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January 19, 1988

ALLIANCE SYSTEM SEEKS TO TURN AVERAGE AMERICAN JOE INTO VENTURE CAPITALIST

By CBR Staff Writer

Turning the masses into venture capitalists is the mission of a remarkable new venture in San Antonio, Texas, reports Newsbytes. A investment of $1,200 a year is not a lot even for those on modest salaries, but that is the minimum stake set by The Alliance Foundation in what sounds like an irresistible gamble that just might turn up another Compaq or Apple. About one in 10 ventures turn into Miniscribes or Borlands even with the likes of SevinRosen Management behind them, and even then, only two in every 100 proposals get funded at all. But an opportunity to spread the risk really widely has distinct attractions. The Alliance System consists of nine affiliated venture capital companies under the non-profit Alliance Foundation, which will use computers to make a market in new ventures starting at 1 cent per share. Ventures capitalised by the system pay 10% of the funds raised to the system, but brokerage fees will be set at just $1 per transaction because everything will be done on-line and no paper changes hands. The minimum investment is $100 a month, and $50 of that goes into a blind fund that will invest in a portfolio of start-ups chosen by the organisers. The terminals are to be offered for a $100 deposit, which will be refundable. Franchises are also offered to those ready to spread the word, and The Alliance ultimately looks to have 6m playing the venture capital game.

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