Correspondence 0001104659-24-069926 from Pop Venture Fund (CIK 0002012830)
Pop Venture Fund (CIK 0002012830)
Date: June 10, 2024 · CIK: 0002012830 · Accession: 0001104659-24-069926
AI Filing Summary & Sentiment
File numbers found in text: 333-278367, 811-23050, 811-23950
Referenced dates: April 29, 2024
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June 10, 2024
VIA ELECTRONIC FILING
Mr. Aaron Brodsky
Securities and Exchange Commission
Division of Investment Management
100 F Street, NE
Washington, D.C. 20002
Re:
The Pop Venture Fund
File
Nos. 811-23950 and 333-278367
Dear Mr. Brodsky:
On behalf of The Pop Venture
Fund (the “Fund”) set forth below are the Fund’s responses to the comments provided by the staff (the “Staff”)
of the Division of Investment Management of the U.S. Securities and Exchange Commission (the “SEC”) in a letter dated April 29,
2024 relating to the Registration Statement on Form N-2 (File Nos 811-23050 and 333-278367 (the “Registration Statement”))
of the Fund filed on March 29, 2024. The Staff’s comments are set forth below and are followed by the Fund’s responses:
PROSPECTUS
Cover Page (pages i-ii)
1. Please explain supplementally the meaning/purpose behind the term “Pop” as used in the Fund
name and in the context of the Fund’s investments.
The use of “Pop” in the
fund name is short for “popular”. Pop Venture’s mission is “Making Venture Popular” in order to provide
the general public equal access to private companies through investing in a closed-end registered interval fund.
Cover Page (pages 2-3)
2. The last sentence on page 3 discloses that Pop Venture Advisers LLC (“Adviser”) is the
Fund’s investment adviser. The Adviser does not appear to be an SEC-registered investment adviser. Please confirm that this is accurate,
and please provide a status update if the Adviser has applied for registration. We may have additional comments.
The Adviser applied for registration
as an investment adviser on March 29, 2024, and the order was approved on May 7, 2024 under the 120 day rule.
Mr. Aaron Brodsky
June 10, 2024
Page 2
Prospectus Summary, Investment
Objective and Strategies (pages 5-7)
3. The Fund’s 80% policy applies to Private Companies, which includes both venture and growth companies.
However, the Fund name includes the term “venture” but does not include the term “growth.” Please revise the 80%
policy so that it is limited to venture companies, including, as appropriate, venture companies with a growth concept.
The Fund has clarified the disclosure
to reflect that the Fund’s 80% policy applies to Private Companies that are venture-stage. The “venture” in Pop Venture
refers to the act of investing in these Private Companies. The Fund will invest in companies that are growing. The Fund defines a business
as “growing” when a company has a trailing twelve-month (TTM) revenue that is higher than the previous twelve months or three
quarters of consistent increases in revenue.
4. Please confirm supplementally whether the Fund will invest in equity securities of operating companies,
and/or whether the Fund will invest in the securities of other funds. We may have further comments.
The Fund will invest in equity securities
of operating companies. The Fund will not invest in other funds.
5. Please supplementally explain whether the Fund will invest more than 15% of its assets in issuers that
rely on the exclusions under 3(c)(1) or 3(c)(7) of the 1940 Act. We may have further comments.
The Fund will not invest more than
15% of its assets in issuers that rely on the exclusions under Section 3(c)(1) or 3(c)(7) of the Investment Company Act
of 1940, as amended (the “1940 Act”). The Fund intends to invest in equity securities of operating companies.
6. Disclosure on page 5 includes a reference to “ordinary income” and “capital gains,”
and could suggest that capital gains lead to ordinary income. Given that the Fund will primarily make equity investments, please delete
the reference to “ordinary income,” or explain to us why it is appropriate.
The Fund has deleted the reference
to ordinary income.
7. Please clarify in the disclosure what it means for a portfolio to be “robust and tempered,”
as those terms are used on page 5.
The Fund has deleted the references
in the Registration Statement.
8. Please disclose how the Fund is defining the term “growth companies” as used on page 5.
The Fund defines “growth companies”
as companies that have a trailing twelve-month revenue (TTM) that is higher than the previous twelve months, and/or three quarters of
increases in revenue.
Mr. Aaron Brodsky
June 10, 2024
Page 3
9. Please disclose if the Fund can and/or will only invest in companies that are in the Locker and/or identified
by the Locker as meeting the Fund’s investment criteria.
The
Fund has disclosed that it will only invest in companies that have completed the Fund’s screening application (“Application”)
and diligence process, which is called The Locker.
10. Please supplementally explain how the Locker “is available to privately held companies.” For
example, does the Adviser sell access to the Locker to privately held companies?
