Tom Ruggie explains how Destiny Family Office evaluates and accesses late-stage private companies, why he believes the AI bubble has not yet burst, and how disciplined portfolio construction using a 25-year bucketing strategy helps manage risk, illiquidity, and opportunity across market cycles.
What happens when the host becomes the guest?
In Episode 23 of Significance of Wealth, Martie Salt sits down with Tom Ruggie - Founder and CEO of Destiny Family Office and the show’s regular host - for a wide-ranging conversation on alternative investing, private markets, and the accelerating AI cycle.
Fresh off being named InvestmentNews’ 2025 Advisor of the Year for Alternative Investments, Tom shares insights from his recent presentation to his TIGER21 peer group, where he argued that today’s AI revolution closely parallels the internet boom of the 1990s—compressed into a much shorter time frame. Together, Martie and Tom explore:
While some opportunities discussed may only be available to qualified purchasers, this episode offers valuable perspective for any investor seeking to understand how experienced advisors and ultra-high-net-worth investors are thinking about private markets, innovation cycles, and long-term portfolio strategy.
Welcome to the Significance of Wealth Podcast, where we explore the evolving landscape of wealth management, private investments, and collecting as both a passion and investment strategy. I'm Martie Salt, sitting in for today's episode with a special guest. Tom Ruggie, the founder and CEO of Destiny, family Office, and typically the host of this show.
But today we're flipping the script. Tom was recently named Investment News's 2025 Advisor of the Year for alternative investments out of hundreds of thousands of advisors nationwide. That recognition speaks to something unique about his approach and after our conversation today, I think you'll understand why.
Tom recently presented his investment thesis to his own Tiger 21 chapter, part of a peer network of ultra high net worth entrepreneurs who collectively manage over $160 billion in personal assets. His argument we're living through a moment that parallels the internet revolution of the late nineties, but it is moving at three times the speed.
These are people who've seen every market cycle, every bubble, every crash, and they were taking notes. Today Tom's going to share how he's accessing pre IPO companies like Anthropic and Anduril at valuations, usually below what is typically marketed in the secondary markets. We'll explore why he believes we are still three years away from an AI bubble, what his 25 year bucketing strategy reveals about portfolio construction and why he's putting a large part of his own wealth into alternatives.
For our clients access to some of the direct investments Tom is discussing is only for qualified purchasers with at least $5 million in investible assets. But understanding how the ultra wealthy are positioning themselves right now should be valuable for all of us. So let's dive in. And first of all, Tom, congratulations on being named Investment News's 2025 Advisor of the Year for alternative investing.
That's quite the honor.
Yes. Thank you so much. I appreciate that.
Tom, I know you recently gave a presentation to your Tiger 21 Group about alternative investments and the AI revolution in your Forbes article, Investing in the Age of AI: Lessons from the Dot-Com Era, you wrote about remembering the nineties when people barely knew what the internet was, but were suddenly investing in anything with.com in the name.
I remember Super Bowl 2000 specifically. And that was the year that dot-com commercials dominated the Super Bowl ads. And of course, it wasn't that much longer after that that everything started falling apart. But you live through that era too, and now you're seeing similar patterns with AI. So walk me through the phases of the internet revolution and how they compare to what's happening right now with ai.
First of all, I would say that I truly believe that we're in a once in a generation moment with. AI movement, um, very similar to, to, in my opinion, the last once in a generation moment, which was in the nineties with the internet revolution. So I think there's a tremendous overlap between the two. Uh, there's a cycle that the internet revolution went through, and it's my personal opinion that the AI revolution is going to go through the same cycle.
I think the biggest difference is it's going to be much faster than the internet revolution. So as an example, in 1990 to 1994 is what was considered the foundation and buildup of the internet. 1995 to 97 was early expansion. Now that's three years in, in my personal opinion, based on the definition of early expansion.
We really had this early expansion happen in 2025. So what took place in three years for the internet and my personal view took one year. This year, uh, with the AI AI revolution. The next stage of the cycle is the bubble formation from 98 to 99. Uh, in my opinion, that'll probably be 2026 for the AI revolution.
