I know someone that’s made 110 startup investments — this year.
That’s nuts. It means that, since Jan 1, they’ve made at least one investment every single weekday.
Sure, startups can lead you to huge windfalls. And sure, their returns beat the stock market by nearly 10x. But still, one new startup investment every day?
Today, I’d like to explain why they’d do such a thing.
Then I’ll show you how to get the same result — with a lot less effort!
“Potential for Large Returns”
The investor I’m referring to is called Tiger Global.
Tiger is big hedge fund in New York City. And according to PitchBook, it’s invested in 110 startups this year, including breakouts like Clubhouse, Hopin, and BlockFi.
Traditionally, hedge funds invest in publicly traded stocks, bonds, and currencies.
But as Business Insider reported last week, funds like Tiger have grown increasingly hot on private startup companies.
Why? Simple: “… because of those companies' potential for large returns…”
Hey, we get it…
Like you may have heard us tell you before, Facebook’s first private investor made 2,000x his money. And private investors in Airbnb earned an estimated 100,000x their money.
Furthermore, on average, including the winners and the losers, startups have returned 55% per year over the last 25 years. That beats the public markets by about 10x.
But still — 110 startups this year?
Why not just one… or two… or even a dozen?
Don’t Bet It All on Black
Here’s the key: when it comes to investing in startups, diversification is key.
You can’t just bet it all on black.
To minimize your risk and maximize your potential returns, you need to build a diversified portfolio of startups over time.
But how many investments does it take to be "diversified"?
Let’s take a look…
The Odds
As legendary venture capitalist Fred Wilson from Union Square Ventures (USV) has said, VCs should target 1 to 2 startup investments per partner, per year.
The average investment period for a fund is 5 years, so each partner will make 5 to 10 investments. For a firm with 4 or 5 partners, that's 25 to 50 investments per fund.
So, is 25 to 50 investments a good target for you? As it turns out, it is!
You see, according to Wilson, for every 10 startup investments you make, you should have:
- Seven startups that fail and return nothing.
- Two startups that break even or earn a small return.
- And one startup that earns a massive return.
And it’s with those massive winners where your profits really start to add up.
For example, imagine investing in Facebook, where you could have turned $500 into $1 million. Or in Airbnb, where every $100 you invested could have turned into $10 million.
So, with a portfolio of 25 to 50 investments, even if just 2 or 3 of them turn into massive winners — and the rest go to zero — you'd still be sitting on a portfolio worth millions.
Sitting on a Pile of Money
But if 25 to 50 startups investments is the right number, why has Tiger already made 110 of them this year?
Simple. As The Financial Times reported, Tiger recently decided to pull back on its public stock investments so it could allocate more capital to the market-beating returns of startups.
In other words, Tiger is sitting on a huge pile of money that’s earmarked for startups — and now it needs to spend it!
And as also reported by The Financial Times, Tiger’s breakneck pace has helped it secure a spot in many competitive startup deals. In fact, it often gets ahead of rival investors by approaching hot startups before they start fundraising — and offering big checks with founder-friendly terms.
But here’s where it gets interesting for you…
Forget about trying to force your way into a new startup deal every day…
We know a way you can build a diversified portfolio of high-quality startup deals.
And at the moment anyway, you can do it without much competition at all…
Be a Tiger
You see, because of a new set of laws called The JOBS Act, now anyone can invest in these young, private companies — and anyone can get access to the potential for market-beating investment returns, just like Tiger.
This is why Wayne and I launched Crowdability:
Our mission is to help individual investors like you make sense of (and profit from) this market.
This market is still relatively new, which is why most people still haven’t heard about it.
That’s why there isn’t much “competition” — yet!
Ready to dive in? Here are two easy ways to get started…
Two Easy Ways to Get Started
First, take a look at our weekly “Deals” email. We send this out every Monday at 11am EST, and it contains a handful of new startup deals for you to explore.
Second, check out our free white papers like “Tips from the Pros.”
These easy-to-read reports will teach you how to separate the good deals from the bad.
Happy Investing!
P.S. Over the years, we’ve created several premium services that can quickly help you build a portfolio of profitable startups, even if you have no experience at all.
To learn more, call our VIP Member Services department at 1-844-311-3191.
Best Regards,
Founder
Crowdability.com
