Investing in Private Startups Could 1,000X Your Money… Plus, One Deal to Get You Started

We are entering one of the best years on record to invest in private startup companies… and these days, you can get in with as little as $50.

There are more opportunities than ever to make a potential fortune off the next Google, Amazon, or Facebook, completely separate from the public stock markets.

And in my opinion, the next wave of tech giants probably isn’t too far away…

In fact, I believe it’s kicking off right as we speak.

You see, before Google, Amazon, and Facebook were the behemoths they are today, they were little-known startups operating out of garages and dorm rooms.

The founders behind these startups – not to mention Apple, Uber, Pinterest, Twitter, Spotify, and many more – were visionaries and innovators who used courage and skill to solve some of humanity’s biggest problems.

But way before they were legends, these founders and their companies shared one thing in common:

They needed infusions of capital from angel investors to bring their visions to life.

The earliest investors in those enterprises – the ones who got in right at the very beginning – made out with life-changing gains unlike those found in any other investment class. Here are some examples…

The angel who wrote Spotify’s first check saw his investment grow by 133,765%. Pinterest’s angel investors cashed out with 583,264% gains. The list goes on and on. In fact, most of the world’s leading companies have also served up stunning returns to their early investors.

These gains are especially impressive when compared to the returns of those who invested on IPO day.

Check it out:

Today, innovation from startups hasn’t slowed down one bit.

There are more “unicorns” – startups valued above $1 billion – than ever before. As of right now, there are almost 500 of these unicorns raking in cash around the world… and funneling those profits straight into their investors’ pockets. Altogether, they have a combined value of around $1.5 trillion.

As the years go on, these numbers will only get higher.

Each year, millions of ambitious entrepreneurs start new businesses, many of which have the potential to skyrocket in value and deliver life-changing windfalls to their earliest investors… their angels.

Now, here’s why this is so important for you to know right now.

Up until 2016, the world of angel investing was reserved for Silicon Valley’s high and mighty… aside from needing all of the intimate connections and a tight-knit network of CEOs, VCs, and billionaires, you also needed to be an accredited investor – meaning you needed a net worth over $1 million to be an angel.

But times have changed. The JOBS Act of 2016 opened the doors for everyday investors to participate in private equity deals. Today, you can get in the game with just $50. Of course, you can invest much more too – it’s all about what you’re comfortable with.

Right now, the next Zuckerberg, Bezos, or Jobs is hustling hard to get their big ideas off the ground. And sometime down the line – whether that’s within the next year or the next decade – they’re going to call on people like you to help make their dreams a reality.

That’s exactly why private equity is where fortunes will be made in the next few years… and that fortune is no longer reserved for only the upper echelons of the investing world.

We’re getting in now. Are you going to join us?

To start, let’s discuss everything you need to know before making that first life-changing investment.

What Is Angel Investing?

Angel investing is one of the best and most reliable ways to make money.

But when you do a quick Google search for “angel investing,” you’re overwhelmed by more than 36 million results – none of which are able to start at the very beginning and personally walk you through the process. So today, let’s cover what angel investing really means – for you AND the founders you’ll be working with.

First off, an angel investor is a person who sees the potential for greatness in an early-stage startup – think Zuckerberg in his dorm room – and throws in that first real investment, or seed money, to help the business grow.

Now, this is all happening before a company goes public. That means you’re not going to be buying shares on the Nasdaq or the New York Stock Exchange. Instead, you’re going to be buying directly into the company itself. (We’ll go over the mechanics of that later.)

As an angel, you’ll be getting in way before typical investors. That means two big things for you…

You’ll have a chance at way bigger profits than someone who waited until the company went public to buy stock. In fact, when everyone else is flooding in, we’ll be making our exit and cashing out.
You will have the opportunity to make real changes and a real impact as a company develops. Imagine buying shares in Tesla right now. Do you think Elon Musk is going to invite you to the boardroom? No way. But as an angel, you have a direct line to the founder – you have influence.

And the private equity market itself is exploding – there are record levels of capital being exchanged. In 2019 alone, investors poured $888 billion into private equity (all while the number of publicly listed companies continues to decline year over year).

With that much money coming in, even a small chunk of it could change your future. And you can get in on it all with just a small investment of your own.

But before making your first move, you need to know exactly which companies are worth your while.

The 10 Characteristics of a Perfect Startup Company

When I first got started in angel investing, I made a lot of deals based on my gut alone.

Gut instincts are important. Sometimes they even work. But angel investing isn’t a crapshoot. The more investments I’ve made, the more I’ve realized that strategy is just as important as intuition.

Some of those early leaps of faith did turn out to be winners. After all, angel investing is a “hits business,” and the more investments you make, the more likely you are to score big.

But switching to a more logic-based system – and making more informed “hits” – has greatly benefited my bottom line.

Now, I only invest in and recommend startups that meet every one of my criteria. I’m not here to throw money away – and neither are you.

Throughout my career, I’ve heard pitches from a lot of people. Some were good, a few were excellent… and a lot were just plain lackluster.

Now that you’ve started, it won’t be long before you know what I’m talking about. There is no shortage of ideas out there – in fact, more than 100 million startups are launched worldwide each year.

That’s about three new businesses per second! It can be overwhelming, especially when every founder is maxed out on passion.

But here’s the thing. Not every great idea is one that’s worth your money. You need to hold out for the companies that are actually going places… and you need to use a solid set of criteria to narrow down your search.

Here are some of the criteria I use to help me choose the potential winners…

1. I only invest in startups with a big total addressable market (TAM).

Think about it. Say you’re looking at a startup that solves a small problem in a huge market – like the e-commerce industry, which is projected to hit $735 billion in just a few years.

The odds are small that a tiny startup will dominate that massive space overnight. But say that they harness just 1% of that market…

Well, a small piece of a huge market is still a huge piece. Because 1% of that massive market means $7.35 billion straight into our startup’s bottom line.

2. Another thing I like to see is revenue in the bank.

A business that hasn’t made any money yet is basically a shot in the dark. I don’t care if it’s $500 or $50,000 – revenue in the bank tells me that there are customers out there willing to pay for their product.

3. I prefer to invest in startups with more than one founder.

The ideal number is two. Two co-founders can get more done while using less capital than one can. A single founder will inevitably need to hire out help. But more importantly, a team of two or more shows me that the original founder isn’t just a crazy person with a big idea who couldn’t convince a single person to get on board.

4. Invest in founders who have a solid track record.

It’s always a good sign when the founders of a business have a history of building successful companies. I have way more confidence in an entrepreneur who has already steered a startup to an exit than I have in a first-timer.

5. Look for startups that solve a specific problem.

The most successful businesses out there are the ones that solve urgent problems. We call them “painkillers” – people need them and would suffer without them. A product that solves a real problem is generally on a path to success. It’s even better if customers find that they can’t live without it.

6. My ideal investment prospect is a product that can scale without spending a lot of money.

A great example of this is software. When a software company grows and starts selling more of its product, it probably won’t need to hire a proportional number of new employees. All they really have to do is distribute more copies of the software online. On the flip side, consider a tutoring business – for every new batch of students that you take on as clients, you’ll need to hire another tutor. That’s poor scalability.

7. I like to invest in businesses that I understand.

I do make exceptions to this rule sometimes, especially when the founders have an amazing track record. But generally speaking, I like to stick to what I know. First of all, it helps me make better-informed investing choices; it also gives me more of an opportunity to help out if the company needs my skill set down the line.

8. Look for companies that have the intent (and ability) to scale globally.

This one’s a no-brainer. Under 5% of the world’s population lives in the U.S. If a startup isn’t at least planning to go global, it’s missing out on 95% of the profits.

9. Find out what other people think about the founders and the product.

Every founder you meet will tell you that their company is going to be the next Airbnb or Uber. Most of them probably even believe it. But what really counts is what other people – the potential customer base – think. Ask as many people as you can what they think of the product or service. Would they use it? Would they pay for it? If so, how much?

10. Take a good, hard look at the deal terms before you sign anything.

Deal terms basically amount to the contract you’ll be signing if you decide to invest. These terms lay out exactly what your dollars will get you – think equity, convertible notes, and so forth. Read them carefully and, if you can, have your legal counsel read them too. You’ll want to make sure you’re getting in at a valuation that’s best for everyone. But don’t let minor technicalities keep you away from a life-changing deal. Terms won’t always be perfect, and that’s okay.

