The Startup Journey: Alternative Investing With Sliced Investing Founders

Founders of Sliced Investing. Top: Akhil Lodha. Bottom: Mike Furlong
Top: Akhil Lodha. Bottom: Mike Furlong

One goal after leaving my corporate job of 11 years in 2012 was to learn more about the startup industry in Silicon Valley. With so much happing here, I found myself dreaming about going on my own startup journey.

I was coming from the old school finance industry where there was relatively little innovation compared to many financial technology companies today.

Life was getting a little boring and I kept watching company after company we took public grow into great successes.

One of those companies I watched IPO was Google. I remember being excited seeing Sergei Brin, one of Google's founders give a lunch presentation in downtown San Francisco during their IPO roadshow back in August, 2004.

It was standing room only, so I wasn't able to eat one of the manufactured plates of rubber chicken. We were one of the lead book runners, and I was inspired at how quickly Sergei, Larry and team were able to build something so huge, so quickly.

Going On A Startup Journey

We are living in the golden age of tech/internet innovation. Five years ago, at age 32, I told myself that if I didn't create something internet-related on my own or join a startup while having so much access living in San Francisco, I would kick myself in the face when I'm old. You can read more about why I left Wall Street here.

Today, Google is one of my largest sources of traffic and revenue for Financial Samurai. Maybe it's good karma for helping them go public, even though the IPO seemed shaky at the time with the last minute price decision of $85/share. Yes, we all should have piled in back then! It's crazy how life comes full circle.

I discovered Sliced Investing on AngelList while vacationing up in Tahoe over Christmas break. With my tag-line “Slicing Through Money's Mysteries,” I wondered if destiny was calling once again as I shot the founders a note to say I'm interested in helping them out. They kindly responded, and here I am.

I wrote off hedge fund investing until 2015 because I didn't have the $500,000+ minimums to invest. It was just as well since the markets have been on fire since 2009 and hedge funds have underperformed. But in a way, I have been creating my own equity hedged portfolio with my accumulation of structured products since 2012. Give me 5-10% returns every year with low volatility, and I'll happily invest all I can.

Fintech Startups Are Booming

Sliced Investing is a fintech company on an exciting startup journey. It smartly crowd-sources investor capital in order to make investing in hedge funds and alternatives more accessible to more people due to their minimum investment of $20,000. With the bull market entering its sixth year, I'm beginning to wonder how much more this baby can run. I'll take under a 10% return for the S&P 500 for 2015 if anybody wants to take the other side of the bet!

In this interview, I want to understand the mindset of an entrepreneur. We'll talk about risk-taking, the why, and how things came to be with Mike Furlong and Akhil Lodha, founders of Sliced Investing. I've got to imagine many people would love to be their own bosses and create a company one day as well. 

Interview With Sliced Investing

How did you guys decide to leave your companies to start Sliced Investing? Most people are happy with their jobs, or too afraid to move, so I'm curious to know whether being an entrepreneur is genetic or developed.

As former Wall Street traders, we were very content with our jobs. We both have natural fascinations with the global markets and drew energy from the fast-paced trading floor environment. With that said, we noticed inefficiencies in the way financial products are distributed. We personally wanted access to some of the same investments we saw on Wall Street, but as individuals we didn't have access. We saw how other aspects of the investment industry were being democratized through crowdfunding (start-up investing, real estate investing, etc) and figured the same thing could be possible with hedge funds and other alternative investments.

At the end of the day, I think we both wanted to have a more meaningful impact on helping individual people rather than just institutions grow their wealth. Entrepreneurship isn't genetic. If you are passionate about an idea and have the courage and determination to follow your passion then entrepreneurship is for you.

How To Prepare For A Startup Journey

Were there certain preparations you took or financial goals you wanted to achieve before taking the leap of faith?

It's definitely fair to say that although we took a calculated risk starting Sliced, the odds in the beginning make it daunting for anyone to start a company. In our case, we were both working at successful and innovative start-ups before we decided to quit our jobs. We feel those experiences combined with the mentorship of Y Combinator gave us enough confidence to start Sliced. We are very happy that we took the risk. (Note: Y Combinator is one of the premier startup accelerators that has funded companies like AirBnB).

Why do you think Y Combinator accepted your business model as one of the 3% accepted companies into their seed accelerator program? Why do you think Khosla Ventures and other VCs proceeded to invest over $2 million in your company?

It's the market. The financial services industry is enormous and — for lack of less cliche words — ripe for disruption. Additionally, the hedge fund industry is currently $2.8 trillion large and expanding each year, but retail investors generally don't have much access to it. It's amazing how behind financial technology is compared to other industries. Even simple financial products like stocks or bonds are a bad user experience. It's hard to not feel like you're being overcharged on the trading fees with current online brokerages. Our technical ability and access to hedge funds is an added plus, but I think people get excited about Sliced because they realize the state of the current market and the massive effect of us making even a small change.

The Value Proposition

What is the Sliced Investing value proposition?

Our value proposition is access to an asset class that has historically been difficult to access and inefficient in allocation. We're doing what the internet did for information to private funds — democratizing it. Furthermore, we charge 50-80% less than other fund of fund companies, with much lower minimums.

Do you think the definition of accredited investor is appropriate? If not, what do you think is a better definition or way to allow individuals to invest in private investments or hedge funds?

We have a strong opinion that the definition of an accredited investor should be based on an investor being knowledgeable and aware as opposed to limits based on wealth. Understanding the risks you take with an investment is a must, and riskier financial products are very much available to many investors. For example, any investor can currently go buy penny stocks on the ‘pink' sheets without any prior qualification. That dichotomy doesn't make sense to us.

How many fund of funds do you currently have, and how many do you plan to launch? What is the timing of these fund launches?

We currently have two, curated fund of hedge funds on the platform that gives investors exposure to broader hedge fund strategies. We will soon be launching individual funds on the platform as well as more fund of hedge fund products. If you spend a minute to sign in, you'll see the specific investment opportunities.

Who is the typical Sliced Investing investor? 

The typical Sliced Investor consists of doctors, lawyers, VPs, Managing Directors, Associates, and finance veterans who recognize the opportunity of investing in hedge funds. Our investors may be well-to-do, but many don't have the $500,000 – $1 million minimums to invest in hedge funds to diversify their investment portfolios. We hope to expand access to as many people as possible.

Who are the companies you admire and would like Sliced Investing to emulate? Are there any partnership opportunities in the making?

Four that come to mind are AngelList, RealCrowd, Prosper Lending, and Lending Club. Each of these companies are democratizing other asset classes (venture, real estate and peer to peer loans respectively) and have experienced strong growth. We do envision future partnerships such as for example, shared blog posts.

Further Questions

Why do you think some hedge funds have a difficult time staying open? How does Sliced Investing help ensure that the funds they invest in are the best funds possible? What is the vetting process before selecting the proper funds?

The vast majority of funds that close have sub five million in assets under management. Generally, smaller funds aren't necessarily managed by professional money managers with a long-term track record. Most funds close because investors pull out and there isn't any further incentive to have a vehicle to pool outside capital.

We take steps to mitigate risk and ensure funds are high quality by leveraging a pedigreed investment committee to make investment decisions. The vetting process is detailed – extensive operational and investment due diligence is performed on the managers that are selected for the platform.

Once the fund of hedge funds business model is proven out, do you have plans to get into other asset classes such as venture capital and private equity?

Yes, absolutely. Our goal is the entire private fund universe. We will probably move to venture funds next.

Is there anything else readers should know that hasn't been covered?

