Most traditional venture capital funds require investors to commit their capital for long periods, usually seven to ten years. That rigidity has long been a barrier to democratizing venture capital, as it limits participation to investors who can afford to have their money locked up for years.

Liquidity, the ability to access your capital on a predictable schedule, is often missing in VC. The Cashmere Fund is structured differently, with redemption windows twice a year that give investors a way to participate in early-stage companies without a decade-long lock-up.

Traditional 10-year VC structures

In conventional venture capital, the rules are fixed:

• Commitment: Investors pledge their capital up front, often with very high minimum buy-ins (tens of thousands, if not millions of dollars).
• Investment phase: For 3 to 5 years, the fund deploys capital into startups.
• Harvest phase: The final years focus on finding exits, like IPOs or acquisitions, to return capital.

This creates the well-known J curve. Returns are negative at first as fees and investments accumulate, then (hopefully) swing positive years later when exits occur. That works for institutions that can wait a decade, but for individual investors, the illiquidity makes VC nearly impossible to access.

Why have funds historically done this? The long lock-up aligns investors with startups, giving managers time to build value without pressure for short-term liquidity. But what works for billion-dollar endowments doesn’t always fit with the financial needs of individual investors.

What “twice-yearly redemption” means

The Cashmere Fund was designed to offer something different. Instead of locking up funds for a decade, it operates as an interval fund with redemption opportunities twice each year. 

Here’s what that means in practice:

• Predictable liquidity: Investors know there are two specific windows every year when they can request redemptions, each limited to 5% of the Fund’s net asset value. This removes the uncertainty of waiting a decade for liquidity.
• Partial access: Investors don’t have to redeem their entire position. They can withdraw a portion, allowing them to manage cash flow without abandoning long-term exposure.
• Fair process: Redemption amounts for each redemption window are capped at a percentage of the fund’s net assets (5% in the case of the Cashmere Fund), ensuring all investors are treated equitably and that portfolio companies aren’t destabilized.

For example, imagine you invest $10,000 in a fund in January. By the summer redemption window, you might decide to withdraw $2,000 to cover a personal expense, while leaving the rest invested. You haven’t lost your stake in the startups, but you’ve gained flexibility that traditional VC structures don’t allow.

Balancing liquidity with long-term growth

Startups don’t scale overnight. A consumer brand may take years to reach national distribution, and a fintech platform often needs multiple product iterations before it breaks out. That’s why venture capital is designed for the long haul. Too much liquidity could undermine this by forcing managers to sell promising positions too early.

Cashmere’s model builds flexibility without eroding the long-term thesis. Redemption windows are limited and scheduled. This balance reframes venture capital: not an all-or-nothing, 10-year commitment, but also not a short-term trade. Instead, it’s a structure that recognizes both the patience startups require and the flexibility investors often need.

Risks of early exits vs. long holds

Every structure has trade-offs.

With early exits, risks include:

• Missing the biggest upside if a company takes off after you redeem.
• Redeeming during weak markets and locking in lower valuations.
• Losing the compounding benefits of letting strong companies mature.

With long holds, risks include:

• Having capital tied up for many years with no liquidity.
• Losing flexibility if your personal circumstances change.
• Missing opportunities elsewhere because funds are locked.

McKinsey’s 2024 Global Private Markets Review highlights how fewer exits and longer holding periods in private markets have made illiquidity an even bigger challenge for investors. Flexible structures like interval funds could help reduce the cost of being stuck on the sidelines.

Why liquidity democratizes access

Access to venture capital has historically meant two hurdles: having enough wealth to invest and being able to give up that money for a decade. Meeting one without the other wasn’t enough.

Liquidity helps solve the second barrier. Predictable redemption windows give investors confidence that they can participate without jeopardizing their personal financial flexibility. That’s particularly important for retail investors, who often balance multiple goals at once, such as saving for retirement, maintaining emergency reserves, or planning large purchases.

The combination of low minimums ($500 for The Cashmere Fund) and scheduled liquidity reshapes who can participate. It allows:

• First-time alternative investors to allocate a small percentage of their portfolios to venture without overcommitting.
• Younger investors to start building exposure early, confident they won’t be locked out of their funds during key life stages.
• Broader participation, since access is no longer tied only to large institutions or accredited status.

Liquidity doesn’t remove the risks of venture investing, but it lowers the barriers to entry. For retail investors, it creates a way to consider venture capital alongside more traditional asset classes.

How Cashmere differs from traditional VC

Liquidity is one part of a broader strategy. Cashmere is structured to better align with the needs of individual investors while still maintaining the fundamentals of venture capital.

• Compound Influence: Our fund engages influential backers, athletes, creators, cultural leaders, who we believe can help increase visibility and adoption for portfolio companies.
• Multi-sector exposure: Our investments span consumer, fintech, and B2B sectors.
• Transparency: Valuations follow Level 3 accounting standards and SEC guidelines, with independent reviews to ensure fairness.
• Evergreen structure: Investors can join at any time instead of waiting for a fundraising cycle.

These elements create a structure that balances the long-term nature of venture with the access and transparency that retail investors often need.

Venture capital has always held appeal due to the chance it provides to back companies early. But the lock-up problem has kept it out of reach for most. Adding liquidity changes the equation. It doesn’t eliminate risk, and it doesn’t make venture capital behave like public markets. What it does is give investors more choice, more flexibility, and more realistic access to an asset class that has been closed off for too long.

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This communication and its contents are for informational purposes only and do not constitute an offer to sell or a solicitation of an offer to buy shares of the Sweater Cashmere Fund (the “Fund”). The Fund is managed by Sweater Industries LLC (“Sweater”) as the investment adviser and Forma Cashmere LLC (“Forma Cashmere”) as the sub-adviser. Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. The prospectus contains this and other information about the Fund and can be obtained by calling 1-888-577-7987 or by visiting the Fund's website at https://www.thecashmerefund.com. Please read the prospectus carefully before investing. All investments involve risks, and past performance is no guarantee of future results. The content herein is for informational and educational purposes only and should not be construed as investment advice or an offer or solicitation with respect to any products or services for any persons who are prohibited from receiving such information under the laws applicable to their place of citizenship, domicile, or residence.