The Adviser requires a completed
Application from every company applying for investment from the Fund. Once the form is complete and submitted, the data is encrypted and
transmitted to a proprietary diligence tool called the Locker. The Adviser does not sell access to the Locker. The Locker is a software created by CrowdCheck Inc. an affiliate of
the Adviser.
ABOUT THE APPLICATION:
The Application
contains 376 questions across seven sections (company, team, accounting, capital, customers, fundraising and legal/consents. Through the
Application, the applicant company will submit 24 documents including financials, leases, shareholder agreements and formation documents.
The Application
gathers data points necessary to conduct diligence on a private company. Once the Application is complete and submitted, the data is encrypted
and transmitted to a proprietary system. Each Application submitted creates a unique Locker. The data in each Locker is not intermingled
with other data, it is encrypted within Salesforce and reviewed by the Adviser and the Fund.
ABOUT THE LOCKER
Once submitted,
the data from the application form will feed 95 calculations including ten balance sheet ratios, customer concentration percentages, number
of foreign/domestic suppliers, and percentage of square footage per revenue dollar. In addition to the data calculations, the Locker identifies
61 possible flags.
CROWDCHECK VERIFICATION OF
A LOCKER
When an
Application is submitted, creating a Locker, it will be verified by CrowdCheck Inc., a diligence and compliance firm, owned by Pop Venture
Inc. Within the portal, each CrowdCheck analyst will be presented the fields that require verification. The verification process itself
is a manual process conducted by the CrowdCheck trained analysts who review the information in each company’s Locker.
CrowdCheck
has a secure portal contained in the Locker system. Through the portal the CrowdCheck team will be notified which Lockers have been created
and are ready for verification.
Mr. Aaron Brodsky
June 10, 2024
Page 4
The Locker
Once a company’s
Locker is verified by CrowdCheck, the company is sent a copy of their diligence dashboard and given secure login/password to access their
Locker.
The Locker
was built in Salesforce by Pop Venture. For seven years, Pop Venture Founder Nicole Loftus researched, designed, and built this diligence
solution to be utilized by the Fund.
The Fund’s
Utilization of The Locker
Prior to submitting the Application,
a company provides consent for their Locker diligence data to be shared with the Adviser. The Adviser has a portal into The Locker system
that will identify verified Lockers that meet the Fund’s criteria. The Fund’s Chief Investment Officer and future portfolio
managers will receive and review these Lockers, conducting further quantitative and qualitative diligence on each company. The Fund intends
to use The Locker as a portfolio management tool to monitor portfolio companies, gather valuation data and improve likelihood that the
portfolio company will continue to raise capital, if necessary, and ultimately successfully exit the portfolio. When a company accepts
a binding term sheet for investment from the Fund, the company will agree to maintain and update their Locker throughout the period the
company is a portfolio company for investment by the Fund.
11. Please inform us supplementally whether any entities other than the Adviser/Fund currently utilize the
Locker.
Currently no entities other than the Adviser and the Fund
utilize the Locker.
12. Please disclose how many companies currently use the Locker to seek funding and/or for related purposes.
Currently no companies are using
the Locker.
13. Page 5 indicates that Pop Venture Inc. is an affiliate of the Adviser and owns the Locker and CrowdCheck
Inc. Please supplementally explain all of the business lines of Pop Venture Inc.
Pop Venture Inc.
Pop Venture Inc. was founded in 2022 by Nicole
Loftus.
Pop Venture Inc. is headquartered in New York.
Pop Venture Inc. owns CrowdCheck Inc. and The
Locker diligence software.
Pop Venture Inc. has no other businesses or
services.
Mr. Aaron Brodsky
June 10, 2024
Page 5
CrowdCheck, Inc.
CrowdCheck was founded in 2012 by Sara Hanks.
CrowdCheck is a diligence and compliance firm
in Alexandria Virginia.
CrowdCheck has twenty-two employees, thirteen
of which are licensed attorneys.
Pop Venture Inc. acquired CrowdCheck, Inc.
on December 22, 2023.
CrowdCheck provides the Adviser and
the Fund with diligence services, verifications of fund applicants’ data and bad actor checks on applicants’ board members,
leadership team and investors.
Pop Venture Enterprises Inc.
Pop Venture Enterprises Inc. was formed in
2024 by Nicole Loftus
Pop Venture Enterprises Inc. is the parent company of
Pop Venture Advisers LLC.
14. Please explain supplementally if Pop Venture Inc. may invest in any of the companies listed in and/or
identified by the Locker.
Pop Venture Inc. will not invest
in companies listed in and/or identified by the Locker.
CrowdCheck, Inc. will not invest
in companies listed in and/or identified by the Locker.
