Over the past two weeks, we’ve introduced you to the basics of private market investing…
From why you must invest in the private market, to how to set up your portfolio for the best chance of success.
This week, we’re moving onto something even more exciting:
How you can get started making private investments on your own.
Yesterday, for example, Matt revealed a special process — the “A.S.E.” Process — that enables you to identify the very best early-stage deals.
In particular, he introduced you to the second step of that process:
The “S” step, which stands for Screen.
But today I’m going deeper…
Today, I’ll introduce you to the third and final step of the A.S.E. process:
The “E” step, which stands for Evaluate.
As you’re about to learn, by using three simple indicators to evaluate private market deals, you can dramatically increase your chances of profits.
Indicator #1 — A Founding “Team”
Everyone loves a good story about a lone pioneer — someone who conquers an industry all on his own.
But the truth is, most successful companies were founded by a team.
For example, Standard Oil, one of the most valuable companies in history, was built by the team of John D. Rockefeller and his business partner, Henry Flagler.
Google was founded by Larry Page and Sergey Brin.
Even Facebook had multiple founders.
And a number of studies back this up.
For instance, one study showed that companies founded by two or more people grow 3.6 times faster than companies with “solo founders.”
You see, with multiple founders, a young company can get more done more quickly — and that can help provide a profitable return to investors like you and me.
Indicator #2 — A “Balanced” Team
But it’s not enough simply to have multiple founders…
The team also needs to have the right founders.
For instance, if every founder on a team had the exact same skill set, the team wouldn’t be able to divide and conquer.
A team that’s “balanced” — where each founder is an expert at one distinct task — stands a far higher chance of success.
Take Facebook as an example…
Mark Zuckerberg was the technologist and visionary behind the company. But Sean Parker, his founding President, had real business experience. Parker had started and run multiple tech companies in the past, including Napster and Plaxo.
So at Facebook, Zuckerberg focused on the vision and the technology…
And Parker focused on raising capital, and building the company’s team and operations.
This “balanced team” approach was critical to Facebook’s eventual success.
And in this case, too, there’s statistical evidence to back up what I’m telling you:
Studies have shown, for example, that balanced teams raise 30% more money and generate 2.9 times more user-growth as compared to unbalanced teams.
Indicator #3 — Follow the Pros
When it comes to early-stage investing, it pays to know what “the pros” are doing.
In the private markets, the professionals are known as Venture Capitalists, or VCs for short.
VCs spend their days meeting with dozens of entrepreneurs and reviewing hundreds of business plans. And they’re highly selective about who and what they invest in.
In fact, the best VCs invest in less than 1% of the companies they see.
The reason VCs are willing to do so much work and research is simple:
The only way they earn a major payday is to identify profitable investments!
That’s why, if you invest in a deal that’s backed by a professional, you stand a higher chance of making profits.
In fact, studies have shown that companies backed by VCs are 66% more likely to succeed than non-VC backed companies.
24 Powerful Indicators
What we’ve shown you today is just a small sample of the different criteria we look at when we’re evaluating an early-stage deal.
In total, before we make an investment, we look at 24 different data points and indicators.
Doing that much research on just one deal can take a tremendous amount of time. But in the private markets, you might look at dozens of deals every week.
That’s why most active private investors end up hiring a research analyst — or sometimes an entire team of analysts.
Fortunately, we’ve invested considerable time and resources into creating a set of research services that are specially designed for investors just like you.
But to be clear, we only provide our most in-depth research to members of our premium services, CrowdablityIQ and Private Market Profits.
Although we enjoy providing our free readers with education and advice, we need to be fair to our paid members — so we reserve our deepest analysis and official recommendations for them.
If you’re not already a member of CrowdabilityIQ, you can join here »
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