How to Turn a 20% Loss into a 3,833x Gain



On May 8, 1945, the second world war ended.

On April 30, 1993, Tim Berners-Lee released the source code for the world’s first web browser.

And last month, on February 2, 2022, another historic event took place.

It will change countless lives and mint countless fortunes.

Wait — did you miss it? Today I’ll explain what happened.

Then I’ll show you how to take part in history.

One Thousand Unicorns

Last month, on 2/2/22, we crossed 1,000 unicorns.

A unicorn is a private company — a pre-IPO startup — with a valuation that exceeds $1 billion. Former unicorns that eventually went public include Airbnb, Facebook, and Google.

But why is crossing 1,000 unicorns such an historic moment?

And more bluntly: why should you care about all this?

The answer is simple…

Table Scraps

Fueled by an endless supply of capital in the private markets, startups have become enormously valuable recently — some might say too valuable.

In fact, some of these 1,000 unicorns are “decacorns” (valued at over $10 billion), and some are even “hectocorns” (valued at over $100 billion).

For investors like you, this creates a big problem:

By the time these companies go public, there’s very little money left to be made. Investors like you are left with table scraps.

Let me show you what I mean.

[Chart] The Biggest Returns Have Moved Elsewhere

A shift has happened over the past few decades:

The biggest financial returns have moved from the stock market, to the startup market. To see what I mean, take a look at this chart:

This data comes from CapitalIQ, the research division of S&P Global, one of the world’s largest providers of data and research.

The grey part of each bar reflects the profits captured by stock market investors. And the orange part shows the profits captured by private investors.

As you can see, for many years, public investors reaped the lion’s share of returns. For example, look at Microsoft (NASDAQ: MSFT). It’s all grey. That means stock market investors captured nearly all of the investment returns the company delivered. And it’s the same thing for stock market investors in companies like Apple, Oracle, and Amazon.

But look what happened after 2004. You can see it in the orange bars. Beginning with Google, startup investors began capturing a big chunk of the gains. And by the time Twitter went public in 2013, private investors were capturing nearly all of the gains.

This explains why Jason DeSena Trennert, managing partner at Strategas Research Partners, a markets and economic analysis firm, has a warning for investors like you who might be interested in investing in IPOs:

“Individual investors are going to get in too late. They’re going to be the last investors in…”

Times Have Changed

Trennert is right: if you wait until the IPO, you’re getting in too late.

But individual investors like you can also get in early

You see, for 85 years, the U.S. government prohibited all but the wealthiest citizens from investing in startups. But because of a new set of laws called The JOBS Act, now anyone can invest in startups — and anyone can put themselves in position to make a fortune.

As an example of this, look at Lyft:

Even after Lyft delivered 20% losses to those who invested in its IPO, a different set of investors made a fortune on it. Those who got into Lyft back when it was a private startup made an estimated 3,833x their money at its IPO.

That’s enough to turn a $1,000 investment into nearly $4 million.

Like The New York Times reported: “Lyft’s I.P.O. was a huge success, just not for investors who bought on Friday.”

How To Get in Early

As you learned today, most of a startup’s value today gets created before it goes public.

That’s why there are more 1,000 unicorns worth at least $1 billion.

To capture that value as an investor, you need to get in early.

Here are three ways for you to get started:

First, check out our weekly “Deals” email. We send this out every Monday at 11am EST, and it contains a handful of new startup deals for you to explore.

Second, check out our free white papers like “Tips from the Pros.” These easy-to-read reports will teach you how to separate the good deals from the bad.

And third, if you’d like to accelerate your success in startup investing, consider signing up for our online course, The Early-Stage Playbook, or for one of our premium research services like Private Market Profits.

Happy investing!

Best Regards,
Matthew Milner
Matthew Milner