If you’re reading this, we hope you’ve had a chance to explore our earlier posts. 

So far, we’ve gone over whether Basic Capital is too good to be true, why we started it, how it works, and why anyone would offer funding to everyday people to invest in the market.

Now, you might be wondering: “Who is Basic Capital? And how do they make money?”

Who we are

Basic Capital is a venture-backed financial technology company. “Venture-backed” means our investors are professional, institutional venture capital funds managing money for endowments and pension funds. These investors back ideas like ours with the vision of creating transformative companies. Many iconic businesses—Google, Apple, Uber, and Airbnb—were also venture-backed, and we share investors with some of them.

Venture capital funds typically have a 10-year horizon, meaning our investors take the long view. They’re not looking for quick returns—they expect us to build a meaningful, enduring business that changes the way the world works.

This long-term perspective is central to our ethos. At Basic Capital, we prioritize creating a company built to last for decades. That philosophy drives everything we do: We focus on delivering value to our customers and ensuring their success, because your success today lays the foundation for ours tomorrow.

How we make money 

For any investment, understanding how fees and expenses impact your returns is crucial. The Basic Capital’s unique structure and use of financing to increase your investing power influence your portfolio performance. Currently, we earn revenue through a combination of a administration fees and financing.

Administration Fee

What is it? The administration fee is what Basic Capital charges for setting up and managing the self-directed Limited Liability company for your Basic Capital investments. 

How much is it? We charge 0.50% on the total value of the assets within Basic Capital assets. If you contribute $2,000, we co-invest another $8,000. The Administration Fee is charged on the full $10,000 asset value, or $50 per year. 

Financing Cost

What is it? This is the annualized cost of financing cost that Basic Capital extends to its customers. This rate is only charged on Basic Capital’s co-investment into your Basic Capital LLC. 

How much is it? The financing rate changes with short-term interest rates. Basic Capital uses the Secured Overnight Funding Rate (SOFR) as its baseline interest rate and charges 2% above it. If SOFR was 4%, Basic Capital’s financing rate would be 6%. 

In our previous example, on a $2,000 contribution Basic Capital would co-invest $8,000. Assuming the reference rate stays the same, the annual financing cost would be $480.

How do fees and costs impact my Basic Capital performance? 

On a $10,000 account, the financing costs of $480 and $50 administration fee amount to 5.30% ($530) of total expenses. Historically, the eligible assets in the Basic Capital have yielded 5.00% above the reference rate (9.00%), generating $900 of income to offset the $530 expenses. Before market appreciation, this generates $370 of net income in your Basic Capital. 

This income is the key source of returns on your $2,000 contribution. The $370 net income generates a net of fee yield of 18.50%. The returns in your account are impacted by the market price of the underlying assets, but over time, this net income drives compounded returns in the Basic Capital.

Our mission: Universal Basic Capital 

Our mission is to give as many Americans as possible better access to the stock market. Today, the bottom 50% of Americans own less than 1% of all stocks held in the U.S. We aim to change that by creating a world where everyone has an opportunity to build wealth through the stock market.

Our vision is bold: to make stock market investing even more rewarding and accessible by giving every American the ability to create their own “endowment.” We believe that enabling over 100 million Americans to own a larger share of the market has enormous potential—for both society and Basic Capital.