18% IRR 6 Year Hold - Would you take it?

How good must an opportunity be to attract an investment? What do you/your funds look for to identify a good fit? How does a company find the right investor?

Any guidance or insight is highly appreciated.

Full disclosure: I own equity in a specialty finance company with a focus on auto lending.

2 Comments
 

Not gonna opine on the investment itself, but I will comment on the 18% IRR.S&P historical average is 10-12%, so at 18% you are very likely beating the market (an investment that requires zero effort).

For more context, 18% means you'll double your money in roughly 4 years. So you'll be essentially 3x your initial investment in 6 years. That's approx, check actual math on it.

The only reason I can think NOT to lock-in a 18% IRR for the next 6 years is if you somehow see an opportunity to invest at a higher return in the very near future. Unless you plan on starting a business or have your own VC/PE shop, not sure where you're gonna beat 18%.

 

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