(Another) Way to Spot a Profit Opportunity

By Wayne Mulligan, on Thursday, February 11, 2016

Yesterday, Matt told you about an exciting trend we’ve been tracking:

Virtual Reality, or “VR” for short.

Investing in megatrends like VR can lead you to huge profits—but only if you’re able to spot them early.

So in his essay, Matt showed you a dead simple trend-spotting strategy:

By watching where global tech leaders like Google and Facebook are investing their money today, you’ll get the inside track on tomorrow’s “next big thing.”

But there’s also another way you can spot profitable trends early on...

Start Downstream

Instead of analyzing the activity of the biggest tech companies, study what’s going on with the smallest ones:

If you find that a cluster of young “start-up” companies are all focused on a particular sector—and you see that early-stage venture capitalists are jumping in to support it—you might be witnessing the start of a trend.

Take the “daily deals” space as an example...

A few years ago, companies like Living Social and Groupon were all the rage.

At the time, Groupon was literally the fastest growing company in history. Venture capitalists poured billions of dollars into it and billions more into others just like it.

In fact, from 2008 to 2011, wealthy angel investors and venture capitalists put $5 billion into hundreds of daily deal start-ups.

The industry has cooled considerably since then—but that didn’t prevent investors who spotted the trend early from making a killing:

In 2011 alone, over 72 of those start-ups were acquired, enabling their early investors to cash out for quick, huge gains.

A daily-deals company called Savored, for example, was acquired for $20 million just two years after getting started. Another deals company called Woot.com was bought for $110 million.

But that begs the question:

Where Are Venture Dollars Flowing Now?

At the moment, one of the “hottest” new sectors is VR.

For the past three years, deal volume and the amount of capital being pumped into start-ups in this space have been growing steadily:

As you can see from the orange line in the above chart, VR deals per quarter rose from about 7 in 2012, to 25 in 2015.

That’s a 300%+ increase in activity in just a few years—and a clear clue as to what might happen in the future.

But Here’s The Rub...

Like Matt explained yesterday, established tech leaders like Facebook and Google are diving into VR—but you’re unlikely to earn huge profits in this emerging sector by investing in big names like that. Because they’re so diversified, VR won’t move their stock price in the near term.

To ride this trend for big gains, you need to invest in “pure play” virtual reality companies—early-stage private companies that are solely focused on VR.

Historically, only wealthy angel investors and venture capitalists were able to invest in these privately-held companies. But because of The JOBS Act, now you will be able to invest in them.

And beginning next week, we’ll give you the chance to do exactly that:

We’ll show you how to access a specific investment opportunity in VR, one of the hottest new technology sectors. So keep an eye on your inbox...

You won’t want to miss what we have in store for you.

Happy investing.

Best Regards,
Wayne Mulligan

Founder
Crowdability.com

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