15. Disclosure on page 6 indicates that the Fund’s portfolio may be comprised of growth companies,
as well as companies that exhibit growth characteristics but fall outside the classic growth stock classification. Please disclose a brief
explanation or parenthetical demonstrating the characteristics of a company that has growth characteristics but that falls outside the
growth stock classification.
The Fund has clarified its disclosure
to reflect that the Fund may invest in businesses that fall within the classic growth stock classification. The Fund calculates growth
as a trailing twelve-month revenue (TTM) that is higher than the previous twelve months, and/or three quarters of increases in revenue.
16. Disclosure on page 6 states that the Locker provides a “quantitative foundation and a discretionary
overlay.” Please disclose in Item 8, or elsewhere as appropriate, additional detail regarding the discretionary overlay, including
the general circumstances under which discretion would be used.
The Locker is utilized by the Fund
as a quantitative due diligence method. The Adviser has the ultimate discretion to determine if a company is suitable for investment by
the Fund, regardless of the report generated by The Locker.
When an Applicant becomes a portfolio
company, their Locker will continue to provide the Adviser and Fund with valuable information on the company’s performance to continually
monitor the portfolio.
Mr. Aaron Brodsky
June 10, 2024
Page 6
17. Disclosure on page 6 references data that the Locker collects from “each user.” Please
clarify in disclosure what “user” means in this context (e.g., is this referring to the “user applicant community”
referenced in subsequent disclosure, or to some other entity?).
The disclosure has been updated to
reflect that the “user” is synonymous with Applicant or Applicant Community. The Locker is a software and as a company utilizes
the Locker, they are considered a “user” of said software.
18. Please clarify what the “user applicant community” is, including if all “user applicants”
are companies that use the Locker.
See response to Comment 17.
19. Disclosure on page 6 references CrowdCheck, Inc. Please provide additional disclosure about
CrowdCheck, Inc. and its business lines and functions. Please also disclose if CrowdCheck, Inc. is a registered entity either
under state or federal law.
See response to Comment 13.
CrowdCheck is not a registered entity
and withdrew its registration as an investment adviser in Virginia effective January 31, 2024.
20. Page 6 indicates that CrowdCheck will conduct “Bad Actor checks.” Please disclose how
the Fund is defining “Bad Actor checks.”
The Fund has clarified the disclosure
on how it is defining “Bad Actor checks”. A “Bad Actor check” is a process or procedure designed to identify and
mitigate risks associated with individuals or entities that may engage in dishonest, illegal, or unethical behavior used in various fields
such as finance, law enforcement, cybersecurity, and compliance. A Bad Actor check involves conducting background checks, verifying identities,
and assessing past behaviors or affiliations to determine the level of risk an individual or entity poses. This could include screening
for criminal records, sanctions, regulatory violations, fraudulent activities, or other indicators of potential misconduct.
The
ultimate goal for the Fund is to reduce the likelihood of engaging with individuals or entities that could harm reputation, financial
stability, or regulatory compliance. The CrowdCheck Bad Actor Report™ is a tool to help securities issuers and intermediaries
establish that they have conducted reasonable care to discover whether covered persons involved in an offering have disqualifications
that prevent the issuer from conducting securities offerings or require disclosure.
21. Please explain supplementally if Bad Actor Checks and other CrowdCheck, Inc. checks can be overridden
and/or are among multiple factors that are considered in making an investment decision, or if such findings automatically result in a
company being excluded from consideration for the Fund’s portfolio.
Mr. Aaron Brodsky
June 10, 2024
Page 7
If CrowdCheck identifies a covered
person within a company applying for investment from the Fund as a Bad Actor, that company will be excluded from consideration for the
Fund’s portfolio.
22. Disclosure on page 6 states that the Locker will provide the Adviser with businesses that meet the
Fund’s stringent criteria, including return on the equity investment. Please fully disclose all the “stringent criteria”
the Adviser will use to implement its principal investment strategy.
The Fund has deleted the word “stringent”
and has updated the disclosure on criteria the Adviser intends to use in its investment strategy.
23. Disclosure on page 6 lists a series of factors included as part of the portfolio team’s “further
diligence review” (review of “revenue growth, cash flow, market potential, product stage, management team, investor composition
and level of financing and trading activity of the company’s securities, etc.”). Are these the “investment criteria”
referenced earlier in the disclosure? Or are these factors that are considered in addition to the investment criteria? Please revise the
disclosure to clarify.
These factors are included in the investment criteria
referenced in the disclosure.
24. Please also explain how the Adviser measures the criteria and/or factors used to select investments, and
at what thresholds the Adviser would make investments based on these criteria/factors.
See response to Comment 3.
The criteria used to select investments
includes:
1. Revenue per year and growth trajectory.
2. Stage of company.
3. Risk Sector
4. Customer Concentration below 50%
5. Total Addressable Market/ Competitive La