Introduction to Private Investing

Welcome!

I’ve written this article to provide all of the basics you need to know to get started with private investing.

Give it a read, and I look forward to investing with you soon!

Matt

Private investing has historically been reserved for high-net-worth individuals. Only recently, however, has it been democratized so that the average retail investor, like you and me, can invest in the same way.

As with ANY investment, you must understand the investment before you invest any money into it.

That’s why, in this article, I’ll break down the basics of private investing to help you prepare for the new opportunities that are about to come your way!

In This Article, I'll Cover:

• What is Private Investing?

• How Can I Help You?

• How Will It Work?

What is Private Investing?

It’s quite simple and similar to investing in public companies such as Apple, Nvidia, or Microsoft.

By investing money in a private company, you receive a portion of the company's equity. Exactly the same, right?

The only difference is that the companies are not publicly traded, meaning you can’t open Wealthsimple to buy or sell them.

These companies are smaller, newer, and have not yet gone “public” (aka, they have not had an “IPO” or “Initial Public Offering”)

Instead, you have to find these companies, or, these companies find you, hence why these opportunities have typically been reserved for high-net-worth and well-connected individuals.

If the company isn’t tradeable, how do you make money?

Great Question!

This part is a bit different than buying or selling a stock because there are no ongoing transactions.

Here’s how startup investors make money:

1. If the startup is acquired by another business

2. If the startup lists on the public markets, through an Initial Public Offering, ‘IPO’, or a direct listing

3. If the investor chooses to sell some shares in a secondary share sale, or on a secondary market

4. If the startup turns profitable and chooses to pay dividends to shareholders. 

That being said, private investing is much riskier than investing in your traditional stocks or ETFs. In fact, most startups WILL fail.

The reason we invest in them is simple, with higher risk comes higher reward. If you were an early investor in Air BNB or Uber, you’re probably very happy with your decision.

There are a few important things you need…

• Diversification in your private investing

• Diversification in your overall investing (please don’t put your entire net worth into startups…)

• Having an experienced team to identify and vet new opportunities

Point number 3 is where I come in!

How Can I Help You?

To give you a bit of backstory, I’ve been working in the Venture Capital field ( investing in startups), and acting as an Angel Investor for quite some time now, while additionally offering consulting and advisory services to startups.

Why is that important?

1. I have a constant flow of new deals and exposure to new companies

2. I have existing connections with founders and other funds

3. Experience

The team that I work with has invested in 30+ companies over the past two years, with an incredible track record and a team of ex-founders.

We know what to do, and how to do it.

Disclaimer: This does NOT mean by any means that I am guaranteeing you any financial success from these investments. I need to make that clear.

How Will It Work?

With the launch of new platforms like FrontFundr and Angel List, investing in Private Companies is quite simple!

Here’s what you can expect a deal to look like:

1. You’ll receive an email from me, like this one, detailing a new opportunity

2. You’ll receive an information package detailing our extremely detailed analysis of the company, including things like financials, projections, obstacles, the team, competition, market fit, and much more.

3. You’ll then have the opportunity to invest $ into the company if, after your due diligence, you think it’s a good choice for you. Minimums may be as low as $100 (the terms for each investment will vary, but they will be very easy to understand!)

4. You’ll receive updates from me about progress and updates!

Simple enough? That’s my goal.

I’ve had some incredible opportunities and outcomes from investing in private companies, and I want to provide the same opportunities to all of you.

If you have any questions, please leave them in a comment on this thread. The odds are someone else has the same question!

To make sure you receive future emails from me, please move this email to your Primary inbox,

or, REPLY to this email saying “YES”

I’ll be in touch soon! :)

- Matt