OK, so now it’s legal for you to invest in start-ups.
Sounds exciting… but should you invest in start-ups?
After all, this is a new world, and it’s natural that you have concerns.
But if you’ve been hesitating, here’s something that might push you over the edge.
Silicon Valley’s Best Deals
The laws around angel investing started changing a few years ago.
Since then, hundreds of “funding platforms” have popped up to connect investors like you to start-up deals.
One of the best platforms is called AngelList…
Let me show you what I mean:
Investors on AngelList could have backed Uber, one of the most profitable start-up deals of all time. A $1,000 investment in Uber when it was first listed on AngelList would now be worth more than $6 million.
You also could have used AngelList to invest in a start-up called Cruise Automation. When GM acquired Cruise for $1 billion, early investors quickly made 1,011%.
It was a similar story when AngelList offered an investment in Dollar Shave Club:
When the company was acquired by Unilever for $1 billion, early investors made an estimated 166x their money.
These are life-changing investments.
To get access to them, investors used a special feature on AngelList that not everyone knows about…
A Profit Syndicate
The feature I’m talking about is called “Syndicates.”
Syndicates allow individual investors like you to invest in start-up deals alongside professional angel and venture investors.
Basically, after experienced investors vet a deal and put their own money into it, they allow investors like you to join them for as little as $1,000.
Currently, there are over 200 of these Syndicates.
For example, one Syndicate is led by a prominent investor named Michael Jones.
Jones has an impressive track record as an angel investor. His investments include MakerBot (acquired by Disney), DocStoc (acquired by Intuit), and Tinder (IPO).
By joining his Syndicate, you can see all the new deals he’s investing in. And when one catches your eye, you can invest alongside him.
You might think I’m “cherry picking” when I mention deals like Tinder, Uber and Dollar Shave Club.
But as you’ll see in a moment, that’s not the case.
Overall Returns from Syndicate Deals
Last week, AngelList posted the cumulative returns from all of its syndicate investments for the 3-year period from 2013 through 2015.
The annual unrealized returns came in at 46%, with a 2.4x multiple.
That means if you’d invested in every one of AngelList’s Syndicate deals in 2013, you would have more than doubled your money already.
According to Cambridge Associates (a research firm that’s known as the industry standard for measuring venture capital returns), those returns put AngelList in the top 25% of all Venture Capital Funds.
So compared to its peers, AngelList is at the top.
Meanwhile, given the S&P 500’s 11.8% annual returns during this period, those returns beat the stock market by about 400%!
If you’re interested in seeing all the details, you can read more on AngelList »
The Downside
Does this sound too good to be true?
In some ways it is.
First of all, Syndicates are only for accredited investors. So if you don’t have a $1 million net worth or $200,000 in annual income, you’re out of luck.
Secondly, even if you're accredited, it’s difficult to know which Syndicates and deals to back. And if you wanted to invest in AngelList’s fund that handles everything for you, the investment minimum is $100,000.
What if you’re an ordinary investor who wants access to the best start-up deals, but you’re only looking to invest a few hundred dollars into each deal?
Is there an alternative for an investor like you?
Here’s Your Alternative
Ever since the laws around angel investing changed, Wayne and I have slowly allowed a small handful of Crowdability readers into a special program we offer. (If you’re already involved, you know who you are).
This program allows ordinary investors to build a portfolio of the highest-quality start-up investments, just like AngelList’s fund.
But in our case, the minimum investment for each deal is just a few hundred dollars.
Essentially, this program gives a small group of people the chance to make a great deal of money—returns like 100% to 1,000%.
Sometimes these deals are early-stage start-ups, sometimes they’re “Pre-IPO” opportunities.
If this sounds like a good alternative for you, keep an eye on your inbox.
Tomorrow, Wayne will tell you a little bit more.
Happy Investing.
Best Regards,
Founder
Crowdability.com
