In the world of alternative investments, there has been a recent surge in popularity for direct deals or direct investments into specific companies. Frictions around manager fees and alleged lackluster performance have left investors considering the overall benefits of investing directly into private companies to augment their portfolio of alternative investments. However, direct investing poses unique challenges and risks for investors which can be easily overlooked. This presentation is brought to you by DarcMatter, a technology platform that allows asset managers to seamlessly access, engage, and communicate with investors. Visit us at www.darcmatter.com for more information.

1. WHY INVESTORS
ARE BETTER OFF
INVESTING IN
FUNDS VS. DIRECT
INVESTMENTS
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2. There’s been a recent surge in popularity for direct deals or direct investments into specific companies
- Frictions around manager fees
- Alleged lackluster performanceWHY?
However, direct investing poses unique challenges and risks for investors which can be easily overlooked
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Growing Interest in Direct Investments

3. @DarcMatterHQ
Challenges of Direct Investing
#1. Deal Sourcing
In order to properly assess viability & investment worthiness of investments, it’s important to
have some type of benchmark and sustainable deal flow
Most investors are not professional managers and advisors that spend the majority of their
time performing research around an industry and connecting with deal pipelines
Therefore, investors looking for deal flow will be left with their own personal networks and
introductions. Not the most effective methodology to create robust deal pipelines

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Challenges of Direct Investing
#2. Diversification
Similar to angel investing, direct growth stage private equity investments require a certain
amount of diversification in order to be effective
Professional private equity money managers may take operational control of companies
However, individual investors likely to be left in a passive position in which the primary control
is only over their own portfolio
On the opposite spectrum, investors that participate in managed funds can enjoy de facto
diversification across multiple companies and assets

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Challenges of Direct Investing
#3. Professional Money Management
The best managers have their investors’ interests as their core motivation to do very well and
have a loyal investor following
Depending on the investor’s expertise and risk profile, it may be better to allocate time and
research into analyzing money managers as opposed to searching for standalone
opportunities that will require significant resources and ongoing maintenance

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Conclusion
Top performers in the industry are consistently sought out by
investors and respected for their investing acumen and know-how
As new developments in technology create greater transparency
and informational efficiencies within the private markets, what we
believe will change is the amount of information investors will
demand from money managers
This in turn will have the effect of sinking less- than-excellent
performers
The top investing professionals are here to stay and will be sought
out by investors of all types

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8. DarcMatter is an online investment platform where investors can transparently
access alternative investment opportunities.
Visit DarcMatter at: https://www.darcmatter.com/
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