A few years ago, a middle-aged guy named Jeremy heard about a new start-up.
He didn’t fully understand what the company did, but he thought it had potential—so he made a small investment in it.
Long story short: every $5,000 he invested turned into $1.25 million.
Today, I’ll tell you how he accomplished this feat…
Then I’ll show you how you could do the exact same thing.
Following Lynch’s Advice
Before I tell you more about Jeremy, let me set the stage here by introducing someone whose name might be familiar to you:
Lynch is the famed stock-picker who ran Fidelity’s Magellan Fund.
During his 13-year reign at Magellan, he racked up 29% annual returns. Not bad: that’s enough to turn a $50k investment into $1.4 million.
How did he achieve such incredible returns?
Well, as legend has it, he’d send his teenage daughter to the mall with some spending money. After seeing which stores she bought from, he’d analyze the stocks of those companies and look for hidden gems.
Makes sense. Kids intuitively know “what’s cool” and “what’s next.” They perceive things that the average investment analyst (middle-aged, getting flabby, wedged into a cubicle all day) tends to gloss right over.
But this strategy doesn’t just work for publicly-traded stocks…
As Jeremy discovered, it works for start-up investments, too.
Jeremy on the Hunt
You see, Jeremy is a professional start-up investor.
He spends his days looking for the “next big thing.”
Basically, he invests in tiny private companies with big potential—and aims to cash out when they become wildly successful.
So one day in 2012, when his colleague stopped by his office to tell him about a new app he’d heard about, Jeremy listened eagerly.
Evidently, his colleague’s teenaged daughter was obsessed with a new app.
As the daughter had explained, there were only three apps that every kid in her high school was using on their mobile phone…
And a certain “disappearing photo” app was at the top of the list.
Jeremy had never heard of this new app before, and he didn’t understand why someone would want their photos to disappear…
But if all the kids thought it was cool, maybe there was something there.
To learn more about it, Jeremy reached out to the app’s founder, a skinny college kid named Evan…
And eventually, he convinced Evan to accept a small investment.
Growing Like a Weed
Soon after Jeremy invested, that tiny start-up started growing like a weed.
In fact, it wasn’t long before it became wildly successful...
And last week, it held one of the largest tech IPOs that’s happened in years.
As you may have already guessed, I’m referring to SnapChat (NYSE: SNAP).
Its current market cap is about $34 billion
And Jeremy’s small stake?
It’s now worth $2 billion.
Is It “Cool”?
So as you look for start-up investment opportunities, ask yourself if kids and teenagers would use the start-up’s product.
Better yet, ask your kids or grandkids if they think it’s cool. Ask your nieces and nephews, too.
Keep an eye out for new start-ups they’re obsessed with…
If a young company can figure out how to appeal to kids and teenagers, profits might be waiting for you just around the corner.