Then the peak in euphoria of the internet revolution took place in late 1999 into early 2000. And again, in my view, that's gonna happen sometime around 2026 to 2027, March, 2000, started the crash, which lasted until 2002. Um, same scenario. I think that's probably gonna be in the 2027 timeframe. So just to put it into perspective.
What took the AI revolution seven years to go from early expansion to crash, I believe is going to take three years for the AI revolution.
That's like warp speed.
Yeah.
That's just unbelievably fast. Your presentation also highlighted three key lessons from the.com bubble speculation versus substance.
Mm-hmm.
Uh, also, survivor's advantage and innovation cycles. Can you break those down for us?
Speculation versus substance. I mean, really what I would point out here is that we know who the leaders are. You know, there's all this talk about. Who's gonna win the race in ai? And there's talk about that domestically.
Of course, there's also talk about US versus China, but the, the leaders are pretty well known. I mean, we know Anthropic is there, we know X AI is there. We know that that open AI is there. So there's going to be multiple winners in this category. And those winners, at least at this point, have already pretty much carved their niche out.
When I'm talking about survivor's advantage, really what I'm talking about was when the internet revolution bubble burst. You know, at at that point there were a lot of companies, think Google, think Amazon that had gone up exponentially up until that point, and both Amazon and Google, you know, had fairly significant losses during the crash timeframe, but they were still the leaders and they were also the ones that not only recovered.
But continue to thrive up until this day, and again, I think you're gonna see the same thing with a lot of the current AI companies and you know, regarding the innovation cycle. Really what I'm talking about there is when, you know when the bubble does burst, which I'm, I'm a big believer that is going to happen.
And when that happens. You know, there, there are going to be the survivors. By the way, when, when the internet bubble burst about 50% of.com com companies went out of business, wouldn't be a shocker to see that happen within AI either. But what comes out of the bubble bursting is additional and new innovation that happens with new companies that figure out methodologies to.
Break into the AI space, learning from what did not work as the bubble crashed, and I fully expect to see that happen as well.
Following up on what you just said about survivors and innovation, there's a lot of speculation right now about whether we're already in an AI bubble. Yeah. So people look at NVIDIA's valuation or these massive funding rounds and they say, Hey, we're already there.
But you've been doing this for 35 years. Do you think we are in an AI bubble right now?
I don't believe that we are. There's a lot of speculation right now that, you know, the bubble has taken place. The bubble is happening, but. You know, having done this for almost 35 years, you, you get a pretty good knack for when things are starting to bubble.
And a lot of leading indicators is when irrational decisions are starting to be made regarding investments and a rational performance is starting to to happen. And, and that has happened to some extent with a few of the, the large companies, but it's not necessarily irrational because of the market lead and market share that they have.
What gets irrational is when you have startup companies come in immediately getting this escalation in valuation. So I don't think we've hit it yet. I, I, again, am a firm believer. It, it will eventually happen. I, to me it's a given. But, um, we're, we're probably at, at least a year, if not a couple years plus out from the bubble.
Not forming, but bursting, which is the important part.
So if we're not in a bubble yet, that means there's still opportunity. So let's get very practical here. Walk me through the different stages of private equity investing from pre-seed all the way to late stage, and tell me where Destiny Family Office is focusing right now and why.
Yeah. So the points I'd wanna make here is that the earlier the stage of the investing, there's certainly much greater opportunity for return, but there's also significantly more risk, uh, variation within those type of investments. And when I say risk, you know, the risk could be losing some of your money.
The risk could be not making much money, but inevitably with, you know, brand new startup companies that you're investing in the pre-seed, um, portioned or stage of the investment, there's certainly risk of losing all of your money. So. Where are we right now? Right now we're pretty much focusing on the late stage vc, typically series C to pre IPO type companies.
These are the companies that, as I've already mentioned, I believe that we're in a once in a generation moment. We have access to some of these companies that are probably going to be public in the next year or two. Certainly no guarantee that's going to happen. You know, anything could happen that could pivot.
A, a company that's set up to go public in a year or two. There could be a change in governance, there could be a change in ideology there, there could be a number of things that, that take place that have a negative impact. But, um, I do believe a lot of the companies that are positioning themselves, such as Atropic and Data, brick and Open AI and Drill, I think they are really positioning to go public within the next couple of years.
