and fund have different roles
The starting point is the distinction between studio and fund. Xablu Venture Studio develops ventures: it researches market problems, builds products and prepares companies for their next stage. The Xablu Venture Evergreen Fund invests. Its investments are subject to the fund’s own decision procedures, including review and approval by the fund’s Investment Committee, after which the Manager, the party responsible for managing the fund, executes approved investments.
One consequence is easy to overlook. A venture appearing in studio materials, on this website or in a presentation, does not establish that the fund has invested in it. Whether, when and on what terms the fund invests in any particular venture is a separate question, answered through the fund’s procedures.
Participating in the fund
An investor who participates in the Xablu Venture Evergreen Fund acquires Ordinary Units in the fund. Ordinary Units are the interests investors receive when participating in the fund. They give economic exposure to the fund’s portfolio, under the terms set out in the fund documentation. The investor’s position sits at fund level.
Fund participation does not automatically give a direct ownership interest in each venture the studio develops, or even in each company the fund invests in. The fund holds its investments; the participant holds units in the fund. Rights such as information, distributions or the possibility of redemption follow from the fund documentation, not from the individual ventures.
Investing directly in a venture
A direct investment concerns one specific company. The investor acquires an interest in that company, through shares or another instrument, at a valuation and under rights and terms determined for the relevant financing round. Those terms are set out in the documentation for that round and can differ from one venture or round to the next.
A direct investor’s exposure is concentrated in that single company. Its outcome depends on how that venture develops, not on a wider portfolio. Direct investment is a separate route with its own conditions; it is not an extension of fund participation, and fund participation does not create an entitlement to invest directly or to co-invest.
A concise comparison
Neither route implies automatic access to the other, preferential terms or a right to participate in future rounds.
Risks that apply to both
Investing in early-stage companies, directly or through a fund, carries a high risk of loss. Ventures may fail, and investors can lose part or all of the capital they invest. Returns, if any, typically take many years to materialise. Costs apply, and they affect what an investor ultimately receives.
Liquidity is limited. An evergreen fund has no fixed end date, but that does not mean capital is available on demand; any possibility of redemption depends on the conditions in the fund documentation. A direct interest in a private company is usually difficult to sell before an exit, if one occurs at all. Exposure to a portfolio spreads risk across more companies, but it does not eliminate it.
An investment of this kind suits only investors who can accept a long horizon and the possibility of loss, and who have read and understood the definitive documentation. This article explains the difference between the routes; it is not a recommendation to choose either.
Would you like to understand the routes in more detail? Request the investment memorandum and the current definitive documentation from the Xablu Venture Evergreen Fund.
Request the investment memorandum →