Last week, you saw what can happen when you invest in the right start-ups:
With Elio Motors, investors made 330% in 30 days …
With Zenefits, they turned $1,000 into $500,000…
And with Uber, a fortunate few made 60,000% on their money—turning every $1,000 they invested into $6 million.
But look: the reality is that most of your investments won’t be homeruns like these. In fact, many of them won’t work at all, and that’s OK…
Why? Because in the end, you can still come out way ahead.
You see, being prepared for the “duds” is a cornerstone of the playbook used by professional early-stage investors—and this is the exact same playbook we put in your hands at Crowdability.
This special system helps you earn consistently high returns—while also protecting your downside.
In fact, starting next Monday, this system could help you lock in well-protected average annual returns of 27%.
Beat The Pants Off Warren Buffett
Compared to 330% profits, or turning $1,000 into $6 million, 27% annual returns might not sound so mouth-watering…
But making 27% a year is, quite simply, astounding.
It crushes the stock market’s long-term average—a paltry 6% per year...
And it even tops Warren Buffett’s annual long-term average of 24%.
To put it in perspective, if you had a system for earning 27% per year, you’d essentially double your money every few years.
If you held on for just 10 years, a $50,000 portfolio would turn into $545,000.
And like I mentioned earlier, this system also helps you protect your downside...
Private Market Math in a Nutshell
Professionals don’t just invest in a few early-stage companies and expect them all to be winners…
Over the course of several years, they build a portfolio of start-ups.
At a minimum, they invest in 25 to 50 companies, and some invest in hundreds. The more diversified they are, the more protected they are.
That’s because when it comes to private market investing, it’s not about how many of your investments fail—it’s about how much you make on your winners.
For example, let’s say you invested $100 into 100 different private market deals. That’s $10,000 total.
Based on the historical success rates of early-stage investments, you should plan to lose money on 30% of these investments, and break even on 40% of them.
So far, you’ve been “wrong” 70% of the time. Of your initial $10,000 investment, you’ve earned back just $4,000.
But we haven’t gotten to your profits yet…
You see, statistically speaking, from the remaining 30% of your deals, you should expect to earn about 10 times your money…
That means, based on your hypothetical $10,000 portfolio, your winners should put another $30,000 in your pocket.
So, in total, you invested $10,000, and you made back $34,000. That’s a 340% gain. Over the course of several years, that averages out to roughly 20% to 30% per year.
This is why diversification is so critically important: in order for the probabilities to work out, you need to invest in many, many companies.
It’s like flipping a coin. Every time you flip, there’s a 50/50 chance of getting heads. But just because you flipped heads the first time, there’s no guarantee you’ll flip tails the next. You might flip heads 10 or 20 times in a row.
But if you flipped the coin 100 to 200 times, the 50/50 distribution of heads/tails becomes more and more likely.
With early-stage investing, it’s the exact same thing.
Real World Data Proves The System Works
Several years ago, a not-for-profit think tank called The Kauffman Foundation performed a study on the returns from early-stage investing.
This was literally the largest study ever conducted on the returns of “angel” investing. To build its data set, the authors gathered results from 539 individual angels and 86 U.S. based angel investor groups.
These angels were involved with 1,130 companies. Some were successful, others failed.
But on average, the investors who followed a system of diversifying their portfolios earned 27% annual returns.
And this isn’t based on theoretical “back tests” or a “model portfolios.” These are real investments made by real investors with real cash.
These are real returns.
The Real Power of Early-Stage Investing
And here’s something else to keep in mind:
Even if the math behind the system momentarily “breaks”—even if you lose money on almost all of your early-stage investments...
You could still make far more than you ever thought possible.
To show you what I mean, let’s go back to your hypothetical portfolio of 100 private investments.
Again, you put $100 into each one, for a total portfolio value of $10,000.
Even if your first 99 investments literally go to zero…
If the 100th company is a homerun similar to Zenefits, your $100 investment would now be worth $50,000.
And if you invested in “the next Uber,” that $100 would be worth $600,000.
That’s what makes early-stage investing so powerful and exciting.
It’s Almost Your Turn...
Last week, we told you about 161 start-ups like Zenefits and Uber...
Investments that have already blossomed to be worth at least $1 billion dollars…
Those investments are changing the lives and fortunes of their investors—and now they can change yours.
Starting next Monday, May 16th, when Title III of the JOBS Act goes into effect, you’ll finally be able to start building your private market portfolio.
In the coming days, we’ll show you the easiest—and safest—ways to get started.
Until then…
Best Regards,
Founder
Crowdability.com
