Chris’ note: There’s a way to make generational wealth in the stock market. Wealth that makes not only you financially free, but also allows your kids and grandkids to enjoy financial freedom. The only problem is that for years, this kind of opportunity has been open only to already wealthy venture capitalists (VCs) and private equity tycoons.
I’m talking about buying shares in early-stage tech companies before they go public. As you’ll see today in my Q&A with our tech expert, Jeff Brown, these private deals give you the chance to earn 10x… 100x… even 1,000x returns. And these gains are no longer off limits to you…
Jeff is a Silicon Valley insider and former tech exec who’s personally invested in more than 250 of these private tech deals. And next Wednesday, he’s hosting a special event called the Day One Summit. It’s all about how you can start to profit too.
It’s free to attend for Daily Cut readers. So make sure to RSVP for it here. Then read on below for my conversation with Jeff…
Chris Lowe: I know you have big news for folks interested in private investing. You’re launching a new investment advisory called Day One Investor.
It’s all about how to get in on the best early-stage tech companies before they go public. How long has this new project been in the works?
Jeff: Since I started as an investment analyst, I’ve wanted to open up the world of private investing to my subscribers. So this has really been in the works since I came on board at Legacy Research in 2015.
It’s been a difficult and frustrating journey. Ironically, that’s because of government regulations designed to protect individual investors.
Rules and regulations have largely prevented folks from putting their capital into what I believe is the single best asset class for growing generational wealth – shares in early-stage companies that haven’t gone public yet.
It’s better than any other asset class I know of to make the largest possible investment returns. That’s why I’ve been working to find ways to get my subscribers into earlier- and earlier-stage investments.
I want them to enjoy the same type of capital returns that are normal for high-net-worth individuals.
Chris: Why are there such big returns on offer in private shares?
Jeff: It all has to do with the price you pay to own a company’s shares. You can find the best bargains in early-stage companies.
Take Apple (AAPL). Today, it’s valued at about $2.4 trillion. If you multiply the number of outstanding shares by the share price, that’s what you arrive at. For Apple to double in value… to deliver 100% returns… it has to grow by $2.4 trillion.
Compare that with an early-stage tech company. Let’s say it’s valued at $10 million. Now, you need only $10 million to flow into that company’s shares for you to earn a 100%, or 2x, return.
Imagine that company grows to have a valuation of $100 million. That’s a 10x return. If it grows to a $1 billion dollar valuation, that’s a 100x return. And if it grows to a $10 billion valuation, that’s a 1,000x return on your investment.
At a 1,000x rate of return, you need an initial grubstake of just $1,000 to become a millionaire.
Those types of returns are simply not something you can get with mature, large, publicly traded companies. But I’ve seen them happen with early-stage tech companies. That’s why I’m so excited about the opportunity I’ve found for everyday investors in private shares.
Chris: When you think of investing in private companies, you might picture wealthy VCs and private equity financiers. How is it that regular folks can now invest in this asset class?
Jeff: It’s thanks to recent rule changes by the Securities and Exchange Commission (SEC), the main U.S. stock market regulator.
That’s what Day One Investor is all about. I want to take advantage of these rule changes and find the most profitable private crowdfunding deals for my subscribers.
Chris: What kind of capital will your subscribers need to get involved in the deals you’ll be putting in front of them?
Jeff: That’s the great thing about these new regulations. They’re available to non-accredited investors. [Accredited investors are folks who’ve made at least $200,000 a year for the past two years… or have $1 million in liquid net worth.]
The minimum investment in a crowdfunding deal is usually about $100. This new opportunity I’ve found – it’s not about writing large checks. It’s about writing many small checks.
At Day One Investor, I’ll be recommending small investments in a lot of deals.
That way, we’ll have a greater chance of investing in the real outliers – small early-stage tech companies set to become multibillion-dollar companies. That’s how my subscribers will build generational wealth.
Chris: Why not just wait for a company to go public and buy on the day it holds its initial public offering (IPO)? Isn’t that early enough for most investors?
Jeff: Twenty years ago, that was a good strategy. But that’s because companies used to go public at lower valuations.
Take Amazon (AMZN). In 1997, it went public at a roughly $428 million valuation – a reasonable valuation you could have picked up shares at on IPO day. And that would have paid off. Since then, Amazon shares are up 1,781x.
But the Fed has kept interest rates so low for so long, it’s distorted everything. With so much free money sloshing around the system, companies no longer need to seek funding through IPOs.
Instead of going public a few years after they’re founded, with valuations in the hundreds of millions of dollars, they now stay private for decades. When they do go public, they’ve already hit valuations in the tens of billions of dollars.
One of my favorite private tech companies, an online payments processor called Stripe, is still private. And it’s already worth more than $100 billion.
All these VCs and private equity guys have been hoarding all the really big investment returns for themselves. Then they’ve used IPOs to dump their shares into the market at ridiculous valuations.
It makes me mad to think about. Because it’s another example of insiders treating regular investors as chumps.
The best way I know to fight back on behalf of my subscribers is to even the playing field though these crowdfunding options. My mission is to get my subscribers into the best early-stage tech companies out there at valuations of less than $20 million.
That’s how we’ll stack the deck in our favor. We’ll adopt the same playbook as these venture capitalists and high-net-worth individuals. I can’t wait to get started.
Chris: Thanks, Jeff. I’m looking forward to hearing more about this at your summit next week.
Jeff: My pleasure. If your readers are interested in learning more about this opportunity, they can RSVP for my Day One Summit. It should be a lot of fun.
I really believe there’s no better way to build generational wealth than private investments. At my event, I’ll show more about why that’s the case… as well as my process for identifying the best private deals.
So I hope folks set aside some time to join me next Wednesday, November 17, at 8 p.m. ET. Your readers can reserve their spots at this registration page my team put together.