So that's where our focus is right now. I can't say that that will continue to be our focus of investing in, in late stage, pre IPO companies because you know, if we do have a crash, the reality is it probably is gonna make more sense to start investing at that point in some earlier stage. Companies that really have the ability to take advantage of some of the opportunities that are created by this crash.
But as with a lot of things within investing, things go in cycles and, and so we are just at. In my opinion, a perfect point in the cycle for what we're investing in now, but I clearly do think that'll change in the future.
You mentioned companies like Anthropic, Databricks, OpenAI, these aren't exactly companies that you can just call up and invest in.
Walk me through Destiny Family Office's evaluation and execution process. How did these deals actually come to you and what happens from there?
Well, first I should point out that there's kind of a, a tiered process or a trickle down process for how we get our end investments for our clients. So. We get the investments from a GP that we've developed a great relationship with over the years, who in turn gets the investments directly from private equity firms that they've developed relationships with.
So when I talk about the trickle down effect from a investment deal analysis process, the bulk of the analysis is being done by the private equity firms that have a very large stake in most of the investments that we ultimately invest in. Then it goes down to our gp. Who has meetings with the private equity firms and goes over various things such as, as the, the tax components, the deal structure, the financing components, et cetera.
And then it comes to us and we do still do a, a good bit of, of research and analysis on our end before pulling the trigger and putting that investment out to our database. But that's really how it flows.
So the first step is the idea generation. And, you know, through our proprietary network, we do have the ability to, to identify what we believe are generational private companies that are in the late stage for, for growth. And again, free IPO. The second step is more of a deep dive into the company financials, uh, looking at the certificate of corporation, looking at the stock purchase agreement, looking at the schedule of exemptions, et cetera.
The third step is making a decision on if we want to move forward with one of these investments, which is followed by the execution of the deal. The fifth step is evaluating what the co-investment. Capabilities look like. We generally set up a co-investment SPV for the companies that we invest in. And finally, the, the final step is, is ultimately the investment exit.
And, you know, this is something that we track on an ongoing basis. As a generality, there's effectively three options for exiting the investment. The first is the company goes through the IPO process, which if that happens. We are deemed to be an insider of that company, so there's a holding period that we would still have to hold the stock even after it formally goes public.
The second way is through another company purchasing one of these direct investments. So a company like Nvidia or a company like Amazon or Google sees one of these investments as a natural partner for what they're doing. And instead of investing directly in them, they could actually purchase that company.
And the third exit strategy is through the secondary market where, um, we, we, we do have the ability to sell these shares in the secondary market. You know, uh, a warning I would put out there is a lot of times when people want to sell in the secondary market, it's because the valuations are usually lower when people are wanting to buy the assets in the secondary market.
Not as many people are willing to sell.
You talk about that trickle down process from private equity firms to your gp, to you. Mm-hmm. But here's what I'm curious about. There are a lot of firms now offering access to private markets, and frankly, some of them are just middlemen adding fees. So how does Destiny Family Office add value beyond just deal access and what's different about working with you versus many of your peers offering similar investments?
Not to toot our own horn, but I, I do think we have a, a great value add process that we deliver to our client base. We're very opportunistic and evaluate, you know, the attractiveness of the pipeline that we're looking at, versus a lot of companies that I see out there are really just looking to maximize their deal volume.
The second thing is, is we're typically investing on the, the cap. In a single layer, SPV, where a lot of our competitors are doing multi-layer SPVs, which means multiple layers of fees, et cetera. Third is we're typically getting the current valuation at the raise for the company that we're investing in versus having embedded markups in the valuation such as what's happening in the secondary market.
I've got a list of, of the companies that we've invested in year to date, and every single one on that list is trading at a premium in the secondary market. So a lot of times when, when we'll see a, a company that we're offering, there'll be a competitor offering the same company, but it's at a, it's at a significant, uh, increase in valuation in the secondary market.
So as a generality, most of our 2025 investments. Have been made in a market where the secondary is trading at about a 20% premium. We have one company that when we executed on the investment, the secondary market was at an 89% premium. So again, a significant markup. Um, fourth is I think just the overall relationship that we provide.
You know, we're very transparent on what we're looking at from an investment standpoint, how we're tracking it, how we update it, how the valuations are updated. Versus what I've heard from others out there is there really is not a, a good, um, methodology of companies providing updates to the valuation of the companies.
