When you look at investment behavior, people are more likely to invest in things family and friends invest in than they are to follow professional advice. That’s why there have been an infinite number of social investment platforms created that allow investors to copy one another. But when it comes to investing in real estate or creating businesses together, friends and families had to essentially recreate the wheel each time they made an investment. That includes creating a company with legal documents, funding an account, managing a cap table. There’s a lot that goes into it and that’s what Tribevest wants to help with.
Tribevest is an early stage company that provides what an investor group needs to make investments: including a bank account, a schedule of contributions and communication tools. CEO Travis Smith joins me on the podcast to talk about his own personal journey putting money in private investments that he took with his brothers. We talk about who’s using the platform, the investment use cases he’s seeing on the platform, and his plans for the future.
Travis Smith is my guest on the Tearsheet Podcast.
The big idea
I’m Travis Smith, entrepreneur, founder and CEO of Tribevest. We make it easy, fast and yes, even social, to form a business and invest with friends and family. When your family and friends become business partners who invest together, you’re tribevesting. Prior to this, I was an early employee at Hyland Software’s flagship product OnBase and most recently headed up strategic alliances at Jack Henry’s ProfitStars division in enterprise payments.
I graduated in finance and was recruited by Morgan Stanley and trained in New York City. I say I was saved by software. That’s when I went over to Hyland Software, which is a big player in enterprise content management in the fintech space. I really got my startup chops there, as well as my introduction to fintech.
And then, I landed at my destination job — my dream job — working for a company like Jack Henry. A multibillion dollar fintech, with a wonderful reputation, it’s a great place and a great company. But as life happens, that was also where Tribevest was kind of hitting me over the head. But that experience was key. Tribevest helps groups come together to form entities, multi member LLCs, and ultimately helps them bank. So as we were building our MVP and early product, those relationships and connections that I had at Jack Henry, to work with banks and fintechs to help us build the product, were just critical. Definitely my background in fintech was huge with starting the business and getting us to where we are today.
The genesis story
It’s kind of a two part story. The true origin story goes back 12 to 13 years ago. It all started with a fishing trip with my brothers and that, quite frankly, we couldn’t afford at the time. And if you do the math, that was right in the midst of the Great Recession. We were fortunate to still have good paying jobs. But many of those around us weren’t as fortunate. And we realize that we were reliant on our paychecks and it terrified us what would happen if those paychecks went away.
We always dreamed out loud about being business owners together. And we always saw real estate as a way to hack wealth without having to give up our day jobs. We didn’t have any real estate investment experience. We didn’t have any entrepreneurial background in our family history. But we were excited to learn and grow together. An even more obvious problem we had was a lack of capital to break into private markets. You need lump sums of money that we just didn’t have.
On that fishing trip, we had our breakthrough. We said, Listen, let’s stop talking about doing deals that we can afford. And let’s solve our lack of capital problem. We each agreed to put away $500 a month — so, between the four of us, that was $2,000 a month and $24,000 a year. Eventually, we got our first deal, which led to another, which led to another, and over the years, we realized that by forming and funding that investor group, that investor tribe, we unlocked a future that we could have never imagined — that would have never been available to us unless we had come together to get over some of the barriers of entry into the private capital markets.
Barriers to entry
First of all, capital is a barrier to entry. Tribevest makes it super easy to come together, align, come up with your vision and agree on an operating agreement, and then ultimately link your bank account and start pulling capital together. We can do that in an automated, super streamlined way — all while managing the cap table. So the five of us can all throw in money and get over a bigger barrier of entry or a minimum investment requirement. We can also address the capital issue with the idea of reoccurring, manageable monthly contributions, putting investors in a position to build money over time, as well as compounding with the number of members in the group.
We make the process safe, legal, and even social by making it really easy to have your creative vision, share that vision, agree on that vision, file for an LLC in any of the 50 states on our platform, configure your operating agreement, sign it, so you’re agreeing on the rules up front, which is just so critical to everything we’re doing. And then, opening up an FDIC-insured business bank account within minutes of actually officially starting your LLC with the state.
The true definition of a platform is that users make up the application in terms of what they want to use it for. That’s what’s so exciting and inspiring for us every day. Initially, it was very real estate heavy and that continues to be a big part of our business: vacation homes, as you can imagine, especially with short term rentals and in the emerging technology space with Airbnb and Vrbo just making that market so accessible. We have a lot of real estate investments, all sorts. But we also have people forming to start or invest in local business, local startup franchises — they also have tribes that are coming together to invest in collectibles and art.
One of the coolest things that has developed here is, we always assumed our users would focus on private investment. There would always be this element of getting over a minimum investment threshold. We have a lot of tribes coming together to invest in stocks and build a portfolio together. What value do we bring them? Well, they could buy their investment portfolio in stocks anywhere, but what they really value is this single dashboard, a place where they can have the transparency and keep their documents and their records and vote, and everything else. So it makes a ton of sense now, in hindsight, that stock clubs and investment clubs are very much a part of our clients’ applications. A lot of these investment clubs are now investing in Bitcoin, which is a huge thing — not something that individuals couldn’t do on their own, but a ton of technology out there to invest smaller dollar amounts into these things. But the idea of coming together, spreading the risk, and learning together, and having fun with it, is a big part of why they’re doing it as a tribe.
Then lastly with startups, a lot of people are connected with people and entrepreneurs. Tribevest makes it really easy for people to participate in those types of investments. A lot of people think of us as a little bit of a competitor to crowdfunding. But the truth is their partners are partners of ours. We have a lot of tribes that are coming together, investing in different crowdfunding platforms, as a way to learn and grow together, not unlike the investment club groups.
Getting the word out
In 2020, we were way more focused on building a company that had 100 customers that loved us, versus thousands that kind of liked us. And that continues to be our theme. We are now getting into scale mode by continuing to improve the technology, appealing to more and more use cases out there, and via word of mouth — a lot of referrals. We have a lot of people that have been invited onto the platform as a member of a tribe that have gone out and now are starting their own tribe. There is a lot of viral, referral growth right now. We do see a lot of different distribution channels as we continue to grow.
We love the subscription model, which is just a great business model in general, but it suits us really well. We’re offering an incredible service and savings to our customers to start an investor group. Without us, just start it and to manage it over the time of a year, it’s probably over $3,000 and 100 hours of research pulling things together. Now we can offer that service for $5 per member per month and all those things are included. It really becomes a no brainer for anybody that’s looking to invest with a group.
We definitely have big aspirations and are growing at about 100 percent month over month in terms of customer growth. Up until today, it’s been friends and family with a little bit of institutional money in. Some of those friends and family have used the platform to come together to invest in Tribevest, which is really cool. Looking ahead, we have our sights on a series A this year. We’re right on course for that.
Tribevest in 5 years
We’re passionate about what we’re doing and the impact we have on our customers. Since the beginning of time, we’ve been coming together as tribes to survive and thrive. But in the modern world, investing is still a single player game. We see the day where investing, as a multiplayer experience, is commonplace. These tribes are creating businesses. They’re business owners.They are owners of their businesses, investing in different assets in different asset classes. So the vision is to provide that service and continue to improve the technology.
But also to help the industry accommodate this new investor, this new entity. Banks, when they think of customers, they think very much a single person or a single company. We’re working with banking partners to be more accommodating in helping these investor groups get to where they want to go. Anyway, we see the day when millions of people have multiple tribes. And we’re committed to that future.