Founded in 1972, Sequoia Capital is one of the oldest venture capital (VC) firms in the business.
Headquartered in Silicon Valley’s Menlo Park, its core focus is technology startups.
Sequoia funded some of today’s most well-known companies before they became famous: Apple, Google, Instagram, Oracle, PayPal, Stripe, Yahoo, and YouTube.
And several of its investments have recorded massive returns:
Google’s initial public offering (IPO) turned a $12.5 million investment into $4.3 billion. That’s more than a 344x return.
Facebook’s acquisition of WhatsApp turned a $60 million investment into $3 billion – a 50x return.
Dropbox’s IPO turned three seed rounds (initial funding stages) into an all-in average 467x return.
While these are some massive returns, and the firm has plenty more, here’s the thing…
Top VC firms like Sequoia actually miss way more often than they hit.
In fact, some have win rates of only 10%. That’s right: They strike out 90% of the time. Yet they’re still highly successful.
Today, I’ll explain why… and I’ll show you how to apply this strategy to your own portfolio.
Because in markets like today, private investments are one of the best ways to shield yourself from volatility.
Being a successful pre-IPO investor isn’t just about how many small bets you win or lose.
Instead, it’s all about the average returns of your winning and losing investments.
You see, your win rate isn’t as important as the size of your average winner versus the size of your average loser.
And that’s why VC firms look for private companies with 10x potential upside or more. If they bag just one huge winner, it more than makes up for a string of losers.
The table below explains how the math works…
|Hypothetical VC Portfolio||Investment||Return||Balance|
|Private Investment 1||$100||-100%||$0|
|Private Investment 2||$100||-100%||$0|
|Private Investment 3||$100||-100%||$0|
|Private Investment 4||$100||-50%||$50|
|Private Investment 5||$100||-50%||$50|
|Private Investment 6||$100||-50%||$50|
|Private Investment 7||$100||-25%||$75|
|Private Investment 8||$100||-25%||$75|
|Private Investment 9||$100||-25%||$75|
|Private Investment 10||$100||1,000%||$1,100|
Finding private companies with high upside and letting them run is key to making this strategy work. These home runs will more than make up for the strikeouts.
If you wait until they go public, it’s much more difficult to do. That’s why VCs focus on companies before they have an initial public offering (IPO).
Consider this… When Airbnb, Snowflake, Uber, and Facebook went public, they had already accumulated $20 billion in pre-IPO value.
So not only did pre-IPO investors watch their share prices rise substantially… IPO-day investors paid significantly more for those same shares.
Research by Blackstone and KKR shows that private companies outperform the S&P 500.
Plus, they have lower volatility than publicly traded companies, performing better during challenging times.
So VC investing is the perfect way for investors craving outsized returns to swing for the fences.
There’s just one big problem… Most people can’t invest with VC firms.
Their funds are restricted to “accredited” investors and large institutions. In other words, you’re mostly out of luck if you don’t have at least $1 million in net worth.
On top of that, spending more upfront on IPO day… for smaller returns… limits your ability to spread your investment dollars across multiple ideas.
But thanks to regulatory changes, these firms are no longer the gatekeepers to some of the best deals on Wall Street…
A Recession-Proof Deal Outside the Market
In the past, Main Street investors couldn’t get private shares in Uber, eBay, or Google, even if they wanted to. You had to be a millionaire or an insider.
But a rule change from the Securities and Exchange Commission now allows ordinary investors to invest in private companies before they go public…
And the flood of retail investors has seen firms like Blackstone go from managing about $58 billion from non-accredited investors in 2018… to around $233 billion today.
It’s all thanks to what’s called Regulation A+ and Regulation CF offerings. And often, you can buy into these private deals with minimums of $50, $100, or $500.
In fact, Daily editor Teeka Tiwari and I have identified a private deal that has a chance to not only 42x your initial investment… this company is on the frontlines combating a crisis that will impact millions of Americans and catch them by surprise.
It’s a crisis so big, billionaires like Jeff Bezos, Bill Gates, and Rupert Murdoch have already moved hundreds of millions of dollars outside the market.
They’re buying a recession-proof investment that will help them prepare for what Teeka believes will be a catastrophe of biblical proportions.
Unfortunately, most Americans are in the dark.
That’s why Teeka is holding a special briefing tonight at 8 p.m. ET to help you prepare, too.
During this briefing, he’ll share all the details of the coming crisis… how this private company plans to solve it… and how you can profit from its success.
Again, it’s a chance to make up to 42x your money… with a minimum investment of $500 at 37 cents per share. That’s enough to turn every $1,000 into $42,000.
You’ll also get a free special report just for watching… including Teeka’s blueprint for this coming catastrophe… how to protect your family from the crisis to come… and a free recommendation that could double your money as this crisis plays out.
It’s a chance to park your money in a recession-proof investment just like billionaires Bezos, Gates, and Murdoch.
So click here to reserve your spot and join Teeka tonight at 8 p.m. ET.
The free report alone will be more than worth your time…
Analyst, Palm Beach Daily