How to Turn $300k into $2 Billion!
How to Invest in Startups and see amazing returns:
On the 14th of April 2021, Coinbase made a historic IPO debut at $250.This gave the company a valuation of nearly $100bn. Why is this so significant though?
The most bizarre part of this whole saga is the fact that if you were given the opportunity you could have invested in Coinbase back in 2012 for around $0.15.This is exactly what Angel investor Garry Tan did.
Garry Invested $300k at $0.15 a share making his investment worth around $2 billion today. Ok, we may not all have $300 thousand lying under our mattress but how can the average investor invest into companies early on in order to get the very best deals.
The Basics of Investing in Startups:
Before you start investing in early-stage companies, it’s important to know that a lot of startups fail and leave investors with nothing. it’s a high-risk, high-reward quiet endeavor.
Sometimes, startups allow you receive a refund if a corporation isn’t successful in raising sufficient funds and if they guaranteed the return of your money.
While relaxed regulations have allowed for more individual investors a financial share of startups, there are some rules to follow. Thanks to the risks involved, the Securities and Exchange Commission (SEC) limits what proportion you’ll invest in any 12-month period. This limit might be as low as $2,200 or as high as $107,000 counting on your income and net worth.[0]
The platforms listed below offer a sampling of the avenues available to anyone who wants to take a position during a startup with limited funds. While it’s unlikely that you’ll become a subsequent Silicon Valley billionaire, these platforms can help diversify your broader investment portfolio and provides you the satisfaction of supporting a young company you believe in.
SeedInvest
SeedInvest is a crowdfunding platform that permits individuals to take a position in early-stage companies that are pre-screened for potential viability. SeedInvest states, that 1% of companies that seek funding through the platform are accepted.
The company claims it has more than 250,000 investors, with more than 150 companies successfully funded.[1]
When you check-in for an account on SeedInvest, you’re presented with an inventory of companies seeking money. Many companies are happy receiving investments from anyone, but some require large investments and are open only to accredited investors who had an income exceeding $200,000 in each of the past two years.[2]
When You register you’re given a “pre-money valuation”, total value of funds being sought, and the amount already raised. Each company has its own minimum investment requirement and a time by which the cash must be raised.
If you aren’t curious about investing in only one startup, you’ll build a portfolio of investments through the company’s auto-invest feature. With auto-invest, there’s a minimum investment of $200 and there’s a 2% processing fee for every investment.[3]
SeedInvest touts the importance of diversification, recommending that you simply invest not during a single startup, but a portfolio of up to 25 companies.
Wefunder
Wefunder has a stated goal of funding more than 20,000 startups by the year 2029. It hopes to do this by accepting investments of as little as $100 at a time.
Through Wefunder, the small investor can inject capital into a good range of companies. Last I checked, it had been accepting investments into dozens of companies including a fan-owned entertainment company, a vegan marketplace, a dog cancer cure, and a brewing company.
The platform allows an investor to purchase stock (with dividends or no dividends), convertible notes, or debt. Wefunder has accepted $110 million in investments since 2012, supporting over 300 companies.[4]
When you invest, money is placed in an escrow account. If the firm succeeds in raising enough funds, your investment goes to the startup. Otherwise, you’ll get a refund.
When the investor backs a business financially, funds are placed in an escrow account. If the firm achieves its goal. Your investment goes to the startup. Otherwise, you’ll get your money back.
Republic
Republic is a platform that allows individual investors to purchase a stake in startups. The best part about this platform is that you can invest with as little as $10.
The firm was started by ex-employees of AngelList, which is a popular platform for accredited investors.
Republic states that it runs a four-step screening process.
Step 1:evaluate a company's founders.
Step 2:What is the product.
Step 3:Does the firm has a strong mission and goal.
Step 4:Does the firm have proof of growth.
One thing that sets this platform apart from competitors is the fact that it has 6 varying investment groups which discuss ideas and advice for investors. Members of said groups also invest together in firms.
I really hope you enjoyed the article if you want to leave a clap that would be much appreciated.
If you have any other tips that have helped you deal with finding happiness then please comment below you could change someone’s life.
If you would like to take a look at some of my other work here’s a list of my favorite pieces: