Nick’s Note: When it comes to finding cutting-edge technology that will deliver life-changing gains, few are better than PBRG friend and colleague Jeff Brown, who’s spent his career at the forefront of new technology coming out of Silicon Valley.
In today’s essay, Jeff writes about a new technology that’s completely disrupting the investment landscape…
By Jeff Brown, editor, Exponential Tech Investor
In 1995, Tom Alberg was a venture capitalist (VC) at a new firm that he founded called Madrona Venture Group. At the time, entrepreneurs were establishing companies to harness the industry-disrupting power of the internet. And VC firms like Madrona were looking to invest and profit from the trend.
In May of that year, Tom was asked to take a meeting with a young entrepreneur who had an idea for an internet company.
Tom was skeptical, but he took the meeting.
Tom said he was impressed with Jeff, the young entrepreneur. He thought he was smart and had a solid business plan. While still skeptical, Tom ended up investing $50,000 in a small company called Amazon in December 1995.
We all know what happened next…
Amazon went public on May 15, 1997. At the time, its enterprise valuation was $438 million. It had $147.8 million in revenue that year and generated a mere $2.7 million in free cash flow the following year, in 1998.
Last May, Amazon had its 20-year anniversary as a public company. Have a look at what’s happened over the last two decades:
On a split-adjusted stock basis, Amazon rose from $1.54 per share in 1997 to where it’s trading today—around $1,660 per share. That’s around a 1000x increase.
And as for Tom Alberg… his $50,000 investment granted him ownership of 195,000 shares of Amazon during the time of its IPO. Those shares today, after several stock splits in the late 1990s, would be worth a little over $4 billion.
I tell you this story to illustrate a simple fact… Early investors in disruptive companies like Amazon were able to make life-changing gains.
And as remarkable as it sounds, that is precisely the opportunity that investors have today…
But it has nothing to do with IPOs. Instead, there’s a brand-new way to go public.
A Dramatic Change
This revolutionary method of financing early-stage technology companies is called an initial coin offering (ICO), rather than the traditional initial public offering (IPO).
You may have heard the term “ICO.” Put simply, while an initial public offering gives investors equity in a company in the form of shares of stock, an ICO awards investors with digital “coins,” or cryptocurrency, created and issued by that company.
Now, I know that might sound like creating money from thin air. But in reality, it’s no different from how a company issues shares of stock.
In the case of ICOs, the coin serves as shares in the company. But what makes them special is that investors don’t have to wait for these companies to go public on a stock exchange.
The key thing to understand is that the way the company’s value is reflected in the market is the same. If the value of a company that you hold increases, what happens to the share price? It goes up. The same is true with digital assets.
It might sound as if this is too good to be true—perhaps a bit like a scam. While there are definitely some scam ICOs, there are also many high-quality projects led by strong executives and technologies that have incredible promise.
Raising capital through an ICO effectively replaces four or five years of fundraising that the average technology company would have to go through… in one fell swoop.
It also solves what’s known as the “bootstrap problem” in the industry. This is when it takes years of tireless effort and scraping by for companies to hopefully build scale in their business so that the network effect can kick in.
And then there’s the investment potential…
ICOs provide the investment potential that companies like Amazon did back in the late 1990s.
For reference, have a look at what happened with NEO’s ICO…
After it was issued on September 30, 2016, it went up more than 89,000% in about 18 months.
Or have a look at another recent ICO, Lisk:
Lisk reached peak gains of more than 34,550% since its ICO in March 2016.
As you can see, there’s a striking difference between ICOs today and IPOs of the late 1990s.
Unlike an investment in Amazon in 1997, you won’t have to wait 20 years for your incredible investment returns. The rate of technological change and innovation is happening at an exponential pace right now—faster than ever before—and it’s accelerating month by month.
New technologies can be deployed and grow quickly into multibillion-dollar businesses in as little as a tenth of the time… That’s right, just two years instead of two decades.
Even better, the rate of ICOs is accelerating.
Take a look at the chart below…
As you can see, in 2017, there were 884 ICOs raising a total of $6 billion. That dwarfs the number of IPOs that same year—160.
Also consider that the total funds raised by ICOs in Q1 2018 has already reached $6.3 billion. That’s nearly 20% more than what was raised in all of 2017… and this only represents three months of the year.
I expect we’ll see $15–20 billion raised in total from ICOs when this year is finished.
It’s clear to see—this is a trend that’s growing exponentially.
The Bigger Picture
ICOs are presenting the same kind of moonshot, once-in-a-generation opportunity that companies like Amazon did back in the ‘90s.
But what’s even better is that now anyone has the chance to capture the returns that were once reserved for venture capitalists and institutional investors.
That’s not to say that you should go out and start buying every ICO you see. Like I mentioned before, many of them aren’t up to snuff. Investors who don’t do their due diligence will get burned.
But even so, the financial status quo that’s plagued the small investor for close to three decades is transforming before our eyes.
This is something you’ll definitely want to keep on your radar.
Editor, Exponential Tech Investor
P.S. Part of my research service, Exponential Tech Investor, is dedicated to finding and vetting the best of the best ICO projects in the market. These are the projects that will deliver 100x returns in the years ahead.
My readers have already had the chance to invest in four of these ICOs, with several more popping up on my radar in just the past few days.
You can learn more about how I personally vet these projects, and how to get a few promising names in your portfolio, right here.
I think the BIS has no right to be critical about anything except itself. It was set up in secret, had a very dubious role in the Second World War, and the reasons for its establishment are now gone. The BIS is obsolete and knows it. What you see is another struggle to survive. It succeeded before and probably will succeed again because people forget about history and stopped thinking for themselves.
Chinese buyers have sent bitcoin and other cryptocurrencies to unbelievable heights… with some like NEM up 8,662% in just months.
But China now controls a second rare resource that’s poised to make Americans 10-times their money—bare minimum—in just months.
It’s easier to buy than bitcoin or any crypto. No online wallets needed. Just a regular brokerage account will do. Takes about 3 minutes…