There are plenty of other things you should keep in mind when you’re scouting for deals – and of course, there are always going to be exceptions to some of the rules I listed about.

But remember… always pay attention to your gut instinct. After all, if everything looks great on paper but you find yourself feeling uneasy, you should trust your instincts. Never get into an investment that doesn’t thrill and excite you.

Still, that’s rarely the problem. Much more common is the scenario in which a novice investor is so starstruck by the wonder and opportunity that “startup-land” presents that they rush into subpar investments at first. Startup founders know this too – that’s why so many of them will try to tell you to get in now or risk missing out!

Don’t fall for that old trick. Instead, try riding on the coattails of experienced, successful angel investors. It’s a simple strategy, but it works.

And luckily, I have one deal recommendation that could put you on the road to a 1,000X return right now…

Introducing Stojo, the company working hard to end “disposable culture” with a line of convenient, attractive containers made from recycled materials… all while raking in over $15 million in revenue.

(For our full research report on Stojo, click here.)

Stojo’s product line includes collapsible coffee cups in four sizes, plus a 20oz water bottle that’s perfect for a grab-and-go lifestyle. They’re also getting ready to launch a line of food storage containers, starting with a collapsible salad bowl.

Stojo is one of the companies currently in the Angels & Entrepreneurs model portfolio. I wanted to share it with you today because it’s a perfect example of exactly what you should be looking for when scouting your own deals.

But what makes this company so special? Let’s run through the checklist…

It’s solving a critical problem in a massive total addressable market.

Every minute, people purchase approximately one million plastic bottles… only 23% of which are recycled. In 2018 alone, the United States produced 35.7 million tons of plastic, or 12.2% of the world’s total plastic production. And each year, over 500 billion disposable cups and 78 million tons of plastic packaging ends up in our oceans.

Because of this, food and beverage supply companies around the world have taken a more sustainable approach to designing their products. In total, global sales of food service packaging are expected to hit $31 billion by just 2027, with industry growth driven by a move toward more environmentally friendly packaging solutions.

Stojo is a market leader in the trend toward sustainable food and drink storage products.

Their products are recyclable, reusable, and sustainably made. Currently, Stojo’s products can be found in stores like Anthropologie, Whole Foods, Urban Outfitters, Starbucks, and more.

Stojo products are sold in over 40 countries right now, and they plan to launch three new product lines: food storage, kids’ containers, and containers made from recycled ocean plastic.

The company has brought on high-profile investors from The Seed Lab and WeWork. They’ve also been featured by companies and publications like Goop, Bazaar, and Conde Nast. Stojo is ranked at number 245 on the Inc. 500 list for 2020.

Not to mention, they’ve already raked in millions of dollars in revenue.

Stojo has sold $15 million worth of products, all while only raising $1 million to date. In 2020, the company’s U.S. revenue grew by 97%, and they were profitable in both August and September.

The company reports that as they continue to expand, they’ll be able to lower the cost of production per unit… meaning this is a company that’s capable of scaling well.

All in all, it’s clear to see that Stojo is truly in the big leagues here. To sum all of that up, I’ve compiled all of Stojo’s information into a handy little chart:

Now, Stojo represents just a sliver of all of the opportunities available to you right now in the world of startup investing.

My free newsletter, The Startup Investor, is a great place to continue scouting everything else you’ll need to be successful in startup land.

Alongside Angels & Entrepreneurs advisory board member David Weisburd (a New York City venture capital superstar), I use this newsletter to highlight the hottest startups, dig deeper into the biggest stories from Silicon Valley, and let you in on all the tips and tactics private equity’s most elite members don’t want you to know.

And if you want to take things to the next level, you can tap directly into our deal flow by joining the Angels & Entrepreneurs Network. Not only will you receive two fully-researched startup recommendations per month… You’ll also gain access to tons of special reports, exclusive videos, founder interviews, local chapters, and so much more. Just click here to learn how you can take advantage.

I’m thrilled to have you on board

Cheers,