We have been fortunate enough to assemble a passionate team that combines strong technical expertise with financial industry experience. Members of our team include former traders, investment bankers, data scientists, and designers, all of whom are extremely dedicated to building a great product. Many of us are fortunate to have gained a ton of invaluable experience from other companies such as J.P. Morgan, Citigroup, Wells Fargo and FT Partners.

The Startup Journey

I hope this interview provides a window into what it's like as a Silicon Valley entrepreneur. Living in San Francisco makes me totally biased towards encouraging people to take more risk. Every single company we know of today was started by someone who had an idea and got out of their comfort zone to make their business a success. The worst case scenario in your head is almost always worse than reality.

Creating the next Google is probably a one in a billion long shot. But who says you have to grow as large as Google to be a success? As someone who runs a small business that's cash flow positive, I'm happy with the way things have turned out.

Thanks to Mike and Akhil for spending the time to answer my interview questions.

Update for 2016: Sliced Investing merged with LOGe Solutions, LLC to create StratiFi. StratiFi is a financial technology company helping wealth advisors deliver reliable and transparent investment outcomes to their clients through the use of various risk management services


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About The Author

19 thoughts on “The Startup Journey: Alternative Investing With Sliced Investing Founders”

  1. Small world. I read this website and find out you are a consultant with Motif, and are interviewing the founders of Sliced.

    I know a couple of people in key positions at Motif, and one of the founders of Sliced is a close friend :)

    It’s quite likely that I know of you in real life!

  2. Above Average Black

    I’m still waiting on S.E.C. to act. I got time though. I’m fine with the public companies for now. In the meantime I’m just trying to learn as much as I can for when I’m ready. Also, thanks for the realcrowd tip during the interview. Never heard of realcrowd before but it looks interesting. I saw a commercial real estate property on realcrowd that I know the exact location of. Interesting stuff.


    The S&P is doing this with nearly twice the volatility of many hedge funds. What does this mean? If you can get access to quality hedge funds, do it.

  4. The requirement is way over my head. But looking back the year Visa was offering IPO. The hedge funds was able to get the offering price, the rest of us have to buy in the open market which was 30% higher. It happens with almost all of the IPO, with the exception of FB. Anyhow, for now it’s working better for me to stick to index fund and dividend paying stock. But it’s great to learn that there is a lower requirement now, there is a way to get in.

  5. Always enjoy the articles (pretty much every one of them). I appreciate that you point out when you have a financial stake in the entity you are touting, so I can give it the old raised eyebrow (extra scrutiny). It’s against human nature to bite the hand that feeds you.

    1% better than the SP 500? Is that enough to get excited about?


    1. Thanks for reading.

      I’d love to have a financial stake in Sliced Investing, alas, I do not. I’m just a temporary part-time consultant for a couple months. For 2015 at least, I’ve turned into a consulting juggernaut because I want to learn as much as possible, learn about as many interesting companies as possible, and network with people in San Francisco in my field. It’s a lot of fun, and there are a lot of challenges as well. Let me make it clear that I’m seeking companies I think who have interesting stories to tell first vs. trying to just get any consulting job to pay the bills. I’ve already developed my financial buffers for my financial buffers, so this adventure is mostly an educational one.

      It would be a crying shame to not try and do as much as possible living in SF with all that’s going on. I keep thinking back to this post, “Are There Really People Who Work 40 Hours Or Less And Complain Why They Can’t Get Ahead?” to motivate me to do more. I’m up to about 70-80 hours a week now, and couldn’t fathom just working only 40 hours. Eventually, the good times will end. And when they do, I will have no regrets having not tried my very best.

      Have you ever seen what happens to the compounding of 1% over many months, years, and decades? Things add up. Compounding is one of the most powerful things on Earth, even with small differences.

      The biggest spotlight on hedge funds will be how they perform when difficult times return.

  6. Seems like a great idea. Perhaps they could create ancillary revenue by establishing a non-bank trustee/custodian entity to service self directed accounts, or at least partner with one.

