Sweater Cashmere Fund

Verdict

• ALIGNMENT: Low

  • Management has limited disclosed personal investment in the fund, weakening alignment with everyday investors who face crushing fees and liquidity restrictions
  • The lack of carried interest (performance fees) removes traditional VC manager incentives, while the flat 2.5% management fee is earned regardless of investment outcomes

• Performance: Below Average

  • The fund’s 5.28% annual return since inception is disappointing given the high fees, illiquidity, and concentration risk of venture capital investments
  • Performance barely exceeded Russell 2000 small-cap stocks despite taking significantly higher risk and charging fees six times higher than typical index funds

• Market Risk: High

  • Heavy concentration in early-stage startups creates extreme volatility and high failure risk, with many investments likely to become worthless
  • Venture capital returns are heavily skewed toward a few big winners, and the fund’s broad diversification may dilute exposure to these rare successes

• Business Risk: High

  • The interval fund structure provides some protection from daily redemption pressure, allowing for longer-term venture investment strategies
  • However, Sweater’s relatively new platform (launched 2021) lacks the track record and institutional relationships of established venture capital firms

• Debt Risk: Average

  • The fund uses minimal leverage, reducing debt-related risks, though underlying portfolio companies may carry significant debt loads in later funding rounds
  • Early-stage companies typically have limited debt, focusing instead on equity financing until they reach profitability

• Liquidity Risk: High

  • Quarterly repurchase offers through interval structure create severe liquidity constraints that could trap investor capital for extended periods
  • The 2% early exit penalty adds another layer of cost for investors needing flexibility, making this unsuitable for emergency funds or tactical allocation changes

• Transparency: Low

  • It’s hard to get the full picture. Performance numbers aren’t front and center—they’re tucked away in semiannual reports instead of being shown clearly on the website. 
  • There’s no straightforward fund deck or summary available either, and most of the experience is locked inside their mobile app. While their support team is quick to respond, there’s not much in the way of formal, easy-to-review documentation. Investors are asked to trust, but it’s tough to verify.

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  All Rights Reserved. The data and analyses contained herein are the property of Noyack and are protected by copyright and other intellectual property laws. The information provided is intended solely for informational purposes and should not be construed as investment advice. It is not an offer to buy or sell a security, and it is not intended to be used as the sole basis for any investment decision. The information contained in this document is believed to be accurate and reliable based on sources believed to be reliable, but Noyack makes no representation or warranty, express or implied, as to its completeness, accuracy, or timeliness. The data and analyses are subject to change without notice and Noyack is not obligated to update this information. The use of the information contained in this document is at the sole risk of the reader, and Noyack shall not be responsible for any losses, damages, or expenses incurred by any person as a result of reliance on the information contained herein. Noyack does not endorse or approve any investment or trading strategy and does not guarantee any specific outcome or profit. The reader should always conduct their own independent analysis and consult with a qualified financial advisor before making any investment decisions. This document may contain forward-looking statements and projections which are subject to risks and uncertainties, and actual results may differ materially. Past performance is not indicative of future results. This document is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Noyack reserves the right to modify or discontinue the provision of the information contained in this document, in whole or in part, at any time and without notice. The information contained in this document is provided “as is” and Noyack makes no representation or warranty of any kind, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of the information contained in this document. Noyack shall not be liable for any errors or omissions contained in this document or for any damages whatsoever arising out of or in connection with the use of this document.