The ultra-rich are obsessed with investing in venture capital funds.
After all, such funds can make their investors even richer.
Unfortunately, as Wayne started to explain last week, many hurdles are keeping investors like you out of this lucrative asset class.
So today, I’ll throw some light on these hurdles…
And then I’ll show you how to get around them!
Like a Mutual Fund… But for Startups
To back up for a minute, let me explain what venture capital funds are.
Venture funds are professionally managed portfolios of startup investments.
They’re like mutual funds or ETFs… but instead of containing a portfolio of public stocks, they contain a portfolio of private startups.
In both cases, diversification — i.e., having a portfolio of investments — is key. But it’s especially important with startups. Generally speaking, startups are riskier than stocks. So to minimize your risk in this asset class, you truly need a portfolio of them.
But it’s worth it…
You see, the profits from startups can be far higher than the profits from stocks…
Historically, stocks have returned an average of about 6% a year. But startups have returned an average of about 55% a year.
In other words, startups have returned about 10x more than stocks. And if you happen to get a Google or Facebook or Biogen in your startup portfolio, you could earn hundreds or even thousands of times your money.
Unfortunately, getting into a venture fund is easier said than done…
The Challenges with Venture Funds
For example, as Wayne mentioned last week, the minimum investment to get into a venture fund is generally six to seven figures, and often far more.
So at a bare minimum, it’ll cost you $100,000 just to get your foot in the door.
But that’s not the only hurdle. Here are a few others:
Fiercely Competitive: Because of their stellar performance, getting into a venture fund is no easy feat. Unless you have a connection to someone on the inside, there’s almost no way you’re getting in.
Along for the Ride: With venture funds, you have no say in how your capital is invested. You might have decades of experience in a particular industry, and you might discover that your fund manager made a horrible investment in that sector. But there’s nothing you can do about it. You’re just along for the ride.
The Fees: And finally, there’s the fees. Not only do fund managers take a 2% management fee each year, but they also take 20% to 30% of your profits. That could add up to hundreds of thousands of dollars — money that could have been yours.
So, sure, venture capital funds offer huge upside…
But not only are there challenges getting into one in the first place…
But even if you could get into one, there’s plenty of downside.
All the Upside, None of the Downside
But what if you get all the positives of a traditional venture capital fund…
With none of the negatives?
And tomorrow, Wayne will tell you exactly how.
So stay tuned!