​How NIN Ventures LLC is Bringing Average Investors Into the Venture Capital Space

Daniel Banas  |

It’s been an historic year for markets. After about seven years of steady gains, a largely stagnant 2016 resulted in a post-election surge that has had many analysts throwing up their hands in trying to predict what it all means for economic growth in 2017. However, despite the remarkable overall market performance, one area that has continued to struggle in recent years is venture capital. In order to survive the challenging investment climate following the economic collapse of 2007and 2008, VC firms like NIN Ventures LLC have had to begin working in innovative and unorthodox ways, and the result is bringing a new class of investors into the market.

“[The] 2008 financial meltdown led to a liquidity crisis for entrepreneurs, companies, VCs and LPs. Fewer IPOs means less exits for VCs, which means no returns for LPs, and as a result, venture funds were on a decline,” says Nin Desai, CEO of NIN Ventures LLC. “When venture funds are on a decline, startups don’t get funded, and we see lower employment rate, and slower economic growth. So, to avoid this, in 2012, the JOBS Act was introduced, which allows entrepreneurs and companies to go out and crowdfund.”

Desai, however, noted that there was a major fatal flaw with that concept.

“I personally come from an entrepreneurial family, so I can speak on their behalf,” Desai says. “Entrepreneurs are a brave bunch of people who are determined to change the way an existing industry functions. On that journey, they need a lot more than just financing. For example, guidance, or domain expertise, help with PR and marketing, recruiting, viable exit strategy, often times follow-up financing, which is what crowdfunding portals are not able to support.”

“On the other hand, on the investor side, we expose investors to a brand new asset class, which they never had any knowledge or expertise to invest in,” explains Desai. “As you all know, 99% of all startups fail. On top of that, low minimum investments like $1000 dollars don’t really give them a say, or a board seat on any of the investments they make.”

What Makes NIN Ventures LLC Different?

“At NIN Ventures LLC, we solve all of those problems,” asserts Desai. “We provide diversification, we take a board seat on all our investments. We lend the necessary support an entrepreneur needs to build the company, which is what they would otherwise get at a traditional venture capital fund. However, the catch is, since we’re crowdfunded, investors can enjoy better returns because they’re directly investing in our fund with a minimum amount of $100,000 dollars using multiple different options. For example: 401K defined benefit plan, digital currencies like Bitcoin, Litecoin, Deutsche coin or just regular checking or savings accounts, which they would otherwise not get access to if they approach a venture capital fund, because they would probably require a bigger check.”

So, what sort of companies and sectors does NIN Ventures LLC invest in? “We invest in series A and series B rounds of companies,” Desai says. “One of the deals that we’re currently involved in is in the 3D printing space, so, for example, if you currently have a damaged liver and you go to your doctor, your doctor will put you on an organ recipient list. That recipient list runs about 120,000 people, and it increases at an average of 12% annually. On the other hand, the organ recipient list increases at about one to two percent. About 21 people die every day because they can’t find the right organs. What if 3D printing can help save some of those lives?”

Another sector NIN Ventures invests in is AdTech. “As people are switching from watching more traditional TV to digital TV, AdTech industry is gaining popularity. The current AdTech market is about $75 billion, and traditional TV is about $112 billion. As more people migrate to watching more digital TV from traditional TV, you’ll see this $112 billion migrating from traditional TV to digital TV, which is a huge disruption to the AdTech industry,” Desai explains.

The Importance of Education and Transparency

Of course, there are inherent obligations to any company exposing investors to new asset classes they would otherwise never be involved in - and the trust of clients is not something Desai takes lightly. “Since we expose investors to a brand new asset class, which they never really had expertise to invest in, a responsibility on our end is to educate them. And we are doing that by being extremely transparent. So, we host monthly investor calls - if you go to our social media, like our Facebook (FB) - we’ll upload everything that happens at our firm on a daily basis. We actually give them a lot more than they need to understand what they’re doing. And since we have a diversified investment portfolio, their portfolio gets diversified, wherein otherwise it would not.”

Where Does Venture Capital Go From Here?

Despite the massive changes to crowdfunding that have taken place in recent years, there’s one area that Desai feels still lags… ability to invest in venture capital firms like NIN Ventures themselves. “We made investments in companies available to everybody, but we haven’t made investments in firms like ours available to non-accredited investors,” explains Desai. “So, currently, if you want to invest in NIN Ventures, you have to be an accredited investor - make more than $200,000 a year or have a joint-income of $300,000 excluding your primary residence. So, we expose investors to a risky asset class before we expose them to a less risk-averse asset class, which I think, doesn’t really make sense.”

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.


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