One thing we also do is we make sure that the stock certificates, certificates are verified because there is a lot of fraud in the private market world, and so this helps to avoid that. And then. I think finally, um, you know, really two things. One is we're definitely an investment partner in the deals that we do.
So we're bringing capital to the table for the deals that we're investing in. We've got skin in the game, and I don't always see that. But another thing that I think is extremely important is our fee structure. So we do not charge any front end load. We do not charge any carry. The only way we get paid as a firm is on a carried interest, meaning that there is an execution of a market gain on the holding, and we get a percentage of that gain.
So this puts us on a level playing field. We all want the same thing. We're not benefiting directly from a company that might ultimately lose a hundred percent of the valuation. So I think it's important to in, in any dealing. In, in the investment world that you're working with a company that also has skin in the game on what's being recognized.
You mentioned you're getting investments at the current valuation while competitors are marking them up 20%, even 89% in one case. Yeah. That's unbelievably significant. Mm-hmm. So what are the primary sectors that you're currently allocating capital to in these private markets? And are you following the same tech concentration that we're seeing in public markets?
We're very tech heavy, um, tech and, and ai and, and a lot of sectors that might not typically be considered tech and AI currently are tech and ai. So as an example of that, you know, we're, we're pretty heavy in defense technology. So, um, defense is, is largely rooted around AI right now. Other sectors is, is enterprise technology.
Obviously ai, artificial intelligence. Space technology and frontier technology. So much like what has been carrying the public markets for many of the last several years. The same thing is happening in the private markets. The, the technology, the AI is, is really carrying the market. This will change as time goes on.
And as time goes on, that'll also change the companies that we're evaluating. So, as I've mentioned earlier, we're very o opportunistic in what we're looking at. And I'll, I'll say it again. You know, this once in a generation timeframe that we're going through is leading to us being opportunistic, primarily in the tech and AI area, um, where it can change in the future.
And even some things we're looking at now. Is, I'm a big believer in, you know what Warren Buffet calls the picks and shovels. So you, you've got the companies that are executing the ai, but then there's what are the companies that are going to benefit from that execution? You know, who's offering products, who are going to be needed for the AI companies to be able to execute on what they're doing.
So that's kind of the second tier of investments that we are making and are looking at at this point as well.
Tom, you said you're very tech heavy, defense tech, enterprise tech, ai, space technology, and I'm sure a lot of people are thinking, Hey, this sounds pretty amazing. How do I get in? Yeah, so I, I'd be one of those, but let's be realistic.
Who actually qualifies for these types of investments?
Well, it's a little bit of a loaded question, but from, from our standpoint, you have to be a qualified purchaser to enter into an agreement to invest in these direct investments with us. And a qualified purchaser is defined as a $5 million investment net worth.
Now there are companies out there you can buy some of these holdings on the secondary market, and the the qualifications for that could be less than a qualified purchaser. Many companies have an accredited investor. Qualification and an accredited investor is, instead of a a $5 million investment net worth, it's a $1 million investment net worth.
So it will vary from company to company, but, but to do the, the direct investments that we're doing, we do require a qualified purchaser, um, qualification. And part of that is really for the protection of the investor. And we'll get into. You know, some of the risks that are associated with these investments and why that protection is somewhat necessary.
You mentioned this is partly for the protection of the investor, which is a perfect segue to my next question. Tell me about the risks. Let's talk about that. Okay. What are the main risks of direct investing and which ones do you think investors most commonly underestimate?
So, I, I, I think the biggest risk right off the bat is, is illiquidity.
Um, these are not public investments. They're not traded on the market. Although I've, I've mentioned at least once or twice that I believe the investments, or at least many of the investments that we're making right now are going to have a short run to the potential IPO. That being said, I would still caution anybody even looking to invest in, in the investments we're talking about, that things could change, and I tell people to really expect anywhere between a five and a 10 year holding period.
As a, as a minimum on direct investments. So illiquidity is, is probably the most important risk. Um, aside from that business risk is extremely important. Again, you're often investing in earlier stage companies than public companies, so that creates more risk of a negative experience and potentially even loss of a hundred percent of your capital.
