Investing Secrets of the Ultra-Rich

By Wayne Mulligan, on Thursday, January 6, 2022

I received interesting feedback to my article last week

If you recall, I shared some wisdom from Fred Wilson, one of the top startup investors in the world.

Wilson is a venture capitalist. That means he invests in startups for a living. More specifically, he manages what’s known as a venture capital fund.

As it turns out, many of your fellow Crowdability readers were curious about these funds. They wrote in asking for more details — specifically, they wanted to know how they could invest in a venture capital fund themselves.

Well, as I’ll explain today, historically, these exclusive funds have been off-limits to almost everyone except the ultra-rich.

But not anymore…

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. Startups, on the other hands, 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 Amazon 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, the minimum investment to get into a venture fund is generally six figures, and often it’s more like several million dollars.

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 discover that your fund manager made a horrible investment in that exact 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 over time.

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?

What if you could put yourself in a position to earn the potentially life-changing returns venture capital funds have to offer…

But with none of the drawbacks like high investment minimums or high fees?

Well, now you can…

And next Wednesday, Matt will show you exactly how to do it.

So stay tuned!

Best Regards,
Wayne Mulligan
Wayne Mulligan


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Tags: Startups Mutual Fund

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