The "Shooting Fish in a Barrel" Investing Strategy

By Matthew Milner, on Wednesday, June 14, 2017

I started working on Wall Street in 1988…

And it was during that very first year that I learned one of the most valuable investing strategies of my life.

Not only has this strategy helped me avoid making some terrible investments…

But it’s helped me earn millions of dollars.

Initially, I used this strategy to invest in the public markets…

But as you’re about to see, it can be used very profitably in the private markets, too.

The Funding Platforms

Over the past few years, there have been some major developments in the private markets.

In particular, in the past, only very wealthy investors could get involved in early-stage private companies. But now everyone can.

It doesn’t matter if you have $1 million to invest, or just a few thousand, for the first time in your life, you can invest in companies before they go public.

You can make a fortune with this style of investing. But here’s the thing:

You can’t buy shares in these private deals simply by calling your financial advisor, or by logging into your E*Trade account…

To claim a stake in a private business, you need to use a special type of website.

These websites are called “funding platforms.”

Hundreds of these platforms have recently popped up across the globe. And many of them have a never-ending supply of deals to invest in.

At first blush, this may sound exciting.

But as it turns out, by investing on the “wrong” kind of platform, you could be putting yourself at financial risk…

Avoid the “Pink Sheets”

To use an analogy you might be familiar with, some of these platforms are like the New York Stock Exchange, and others are like the Pink Sheets.

The ones like the NYSE have strict requirements about which deals they’ll accept.

Other platforms, however, are more like the Pink Sheets. And the requirements to get listed on the “Pink Sheet” platforms are much looser.

In fact, we’ve seen some platforms whose only listing requirement is that a start-up pays a fee. Once it pays the fee, it can be featured online.

For investors, this is a scary scenario — especially for those who are new to the private markets.

And it’s getting scarier every day.

You see, as of last week, there are now 29 funding platforms in the U.S. alone.

That’s up from zero a few years ago, and it’s up from 22 just six months ago.

If these new platforms turn out to be more like the Pink Sheets than the NYSE, sourcing deals from them could put you at serious financial risk.

But this raises a critical question:

How do know which platforms you can trust?

“Shooting Fish in a Barrel”

To answer that question, now I’ll tell you the lesson I learned during my first year on Wall Street:

Only look at deals from sources you trust.

As I learned, if you can follow this lesson, it’ll lower your odds of investing in losing deals — and it’ll increase your odds of getting in on profitable deals.

In fact, once you know what you’re doing, it can be like shooting fish in a barrel.

To leverage this strategy in the private markets, here’s what you need to do:

Only look at deals from high-quality funding platforms!

Three Ways to Identify High-Quality Platforms

To get a sense if a platform is “high-quality,” here are three attributes to look for:

1. Compensation — First, find out how the funding platform makes money.

Does 100% of its compensation come from charging start-ups a listing fee?

Or does it earn part of its compensation in equity, so if a start-up it features becomes successful, the platform can earn “upside”?

If the platform has upside, that’s a good sign. It means it’s financially motivated to feature the best deals.

2. Platform Executives — Check to see that members of the platform’s executive team have professional backgrounds in the private markets.

Ideally, the founders will have backgrounds as professional investors or bankers. But at the very least, they should be former start-up founders who know what it’s like to be in the trenches.

3. Operating History — And finally, make sure the platform has been around for a while. Confirm that some of its deals have completed a full funding cycle, and see if the platform has a history of consistently being able to attract strong deals.

This will help you eliminate platforms that might be looking to take advantage of you — and will automatically help you eliminate bad deals.

Only the Best

When Wayne and I started Crowdability a few years ago, we made the “shooting fish in a barrel” investment strategy a key part of our offering.

That’s why we go further than simply telling you what to look for in a platform, or just providing you with a list of platforms to explore on your own.

We decided to build a proprietary piece of software that would automatically collect new investment deals from only the highest-quality platforms.

And now, every Monday morning, we send those new deals to your inbox.

We also provide you with a free, searchable directory of those opportunities right here on the Deals section of our website »

To be clear, not every deal listed there is worthy of your investment…

But by narrowing down the universe of opportunities to just the top deals from the top platforms, you’ll have a far easier time finding profitable investments.

Happy Investing.

Best Regards,
Matthew Milner

Founder
Crowdability.com

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