Editor’s Note: We’re throwing a curveball in today’s Money & Markets Daily. We’ll hear from our newest contributor, Matt Milner. Matt is a former Wall Street exec, startup founder, and venture capitalist. Now he runs Crowdability, which helps ordinary people invest in — and profit from — private startups. Keep your eyes on your inbox for ways to follow Matt and his team at Crowdability into incredible startup opportunities. For now, keep reading as he walks you through an idea that’s worth internalizing in this market … Enjoy!
Retire From Just ONE Investment
Last Friday afternoon, before I took off for the weekend, my friend Aitio dropped by the office to say hello.
He wasn’t exactly in our downtown Manhattan neighborhood. But with his 2023 Tesla Model S Plaid (0-60 MPH in 2 seconds), he doesn’t mind traveling.
Aitio used to be a general contractor in Queens, and he did well. As his bank account grew, he started investing in bars, restaurants, and clubs.
But in 2007, he decided to invest in something else instead: private tech startups. And before long, he had some small wins as an angel investor. A single here and a double there.
But a few years ago, he hit a homerun.
Now he’ll never have to work again.
A Simple Investment Philosophy
When I first met Aitio about a decade ago, I asked him to describe his investment philosophy. I’ll never forget his reaction:
He paused to think, stroked his well-groomed goatee, then broke into a wide smile.
“All it takes is one,” he said.
And that’s where he got his nickname:
A.I.T.I.O: All It Takes Is One.
The Numbers Behind Startup Investing
To make sense of Aitio’s investment philosophy, let’s take a quick look at the numbers behind startup investing.
According to Cambridge Analytics, an advisor to institutions like The Rockefeller Foundation and Harvard University, investing in startups has returned an average of 55% per year over 25 years.
That’s enough to double your money every couple of years or so.
But that’s just the average. Plenty of folks, people we know and work with, have done far better than average.
For example, the annual returns of our business partner Howard Lindzon have been measured in the “hundreds of percent.”
What’s the secret to earning triple-digit annual returns?
Let Aitio give you a hint:
All it takes is one.
The Proof
Long-time Crowdability readers will recognize our many stories about investors who’ve hit it big on a single startup investment.
For example, look at Howard’s investment in Uber, back when it was still private. For every $5,000 he invested, he got back $2 million a few years later. That’s 400 times his money.
Then there’s Paul Graham, another startup investor. On his investment in a tech startup called Heroku, he earned 491 times his money.
And when he invested in Twitch, a video-game company, he earned an estimated 573 times his money.
All It Takes Is One
And here’s the thing:
Even if you make dozens of startup investments and all of them go to zero — well, all of them except one…
You could still make a fortune.
Because all it takes is one.
Enough to Retire
Let’s say you invest in 50 startups over the next few years, and you invest $500 into each one.
Based on the historical odds, it’s likely you’ll get a handful of base hits — enough hits to get you to the 55% annual returns we mentioned earlier.
But even if 49 of the companies go belly up — in other words, even if your first 49 investments literally go to zero…
As long as the 50th company turns out to be “an Uber” — the investment where Howard made 400 times his money — that $500 investment of yours would turn into $200,000.
And if you’d invested, say, $5,000 into each startup instead? Your stake would be worth $2 million.
For most folks, that’s more than enough money to retire.
And that’s what’s so exciting about startup investing:
All it takes is one to change your life.
Happy investing.
Best Regards,
Founder
Crowdability.com