  7. So according to their website, their 25 year track record is about 1 percent better than the S&P 500, which is potentially negated by their fees that range from 0.5% to 1.25%. Meanwhile, I can buy the S&P 500 (VOO ETF) for an annual fee of 0.05%. And I don’t need to be accredited. I can even wear an ankle bracelet and not be allowed to leave my domicile.

    What am I missing, except for the great outdoors?

    1. Got to love the great outdoors (unless you live on the East Coast right now). Performance for hedge funds and other alternatives are almost always NET of fees. I’ll ping the guys and see what they have to say.

      For example, when I invest in structured notes that provide a 12% return if XYZ doesn’t breach a 20% barrier, the 12% return is net of the fees I pay. I care about the end result.

        1. Mike Furlong

          Hi Steve–

          Co-Founder of Sliced here. All returns stated anywhere on Sliced are net of fees. Though 1% difference doesn’t seem like a lot, compounded over 25 years amounts to growth of capital roughly 20% higher than the S&P.

          A $100,000 investment in the S&P 500 TR in Jan of 1990 would be roughly $1,000,000 — whereas hedge funds (measured by HFRI Fund Weighted Composite Index) would be $1,200,000. That’s ~20% more capital. If you would have invested in just Equity Long/Short hedge funds you would have $1,400,000. This is all net of fees and expenses.

          Hedge funds have been a powerful source of wealth creation and protection over the years.



  8. I hate to be dense, but I still don’t understand the benefits of investing in a hedge fund vs a normal diversified portfolio. Can you explain it like I’m 5?

  9. I look forward to when they offer access to private funds / venture funds. I have limited knowledge of the economics of how fund of funds work for an investor, but doesn’t the investor essentially end up pay double the management fees (i.e., the investor pays a management fee to Sliced and Sliced pays a management fee to the underlying fund)? I know that larger fund of funds (at least in the private fund world) can negotiate a smaller management fee with the underlying fund, but even with that, how does the investor come out ahead? Maybe you just have to pay up in fees if you don’t have the big bucks to invest directly in a fund?

    1. Bingo! Fund of Funds pay the fees of the funds they invest in. In general, most hedge funds have a 1%/10% (management & performance fee) structure. Sliced pays those fees when it makes investments in other funds… Then the investor in Sliced pays Sliced a small fee to manage it’s money.

      So you end up paying higher fees than if you could invest directly… but most people *can’t* invest directly, so they just suck it up and pay the extra fee.

      1. It would be great if everything was free. There is a price for access. Sliced Investing has lowered that price because traditional Fund of Funds may charge 1/10 on top of 1/10 or 2/20 AND have $500,000 minimums. Sliced Investing is 75-125bps, to gain access, and that’s it.

        I’m fascinated with how the internet and financial companies can help crowd source funds towards more equal access traditionally only attainable by the very rich. I hope to learn a lot from my consulting time over the next several weeks and I’ll share with folks my findings.

  10. Great interview. I’m glad to hear Sliced offers much lower fees and I like the concept of helping more people invest in ways they otherwise wouldn’t have access to. Democratizing the industry sounds good to me and I agree there is demand for “disruption.”

    That’s also exciting to hear that expanding beyond hedge funds is a possibility too. I can’t imagine the amount of work involved in starting a busuiness, especially with all the competition out there, so great job on your success so far and look forward to seeing more.

  11. BE Pennypacker

    Great stuff. It sounds like Sliced Investing has found that unique innovation needed to build a successful company.

    I’ve started a couple side businesses myself, but have never taken the full “leap” of leaving my regular day job. I’m hoping one of these days I’ll either be financially secure enough that I’m comfortable living without my day job, or my business is doing so well that I’m forced to leave my full-time gig.

    I love learning about the experiences of other entrepreneurs. I just read a book called Zero to One by Peter Thiel, the co-founder of Paypal. It has some great insights into building a tech startup.

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