Allocations, a fintech startup that creates software to assist smaller private equity funds in forming and operating their own funds, announced today that it had raised $4 million at a valuation of $100 million.It also shared a number of performance metrics such as a $4.6m revenue run rate and $6 million bookings rate.Allocations also stated to TechCrunch that the company has experienced 28% monthly revenue growth in the past 12 months. We were intrigued by such metrics. Allocations is building so much demand early. How does Allocations' thesis about the future of private equity fund intersect with microventure fund claims?What does Allocations do?Allocations was born from the efforts of CEO Kingsley Advani in building a network of angel investors and the problems that he faced in spinning up special purpose vehicles. SPVs are becoming more common to raise capital from a single investment. Advani was in a hurry to make deals before they closed.Allocations, like many tech startups, is software that solves a problem. The traditional way of creating SPVs didn't meet the pace that private investors expect to invest.The startups software allows users to quickly create new SPVs or funds. It also helps investors manage capital calls, and other matters after a fund has been formed. Startups can charge one-time fees (in the case SPVs, which are by definition a one-shot investment) or recurring fees (multiasset funds and SPVs). Allocations will pay $15,000 annually for a 30-investment fund.How many funds can a startup get? Are there enough funds to support Allocations as a large company? The company has so far attracted around 300 funds. Advani believes there will be a lot of demand. TechCrunch interviewed Advani about the fact that while current-day occupants of large funds are locked out of material, they have venture economic upside. More people can simply start their own fund and enjoy better economics. This dynamic could increase demand for his startup services.Advani said that while family offices and major capital pools used to fight for allocations into venture capital funds, now that venture capital is a subset within private equity, they are increasingly looking for smaller funds that can post higher returns than larger investment partnerships. This is the law that large numbers reverses; it's easier to manage a $10 million fund 10x than a $10 trillion vehicle.Advani believes that his customers will create multiple funds. According to Advani, the CEO, new fund managers have one goal: to reach their second fund. Managers often invest quickly in their first fund to reach their second faster.Startups believe that the market will see more small-scale private equity funds over time. These funds may not be larger than $10 million in capital. This view mirrors TechCrunch's recent market observations, where rolling funds have risen to prominence in early-stage startup investing and solo GPs creating what seems like more microfunds than ever.Allocations is part of a larger trend in fintech startups reviving old models of the world of money. They are making them more efficient, modern and sometimes cheaper. Allocations and Robinhood are miles apart, but they share a common goal: democratization of investing access and the use of tech to break down walls.Update: This round is a $4 million round and not $5 million. This has been fixed.
