How to be a "mini" angel investor with $10,000
August 21, 2020
I want to invest in at least 5 tech startups by the end of 2020. Why? Because I want to be rich.

Jk. Well, kinda. Thanks to equity crowdfunding, you can invest as little as $100 (or less) in early companies.

To give you an example of the power of early investing, Mike Novogratz made $250,000,000 when Ethereum jumped from $1 to $1300.

Sure, this was definitely an edge case, but it goes to show that there's money to be made in the small cap companies.

Going from a $5mil market cap to a $5bil market cap will make you a lot more money than investing in Amazon, who's market cap as of 8/20/2020 is $1.65T. That's trillion. In order for Amazon to 100X, it would have to literally go to the moon ($165T). That's more money than the total market value of all U.S. stocks.

You might be thinking, what kind of return could I realize from investing in early startups? Well, let's do some simple math and make a lot of assumptions.

Here we go: 
  • you invest in $10,000 in 50 companies @ an average $10mil valuation. 
  • 70% of them go to zero
  • 28% of them 2x
  • 1 company is a unicorn (with a 1bil valuation)
  • 10 years to exit
  • No dilution

How much money did you just make?

$10,000*(0.28)*2 + $10,000*(.02)*1000 = $5600 + $200000 = $205,600 in 10 years.

This doesn't take into consideration a lot of factors, but I'm dumbing it down for simplicity's sake. That would roughly be a 30% Internal Rate of Return. Much better than the S&P500's 10% yearly rate of return for the last 90 years.



I plugged in $10,000 @ a 30% interest rate, compounding daily on Investor.gov.

Now that I've convinced you that this is the best way to invest, are you ready to put in some money? :)

Before I finish, I also want to talk about my investment thesis. What do I look for when investing? This will probably change, but here it is at the moment:

- tech companies (no ecom, regulation-heavy, hardware, or lifestyle)
- under $10MM valuation
- something (1 "fatal flaw") is contrarian or off about the company

I personally like the last one the best, because most unicorn companies are contrarian, otherwise everyone would be either a) investing in them or b) starting them.

Further reading: why you should invest in more early companies.

That being said, check out a Mini Startup I made with a friend. It's called Pinetree, and it pulls in all of the active crowdfunding campaigns so you can quickly invest in the top companies. :)

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