There's valuation risk, and, and, and by that what I mean. Is is not the ups and downs 'cause that's really the business risk. But the valuation risk is the fact that there's no transparency in the market pricing. We generally update our valuations on a direct investment. When there is a new raise that sets a new price, typically higher, but it can be lower.
Um, but that's what we use to, to mark the valuation. But that might happen once or twice a year. So as already mentioned, this is not traded in the public market so. You're not going to be able to track how the performance of these investments are going until there is, you know, some sort of an event that changes that there can be dilution risk and dilution Risk comes from when an editor round is done to, to raise additional money that could dilute how much ownership that you have.
I've already mentioned there could be governance issues, there could be regulatory issues. Um, you know, as an investor you, you don't really have voting rights, so. You, you don't, in, in Vera you don't have any influence on what the company's doing. And then finally, you know, the, the last two is number one, exit uncertainty.
Again, we don't know when the exit strategy's going to happen, and probably a pretty important one as well is concentration risk. So, you know, my advice to somebody new coming into direct investments is to allocate a percentage of your portfolio that you're willing to invest in these more aggressive, more volatile.
Investments and then take that number or that percentage and divide it by eight or 10. Meaning let's just say hypothetically, you wanted to invest a million dollars in direct investments. My suggestion would be to invest between a hundred and $125,000 per deal and do multiple deals over the course of the next year or two.
So you're building a diversified pool of investments? No. One thing that I've learned over the years is that all of these investments look fantastic on paper when you're looking at 'em. But that can change rapidly and it's, it's, you know, the point of diversification is to not have all your eggs in one basket.
And when it comes to direct investing, I certainly recommend that.
Let's talk about portfolio construction for a minute. You just gave great advice about diversifying across eight to 10 deals to avoid concentration risk, but zooming out to the bigger picture, how do you determine what percentage of a client's overall portfolio should be in alternatives?
I know you've developed something you call a bucketing strategy that you've been using for 25 years, so walk us through how that works.
That's a great question and one that gets a lot of press. You know, there's, there's certainly a lot of data out there that supports that the high net worth and ultra high net worth of putting a larger and larger portion of their investment assets into alternative investments in general.
Not just direct investments, but alternatives. And that has held true within our firm as well. And, and even with me personally, we do have a, a strategy that we use for the majority of our clients. It's, it's a bucketing strategy. And so with this bucketing strategy, we're looking at 10 years of potential income needs or, or even if there's no income needs, what's a comfort level for potential needs in the future for the next 10 years, and that, that bucket is invested fairly conservatively, typically fixed income type investments.
Um, there, there can be even alternatives in the fixed income world that that potentially garnish a, a higher potential for return. But nonetheless, we don't want it to be completely correlated to the market. Bucket two is what we statistically evaluate to be 11 to 20 year money. And within bucket two. For a lot of our clients that are in the, you know, 1 million to $5 million range, were typically using a traditional 60 40 type fixed income to stock portfolio for, for this investment for higher net worth clients.
What I like to do here as long as the comfort comfortability for risk is there is, I like to use bucket two for public equities, and then that leaves bucket three, which is money that we're saying statistically this money shouldn't be necessary for the next 20 years. So we have the ability to invest this money, kind of put our, our blinders on.
Not that we're not proactively managing it, not that changes aren't being made, but we have a mindset that this is longer term money so we can. Take the, the ups and downs that are going to come with a, a market that, that moves through cycles over the years. And so, you know, for, for a large percentage of our wealth management client base, this is where we use the public markets and then maybe do some alternative investments in addition to this.
But for our, our, our family office clients, our higher net worth clients, we're really looking at this, this pool or bucket, if you will. As something that could be allocated solely towards alternative investments. And, you know, for what it's worth, that's the strategy that I've taken within my own portfolio.
Um, and, and it, it is dependent upon our client, their situation, their goals, their comfort level, et cetera. So there's no cookie cutter answer, but one thing I've, I've learned, we've been using our bucketing strategy for almost 25 years now, and. I have a saying that strategy trumps performance. And what I mean by that is you could invest in 10 exchange traded funds today and a year from now.
There's gonna be, could be a big divergence in performance between those 10 ETFs, but if they're still somewhat similar ETFs by the end of 10 years, that divergence is going to really close in. There's not a significant difference between ETFA versus ETFB. On the other hand, having a a well thought out, well understood strategy can help make the difference in performance long-term.
