PJT Managing Director Cabala Joins Marketplace Investor CircleUp

  • Cabala to focus on attracting institutions to online platform
  • CircleUp targets market share from underperforming funds: COO

Jake Cabala, a managing director in PJT Partners Inc.’s fundraising group, joined CircleUp Network, an online platform for investing in private consumer and retail businesses.

Cabala, 37, started this week as the San Francisco-based company’s head of institutional business, he said in a telephone interview. He was a managing director at Park Hill Group, which PJT acquired last year from alternative-asset manager Blackstone Group LP.

At CircleUp, Cabala will work on attracting institutional investors such as endowments and foundations to the company’s platform, which has expanded to include index and customized funds that back an array of early stage businesses. The 170 companies that have raised $210 million on CircleUp have, on average, increased revenue 80 percent a year since funding and produced annualized unrealized returns for investors above 50 percent, Rory Eakin, the company’s co-founder, said in an interview.

Using Technology

“Over the last 18 to 24 months, we’ve begun to get into a number of conversations with traditional endowments, foundations and other limited partners about ways of utilizing our technology,” said Eakin, also the company’s chief operating officer. “In a number of asset classes, in particular hedge funds and early stage venture capital, returns have been difficult and fees have been a very large part of that model.”

Started in 2011 by Eakin and Chief Executive Officer Ryan Caldbeck, CircleUp is one of several websites allowing accredited investors to back private businesses, which was made easier by the 2012 Jumpstart Our Business Startups Act. It collects a commission from the companies when money is raised.

The data CircleUp gets from companies that apply to be on the platform also is attracting institutional investors, Eakin said. The company has used recent funding to expand its machine-learning algorithms, which evaluate about 500 businesses a month.

‘Bottom 75%’

Deal platforms such as CircleUp won’t replace private equity and venture capital firms, Eakin said. However, the company is targeting market share from asset managers whose performance doesn’t justify the high fees they collect from clients.

“There are trillions of dollars sitting in the bottom 75 percent of those funds,” Eakin said. “That’s a market that I think is under threat from marketplace investing.”

The average investment on CircleUp has increased to more than $100,000 from $25,000 three years ago, Eakin said. Half of the money invested using CircleUp is from institutions and half is from accredited individuals, compared with 100 percent from individuals when the platform opened in 2012.

“I was willing to leave a career at such a great firm because I was excited by the results that CircleUp has been able to attain,” said Cabala, who worked in Lehman Brothers Holdings Inc.’s private investment management business before joining Park Hill in 2007.

CircleUp has raised $53 million in funding from backers including TPG co-CEO Jon Winkelried, former Stanford Management Co. CEO John Powers and venture capital firms Collaborative Fund, Union Square Ventures, Canaan Partners and Google Ventures.

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