Right Side Capital – A pioneer in pre-VC stage tech investing

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Right Side Capital – A pioneer in pre-VC stage tech investing

Right Side Capital Management (“RSCM”), based in San Francisco, is the most active pre-VC stage investment firm in North America. Its team has worked together for 11 years and has invested into 1,200+ technology startups since 2012.

The firm invests in capital-efficient technology companies that are raising smaller round sizes, and at earlier stages, than what most professionally managed funds are able to invest in. They focus  on this segment of the startup ecosystem because it is much higher returning than the traditional VC market. Right Side Capital also has virtually no professional competition because the amount of capital sought by companies at this stage is generally too small for traditional venture capital firms to address.

RSCM manages five funds with two distinct investment strategies (RSCM Core Strategy and Peregrine Select Strategy), all designed to produce outsized returns with exceptionally low taxes.  

Importantly, Right Side Capital funds are optimized for tax-efficiency. The federal government and most states offer amazing tax incentives for pre-VC stage investors.  If investors do it correctly, their gains can be tax free federally, and in 45 of 50 states.  Most gains for RSCM funds are expected to be taxed at 0% federally due to IRS Rule 1202, also referred to as the Qualified Small Business Stock rule (QSBS). QSBS-qualified gains are tax free federally and excluded from AMT adjustment.

In terms of performance, RSCM Funds consistently outperform the VC industry, even though its funds take substantially less risk.  The first fund, RSCM Fund I, is currently at ~4.85x net multiple, 23% net IRR, and is on track to deliver a 6x+ net return to investors by the time the fund winds down in another year.  

For information, contact Jeffrey Pomeranz at [email protected] or 415-637-7064.

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