What was the #1 most profitable investment of all time?
Was it Warren Buffett’s investment in Coca-Cola in 1987?
Was it picking up shares of Amazon or Netscape in the 90s?
Or was it something more unexpected?
I recently came across a list of the world’s most profitable, documented investments.
Plenty of attributes make these investments different from one another.
But what shocked me was the one thing they had in common.
Let’s take a look — starting with the 5th-most profitable investment, and counting down to #1.
Investment #5 – Oil the Wheels of Profits
If you’re a student of business history, you might be familiar with the 5th-most profitable investment of all time.
In 1867, Henry Flagler invested $100,000 into John D. Rockefeller’s Standard Oil Company.
By 1913, Flagler’s estate was worth over $75 million. That’s more than $1.7 billion in today’s dollars.
Flagler’s total return: about 700x his money.
Investment #4 – The World’s Biggest Garage Sale
In 1995, back when my Mom thought the “World Wide Web” was a children’s book, an investment firm called Benchmark Capital invested $6.7 million into a “garage-sale” website.
The site, known as eBay, eventually went public, turning Benchmark’s $6.7 million investment into $5 billion.
That’s an astounding 745x return.
Investment #3 – Big Returns from Social Media
But another tech investment performed even better than Benchmark’s bet on eBay.
In 2005, an investor named Peter Thiel bet $500,000 of his own money on a social networking startup for college students.
At the time, he couldn’t have known what that startup would turn into, and what it would do to his bank account.
That tiny startup was Facebook — and Thiel’s $500,000 stake reportedly turned into more than $1 billion.
That’s 2,000x his money.
Investment #2 – Horseless Carriages
Imagine it’s the year 1903. Your energetic young nephew visits you at home to discuss a new business idea.
He’s forming a company with a friend to build “horseless carriages” and needs investors.
Would you have backed him?
John Gray did. His nephew then teamed up with Henry Ford to form the Ford Motor Company.
By 1919, John’s investment of $10,500 had turned into more than $26.25 million.
That’s nearly a 2,500x return.
Investment #1 – The Sweetest Returns
Question: What’s sweeter than a 2,500x return?
A 10,000x return.
In 1891, a gentleman named Asa Candler purchased the formula for Coca-Cola from a Southern pharmacist.
The price? $2,300.
In 1923, Candler sold Coke for $25 million.
That’s a jaw-dropping 10,868x his money.
What These Investments Have in Common
Despite these investments being very different — from oil to Coca-Cola — they each provided a stunning return for investors.
But here’s the surprising common element they shared:
None of them had gone public yet. None of them traded on the stock market.
Instead, every one of these investments was made when the company was still private.
Whether it was a tech company like Facebook or a consumer-products company like Coca-Cola, each one was a private startup.
Perhaps this shouldn’t be so surprising…
After all, early-stage startups can be risky. But with that risk can come outsized rewards.
How To Maximize Returns and Minimize Risk
But you shouldn’t throw caution to the wind.
On the contrary. If you’re going to be a startup investor, you need to manage risk very carefully.
And what’s the most important way to do so?
Diversification.
You can learn more about how to diversify your startup investments in our free report: The 10 Crowdfunding Commandments »
If you haven’t already read it, dive in today!
Happy Investing.
Best Regards,
Founder
Crowdability.com
