How to Legally Trade on "Insider Information"

By Matthew Milner, on Wednesday, November 11, 2015

For more than a quarter of a century, General Mills (NYSE: GIS) has been a winning trade:

If you’d invested $10,000 into the company in 1990 and reinvested the dividends, today you’d be sitting on $217,146.

That’s roughly twice what the overall market returned.

Perhaps those market-beating returns shouldn’t come as a surprise…

After all, General Mills’ brands include “consumer staples” like Cheerios and Häagen-Dazs—brands that people keep buying in good times and bad.

But as consumers increasingly turn to organic foods and smaller specialty brands, General Mills’ business has been going in the wrong direction lately: down.

To start growing again, it’s decided to venture into the start-up world and invest in emerging food brands—in other words, the next Cheerios or Häagen-Dazs.

And now it’s inviting you along for the ride.

Food and Beverage Profits

Before I show you how to invest next to General Mills, first I thought I’d give you a “taste” of the profits that have come from investments in food and beverage companies.

Once upon a time, for example, Snapple was a tiny company based in Long Island, New York. It was started by three guys who knew nothing about the beverage industry—in fact, two of its founders ran a window-washing business.

Fast-forward a handful of years and the company turned into a hot IPO. Eventually, it was acquired by Quaker Oats—for $1.7 billion.

And just five years ago, Chobani was a young start-up that made Greek-style yogurt. Now the company is worth an estimated $3 billion.

Historically, however, food start-ups have been tough to evaluate as investments. (Case in point: why would anyone have thought a bottled tea company run by a couple of window-washers would be a good investment?)

But thanks to a San Francisco-based company called CircleUp, now that's changing.

The Next Generation of Food & Beverage Home Runs

CircleUp is an equity crowdfunding platform—

Like the other platforms we cover here at Crowdability, it connects start-ups that need capital with investors like you who are looking for high-growth opportunities.

But instead of focusing on complicated technology start-ups, it sets its sights on consumer product companies—many of which make foods and beverages.

The start-ups it features typically have at least $1 million in annual revenue. That means they’ve already survived the highest-risk phase of their existence.

And many of these products are already in stores like Whole Foods, so you can go taste or drink them before investing.

CircleUp is a solid company. It has a strong management team, top-tier backers, and it’s already raised a total of $135 million for about 120 companies.

At the moment, it has more than 200 start-ups to explore on its platform…

From Kingmade Jerky, made from premium beef...

To Iconic, a grass-fed protein drink…

To Sonoma Cider, an artisanal and organic hard cider.

But how do you know which ones to invest in?

Follow The Leader

Last week, General Mills announced a new initiative:

A multi-million dollar venture fund to invest in food & beverage start-ups.

Corporate venture funds are nothing new, but the fund that General Mills put together is a first:

You see, instead of hiring a team of analysts and investors to manage the capital, General Mills is partnering with the folks at CircleUp. And over the next few years, the fund will invest in a bevy of CircleUp start-ups.

General Mills believes this relationship will enable it to find and invest in the brands with the greatest potential to become “the next” Cheerios or Häagen-Dazs.

But General Mills won’t just be providing capital and hoping for the best…

Once it makes an investment, it will take an active role in the start-up’s development: it’ll give the start-up access to its invaluable resources—from its world-class R&D lab, to its 150 years of expertise in supply chain management, finance and marketing.

And here’s the best part:

If you’re a registered investor on CircleUp’s platform, you’ll be able to invest in the same exact companies, right alongside General Mills.

A Formula for Success

This is equity crowdfunding at its best:

A high-quality funding platform identifies and analyzes the most compelling start-ups in a specific sector.

Then, an 800-pound gorilla in the same sector does further research, ultimately investing its own capital and resources to help a handful of these start-ups succeed.

And finally, you and thousands of other consumers are invited to invest right next to the 800-pound gorilla—at the same time, and on the same terms.

In a way, it’s almost like “insider trading”—where investors have access to information that gives them an unfair advantage. But in this case, not only is it completely legal, but it’s welcomed and encouraged.

So if you’re interested in investing in start-ups, but get overwhelmed trying to understand complicated technology companies, food and beverage start-ups might be more to your taste.

You can learn more and sign up on CirlceUp here »

Please note: Crowdability has no relationship with CircleUp, or with any of the platforms or companies we write about. Crowdability is an independent provider of education, information and research on start-ups and alternative investments.

Best Regards,
Matthew Milner
Matthew Milner


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