In the spring of 2019, Daily editor Teeka Tiwari and I set out on an ambitious project…
Our goal was to get Main Street investors access to deals formerly reserved for the Wall Street elite and connected Silicon Valley insiders.
And if we pulled it off, we knew we could deliver life-changing gains for our readers.
The deals I’m talking about are pre-IPOs.
An IPO – or initial public offering – is when a company lists on a public exchange like the NYSE. So a pre-IPO deal is when you buy a company before it goes public.
And these deals can be lucrative…
Some of the biggest names to go public in 2020 were Airbnb, DoorDash, GoodRx, Palantir, Snowflake, and Warner Music Group.
Since their debuts, these companies have returned an average of 26.5%. But pre-IPO investors in these companies have seen average gains of 2,184%.
That’s the difference between turning every $1,000 into $1,265… and turning every $1,000 into $22,840.
As you can see, the pre-IPO route offers the opportunity for life-changing gains.
But here’s the thing…
For decades, only the rich and connected were welcome in the pre-IPO playground. Federal regulations walled off those massive gains from ordinary investors like you.
But on April 5, 2012, that all changed with the passage of the JOBS Act. It took years to iron out and implement the law. But the result was a game-changer.
For the first time, publishers like Palm Beach Research Group could write about private deals – often called private placements – and share them with their readers.
Big T and I went to work… and created a newsletter to recommend the best pre-IPO deals we could find to our subscribers.
And we’re proud of the work we’ve done in less than two short years.
So far, we’ve had one pre-IPO deal go public. And it’s surged as high as 263% since we got in before it listed. And another has filed to go public on the Nasdaq this year.
But we’ve come across a niche area in the private market that allows you to get into deals even earlier than the pre-IPO deals we’ve covered so far…
It’s off the beaten path – so you won’t hear about it in the mainstream press. But recent regulatory changes will open the door to a flood of capital in this space.
A Game-Changer for Private Deals
Here’s why the JOBS Act was so big…
It contained a provision allowing non-accredited investors (people whose net worth is less than $1 million) to get into deals previously restricted to Wall Street insiders.
This provision created Regulation A+ deals (called Reg A+ for short). And they transformed the investing game…
Reg A+ deals allow private companies to raise money from accredited and non-accredited investors. So these placements are now coming online.
Before 2016 – when Reg A+ provisions were finally put into place – Wall Street and market insiders had almost exclusive access to these deals. But now, Main Street can finally invest in them, too.
That’s when Big T and I decided to turn the tables… by creating a service that recommends these Reg A+ deals to non-accredited investors like many of you.
And as I mentioned above, our recommendations are already starting to go public.
But there’s another type of pre-IPO that I want to share with you today. It also came about as part of the JOBS Act. But few people have been able to take advantage of them – until now.
They’re called Regulation CF deals. And we believe they could have even more upside than Reg A+ deals. (I’ll get to that in a moment.)
The main difference between Reg A+ and Reg CF deals is the amount of money each can raise.
While Reg A+ offerings can now raise up to $75 million from the public, a March 15 SEC rule change increased Reg CF public fundraising limits from $1 million to $5 million.
This is huge… And the implications are something you won’t hear about it in the mainstream financial press.
With the increase in the funding cap, we’re seeing a surge in high-quality, fast-growing companies pursuing the Regulation CF option. Raising up to $5 million allows them to execute in a way that $1 million simply couldn’t.
Plus, the increase in capital could speed up the time it takes private company to go public. Some of these Reg CF deals are of such high caliber they could quickly go straight to an IPO.
This means investors on these high-quality CFs will be positioned early for massive gains… and their shares won’t be diluted by subsequent fundraising rounds.
The Perfect Asymmetric Plays
At PBRG we find safe, conservative ideas that generate multiple streams of income. Then we put a portion of that safe income into what we call “positive asymmetric risk” investing…
That means you can take a grubstake from your income-generating strategies – say $100 – and potentially stand to make $100,000 or more with asymmetric investments in cryptos or pre-IPOs.
And the numbers don’t lie… Here’s what Teeka said about pre-IPOs back in 2020, when a record number of companies were going public:
If you tally all the companies that had IPOs so far this year, the difference between buying at the IPO price and the pre-IPO price is staggering. On average, gains made on IPO day are 36%. Sure, that’s nice.
But for pre-IPO investors, those same one-day gains are 22,946%. That’s the difference between a luxury vacation and living a life of luxury.
The outsized returns in the pre-IPO market certainly come under the umbrella of “asymmetric investments.” You don’t need too many gains of that magnitude to dramatically move the needle on your net worth.
That’s how venture capitalists invest… they stock up on these types of asymmetric deals – and let time do the heavy lifting.
Take Peter Thiel, for example.
In 2004, he became the first outside investor in Facebook, when he offered up a $500,000 angel investment… By the end of 2012, Thiel had sold his entire stake in the company for a little more than $1 billion.
That’s a mind-blowing 200,000% return on his original investment.
So now that the amount Reg CF companies can raise has been increased to $5 million, we’ll see a flood of capital come into these companies.
In 2020, Reg CF offerings raised about $239 million. That’s huge… But investing advisory firm Crowdfunding Capital Advisors estimates we’ll see double that amount this year.
This trend is just getting started… And I expect the market to double every year for the next three to five years.
Now, Reg CF deals do come with some risks…
For example, once you invest in a Reg CF offering, your money could be tied up for years. And since they’re still private, Reg CF offerings tend to be less transparent than publicly traded companies.
So if you’re looking for company with more transparency or a quick payout, you might want to stick with more traditional investments.
But if you want to invest like a venture capitalist – and potentially turn tiny grubstakes into life-changing gains – Reg CF deals are best idea we know of outside of cryptos.
To get broad exposure to the growing Reg CF trend, consider browsing deals on crowdfunding platforms like Republic and Wefunder. Each platform has dozens of promising companies to explore. And they’re a great place to start.
And remember, always do your due diligence before making any investment. Especially when it comes to smaller Reg CF deals.
Analyst, Palm Beach Daily
P.S. Thanks to the recent SEC rule changes, everyday investors can now take advantage of pre-IPO opportunities like never before…
But Teeka believes another class of asymmetric investments is set to create more than 800,000 new millionaires over the next few years…
And about 99% of Americans have no idea this opportunity even exists… or that they can position themselves now for as little as $10.
Click here for the full story on what Teeka predicts will be “the biggest shift of wealth and power in modern history,” and how you can be a part of it.