Alternative Investments Podcast (Clip 5 of 8) – Austin, TX as an Alternative Investments Hotbed
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Alternative Investments Podcast – With Strategic Capital & Waterloo Capital
Don Simoneaux talks about the history of Alternative Investments in Austin, and how Austin has historically been a great place for Alt investing. Learn how to work with Strategic Capital – Registered Investment Advisors in Austin, Texas.
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Episode 4 Podcast/audio/video Clip (5 of 8)
Working with Strategic Capital on Alternative Investment Strategies
Meet Don Simoneaux – Alternative Investments Waterloo Capital
Don Simoneaux and Bobby Russell tell the history of Austin as a hotspot for Alternative Investments, and the commitment of Strategic Capital in building the access to alternative investments in Austin
Moderator: I’d like to get into maybe a history lesson a little bit and I think you’re probably the best person in Texas to do it – the idea of the gulf, you know, being an alternative investment… being in a position whether it’s geopolitically or just geographically to be an alternative investment haven, so to speak. Can you talk a little bit about that because oil and gas has been the de facto standard – aside from Real Estate – for alternative investment, for the better part of well… well over 100 years. So, can we talk about that a little bit in regards to you know how rich the history of Austin, or of Texas, is, in the alternative investment space
Don Simoneaux (Director of Alternative Investments, Waterloo Capital): Yeah certainly, so, you know most so you can really kind of think about private Equity from a history perspective you know, modern private Equity you know if you think about in traditional fund structures you know leverage buyouts things like that that really started in New York and a lot of the major investment banks in the early 80s with you know some of the, you know the mergers and Acquisitions that took place during that time period a lot of it was fueled on debt and it was levered and you know it was sort of the burgeoning of that asset class there; at the same time on the west coast we had sort of the Silicon Valley explosion of venture capital there kind of precipitated by some of the offshoots from Stanford, kind of made Silicon Valley what it is so you have the bi-coastal framework here of sort of the private equity and hedge funds on the east coast and the venture capital on the west coast.
Don Simoneaux (continued): Austin has been long known as a tech haven, right, so we had IBM here since the 70s; Texas Instruments here around the same time frame, and then Dell sort of blowing up our Tech scene in the 90s going into the early 2000s really attracted a lot of tech talent to Austin. Around that time frame. Austin Ventures, if you remember that firm, they began investing in the early 2000s or sorry late 90s early 2000s and really helped create an institutional investment culture they’re really one of our first larger institutional Venture firms here in Austin and you know since they have since wound down their operations we have a lot of offshoots so we have a lot of you know smaller venture firms here in town that you know are creating a really vibrant active startup community. That’s been great and you know; I think just based on you know the quality of living here in Austin there’s been a lot of larger firms that have relocated a large portion of their operations here in Austin.
Don Simoneaux (continued): So, you know we do have the institutional investors located here, but on the other side you know there are hundreds of billions of dollars that are managed out of Austin on the institutional allocator side. So, we have the University of Texas endowment located here in Austin. The Texas Teachers Retirement Systems; Texas Employee Retirement Systems; there’s just a ton of capital that’s here in Austin and so, that attracts a lot of top-tier firms on the alternate investment side, to come to Austin to raise assets and you know we’ve benefited from that.
Don Simoneaux (continued): Being able to get access to a lot of these groups coming through town and, you know it’s a relationship driven business, so we we try to cast a wide net, and meet as many groups as possible and, when appropriate you know bring those types of Investments to our clients
Moderator: Sure, can you can you actually go a little more in depth I don’t want you to you know be at risk of alienating any of your relationships, but I mean, you’re a pretty well entrenched individual here in the space, and just talking about, you know, the endowment funds that are there in Austin and some of the large institutional investors that really find a home base there, can you talk about how important relationship is in the alternative investment space because it’s still I mean it’s not burgeoning to institutional investors but for the mainstream investor it’s just coming online now with you know mainstream applicability I guess for lack of a better term can you talk a little bit about how important relationship is, there in this area?
Don Simoneaux (Director of Alternative Investments, Waterloo Capital): Yeah, for sure. So, you know whenever we’re working with a group so we have a very detailed and in-depth due diligence process that we go through whenever we make a new allocation to a manager it’s that same process that I did when I was working with a trillion dollar consulting firm that we try to do here for our clients at Waterloo and for advisors like Strategic (Capital). But on the back side of that is really you know the relationships that we have to cultivate and develop to be able to find and gain access to these managers so you know the types of managers that we gravitate to, are the managers that are capital constrained and operating in markets where they don’t need a lot of additional Capital – that’s our benefit as you know being you know a smaller than Institutional Investor you know working with our client families we work with, is that we can allocate to strategies that you know that are limited in the amount of capital that they could take in to implement a given strategy. So, you know some of the good a good example of it is you know there’s some you know lending categories here in Texas that you know might you know source you know, 100 to 300 million dollars in new loans per year and the funds that invest in this space can only deploy a certain amount of capital and so there’s a limited amount of spots that are available for investors to access these strategies, and so we will go out and develop relationships with what we feel like are the the best managers in a given space they can get comfortable with our due diligence process our ability to operate and administer investments in this space and ideally we’re able to negotiate either for lower fees or lower minimums for our clients to be able to access these strategies that really just aren’t available, you know at any other sort of similar size institution so that’s really a Competitive Edge that we have space.
Moderator: For sure. And how much of your time maybe you don’t want to go into this, but how much of your time is spent actually nurturing those relationships I mean you must be sitting on board seats, you must be at meetings consistently…
Don Simoneaux (Director of Alternative Investments, Waterloo Capital): Oh sure – yeah, I was – I just spoke at an alternative investment conference, last month, and you know, we kind of do those things because it’s it’s great way for us to continue to build these relationships and it’s it’s a continual process right we’re always trying to network and meet, you know, what we feel like are the best managers in the space or you know, an up-and-coming manager that will be one of the best managers and you know their particular strategy, and so, it’s something that we do all day, every day, you know really trying to stay abreast of what’s happening in the alternative investment space and make relationships with top tier teams