But the reason it makes a difference is because most people don't do well investing because of I rational decision making and irrational decision making typically comes from. When the market is doing very, very well, so greed kicks in or when the market's doing very, very poor, so fear kicks in and not having a well thought out proper strategy just opens the door during these times of greed and fear to making poor, irrational decisions.
So again, just to to summarize by having a well thought out strategy, you're not going to be as inclined to make the mistakes that most investors make.
We've primarily been talking about direct investments in private companies.
Mm-hmm.
But you were named InvestmentNews' Advisor of the Year for alternative investments.
Broadly, beyond these pre IPO opportunities, what else are you doing in the alternative space?
Yeah, we're doing an awful lot in the alternative space. Um, I mean, candidly by far direct investments are the hottest, um, investment that, that we're making right now. There's just a ton of demand, especially in the high net worth space for access to these very difficult to gain access to companies to invest into.
But that being said, we do a lot in the private equity side. We do a lot on the private credit side. Um. A little bit out of vogue, but we still do a decent amount in the hedge fund side. So going back to my, my bucketing strategy, you know, the, the hedge funds serve as, as a pool two or bucket two investment for us, because it is hedging the market and protecting something against the downside.
And of course, we've been in a, a long-term bull market run, which means that hedge funds are not going to be as popular because they're not performing as well. But in, in, in our view. That can play an important role in an overall well thought out investment strategy. Um, we're not doing much in the real estate investments at this point, although, again, like all investments, that's cyclical.
So we certainly have done that in the past. And, um, we're also focusing a lot on some of the public companies that have. A, a large mix of private investments inside of them. So that makes up a lot of what, what we're doing on the public side. And then finally, it, it probably is worth mentioning, I do a lot of, of public speaking on collectibles, not only as a, as a passion, but also potentially as an investment.
Um, as many of you know, I'm an avid sports memorabilia collector and, uh, I, I would put the performance on my sports memorabilia up against an awful lot of portfolios out there. So that's been something that we've, we've done a lot of marketing on, done a lot of writing on, done, a lot of speaking on. So that is, is a, a topic of conversation, but really only for collectors that are people that are passionate about collecting.
So that's not something that we're going out to somebody that doesn't have a passion for that in saying, Hey, let's implement some collectibles into your portfolio. Uh, but it is a, it is a fun and, and unique investment strategy.
Well, that really is unique and we ought to do a show sometime on all the stuff you have and how you found it.
Yeah. You know, from a, a standpoint of like building a collection, you know, I got into having these discussions around the collectibles really because of, of the overlay of passion that I have for what I do for business on the wealth management side.
Along with my passion for collecting.
Well, that's really a perfect note to end on. Combining passion with investment strategy. You've given us an incredible look behind the curtain today from your thesis on the AI revolution moving faster than the internet bubble. That's really kind of scary to some people.
To how you're accessing pre IPO companies at valuations 20 to 89% below what some others are paying to your bucketing strategy that you've refined over 25 years.
Thank you Marty. Always a pleasure talking to you. You really appreciate your taking your time.
For our listeners who wanna learn more about the strategies we discussed, you can visit Destiny Family Office at www.destinyfamilyoffice.com.
And congratulations again to Tom on being named Investment News's 2025 Advisor of the Year for Alternative Investments. If you enjoyed today's episode, please subscribe to the Significance of Wealth Podcast. You can find us on Apple Podcasts, Spotify, Pandora, and YouTube. Thank you all for tuning in. I'm Martie Salt. Until next time.
The expressed views, thoughts and opinions belong solely to the host and or guests, and are not investment recommendations or opinions issued by Destiny Wealth Partners or its affiliates. Investment advisory services are offered through Destiny Wealth Partners, LLC, and SEC, registered Investment Advisor.
Destiny Wealth Partners also conducts business under the name Destiny Family Office. Destiny Family Office Podcasts are the sole property of Destiny Family Office and information provided is for informational and educational purposes only. Learn more at www.destinyfamilyoffice.com/disclosures.
The funds discussed are typically for qualified purchasers, defined as $5 million of investment net worth, exclusive of primary residence.