Be The First to Find "The Next Big Thing"

By Wayne Mulligan, on Friday, December 6, 2013

Imagine yourself sitting in a high-backed leather chair in an oak-paneled office.

The year is 1905, and the first Ford Model-T’s have started to dot the road.

You live in Detroit, Michigan – ground zero for the automotive industry – and work at a small investment fund.

Entrepreneurs visit you throughout the day, asking you to invest in their projects.

One afternoon, two men come in, one right after the other – Adam and Jack. Both are successful businessmen, and each is passionate about a new business idea.

You listen carefully to each of their presentations, and then spend a few hours doing some thinking. By the end of the day, you call Adam and let him know you’ve decided not to invest in his company.

“But why?” asks Adam. “How could you decide so soon?”

“Well,” you say, “it’s simple. You’re starting a company that makes better shoes for horses. That’s the past. Another gentleman was here today and he’s building a better engine for cars. Horseless carriages – that’s our future!”

Jack was catching a wave – or as we like to say, he was capitalizing on a megatrend.

As investors, not only should we follow megatrends; we should try to catch them before others. This is especially true when it comes to early-stage investing.

Today I’m going to tell you about a megatrend that has us very excited – a trend I believe will play out in both the private and public markets over the next several years, and will allow early investors to profit handsomely.

Urban Problems

Since the 1920s, more and more Americans have left rural areas and flocked to urban areas like New York, Los Angeles and Chicago.

In fact, according to the U.S. Census, the population of urban areas in this country grew by more than 12.7% from 2000 to 2010 alone – outpacing population growth by 33%.

This is a megatrend!

Everything becomes more difficult to manage as urban centers grow – from basics like water and sanitation, to complex issues such as housing and transportation.

As our national debt continues to mount, we can’t rely on the public sector to solve these thorny problems. Solutions need to come from the private sector – and thankfully, entrepreneurs have the passion, and the financial incentive, to try and create these solutions.

Let’s take transportation as an example…

Urban Solutions

Living in New York City spoils me.

If I need a ride home after midnight, there are usually a dozen yellow taxis vying for my business.

A couple of years ago, however, on a particularly cold and rainy night, there wasn’t a cab in sight. So on the recommendation of a business associate, I pulled out my mobile phone and fired up an app called “Uber.”

Uber is a mobile application that quickly connects passengers to drivers. With the touch of a button, a car picks you up and takes you to your destination. The cars are well-kept town cars or SUVs, and your credit card is on file so you don’t have to worry about payment. The coolest part is that you can track the car from your mobile phone’s GPS, so you know exactly when it will arrive – that means you can wait inside a warm, dry restaurant while it’s pouring outside.

Uber is already in many U.S. cities, and is starting to expand internationally. The company’s revenue numbers were leaked the other day and it looks like they’re generating over $1 billion in annual sales – and this is just a few years after the company got started.

This stunning revenue growth might explain why Google invested $250 million into the company at a whopping $3.5 billion valuation. (“Valuation” is the private company equivalent of a “market cap.”)

Uber is a perfect example of a company taking advantage of a megatrend.

Where to Find The Next Uber

But Uber isn’t the only company capitalizing on the urban growth megatrend by attacking the transportation market.

There’s a similar company called Leap Transit – and Leap is currently raising money on AngelList, one of the high-quality platforms we cover on Crowdability.

Simply put, Leap aims to become the “Uber for Mass Transit” by creating a new type of bus service. They’ve already launched in San Francisco, and now they’re looking to expand. The buses are spacious, comfortable, and equipped with internet access. And similar to Uber, you can track your bus on a mobile phone so you don’t have to wait outside in the cold.

We might also mention that we’re attracted to Leap’s simple business model. At $6 per ride, it’s easy to calculate how many commutes it would take to reach a billion dollars in revenue!

Another transportation company raising funds on Angel List is Corral Labs. Corral is differentiating by focusing on shuttle buses – the type of multi-passenger service you might take to the airport.

We also see plenty of opportunities outside of transportation…

We believe urban dwellers will need to rethink everything from how they generate energy to how they find a place to live. And as entrepreneurs create solutions to these problems, investors like us will be presented with significant investment opportunities.

As the urban growth megatrend continues to play out, we’ll continue to bring these new opportunities to your attention.

If we can get in early on the next Uber, the returns could be tremendous!

Best Regards,
Wayne Mulligan
Wayne Mulligan


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