In general, I trust no one and nothing in the world of financial services. More than 20 years of swimming in the industry had taught me that the industry exists with one purpose: to separate people from their money through the process of reallocating capital. Sure, they operate behind noble veils like "helping secure your retirement" or "achieving long-term growth in excess of inflation," but such altruistic goals come with fees that are often far in excess of the value they deliver while being impossibility hard to understand.
So, with that as background, this is just another example of a group of people identifying a potential source of capital (in this case, presumably higher net-worth graduates from prestigious universities) and trying to get them to give them money with the purpose of taking a percentage of it for themselves. The venture capital market is historically something that is very narrowly accessible to a small group of people with lots of money, but shows like Shark Tank have raised the level of awareness and appetite for venture investing, so this company is playing the volume game -- hoping that they can perhaps tap into a large pool of people that perhaps yields smaller amounts but a higher yield than traditional venture prospecting. Throw in another noble veil of helping entrepreneurial graduates of your alma-mater and you have an interesting sales strategy, and in this world all you need is a sales strategy.
At the end of the day, most investors can get by with a simple asset allocation strategy and EFTs/index funds, but it's no fun to talk about that at cocktail party. Investing should not be emotional. It should be systematic and disciplined. That's how wealth is made. Feeling a connection or desire to support graduates of your university is noble but, in my opinion, not a factor I would personally value.
All that said, here are a few additional thoughts.
1. When I first saw the link, I read it as "avg" + "funds" or "average funds." I don't think many people like chasing "average" returns. That's just some bad marketing on their part.
2. The site says their investment range between $100K-$500K, with the opportunity of up to $2M. Translation: these are basically small business loans like you would find on Shark Tank. I have to believe that is tough market to make consistently high returns, which is why they say "high risk, high return." No one should take "high risk" unless they can afford to lose every dollar invested.
3. Minimum investment is $50K and the maximum is $1M. Why have a maximum? This is really strange. I understand the minimum, but not the maximum.
4. Their website states: Our fees are industry standard: a 2% annual management fee used to cover business costs each year of the 10-year life of the fund and 20% of the gains on an investment. There are no additional fees or expenses associated with investing through us. If you are investing via a trust or retirement vehicle, your account managers will likely charge you some fees for setting up and maintaining those accounts. This raise a few questions for me:
a. 2% is a pretty hefty investment management fee. You can get solid investing advice from a dedicated adviser for about 1% of assets.
b. You are not asked to pay 20% of gains on any other investment vehicle that is out there.
c. Given how rich (a) and (b) are, the statement about "no additional fees" is pretty amusing.
Anyway, I found a story in the Boston Globe that says they are bringing in $40M in capital every quarter, so there is apparently an audience for this, but that audience just does not include me.