When you don’t have money, it’s tough to get it. And when you do have it, it piles up.
Every other week the rich man’s wealth grows: through rents, bond coupons and dividends. Many income streams, flowing together.
And it doesn’t stop there. Rich investors get special perks.
They get tipped off by their bankers and their friends. They band together into syndicates. Or they make us of special high-net-worth only investment vehicles such as hedge funds, private equity or venture capital.
They even set up family offices — basically miniature wealth management companies — to invest their billions, give to charity, minimise taxes, plan succession, and watch out for opportunities.
First dibs investing
One strategy the rich employ is to get first dibs on the most exciting young companies. Basically, this means that when an amazing young company shows up looking for funding, the rich are the first in line to buy a stake. This is known as venture capital (VC) investing.
For a 22 year old technology entrepreneur with a PowerPoint “pitch deck” and dreams of making billions, there’s only one place to go. 3000 Sand Hill Road, Menlo Park, California. That’s where the VC money is at.
Sand Hill Road is home to the world’s best VC firms. VCs are the technology industry’s money men. They back talented entrepreneurs with millions of dollars in exchange for a stake in the future of their companies.
(Think Dragon’s Den, except with Mark Zuckerberg pitching Facebook instead of a guy pitching edible birthday cards for dogs.)
Here’s how venture capital works: the entrepreneur pitches his startup idea to a VC to get “seed capital”. This is the first round of funding, and it usually comes before the company has made a penny.
When his product gets some traction (and he needs more money) he goes back to the VC for more funding. This is the “A round”. All going well, he’ll come back later for a “B round”. And so on. Each time, the entrepreneur gives up a slice of his company for cash.
It’s a great deal for the entrepreneurs. As well as a tonne of cash they get support, advice and introductions (which is important when you’re a 22 year old software genius who’s barely seen the outside of his dorm room).
A unicorn is a startup whose value has risen to $1bn dollars, based on fundraising (as opposed to the stock market). They’re the ultimate VC success stories. The venture capital industry exists to find the next unicorn.
There was a time when they were incredibly rare – hence the name. Not any more though. Remember the “outrageous boom on Sand Hill Road” I mentioned earlier? The source of – or maybe the result of – that boom is a massive increase in the value of startup technology companies. So now there are way, way more unicorns.
A way in
By definition, unicorn investments are closed to the non-rich. They are owned and funded by the ultra-wealthy.
How wealthy are we talking here? Sequioa, one of the largest VC firms, is raising a fund at the moment whose minimum investment is $250m.
All of which is a bit annoying.
As a private investor with an appetite for risk, and a bit of ambition, you really want to be in on these types of deals. But unless you’ve tens of millions to invest, you’re left out in the cold.
But I’ve found a way in.
I’ve found a way for to invest in the hottest early stage startup companies. What’s more, you get to invest alongside the greatest technology investor of our generation.
So that when the next 20-year-old Mark Zuckerberg type turns up in Sand Hill Road, he’ll effectively be pitching to you.
You get in at the same time as ultra rich investors… and you invest alongside the very best.
I’ve prepared a full report with all the details, to find out more and to claim a copy simply click here.