VC Investing As an Investment Banker
My best friends works at a VC firm in Cali and he sent across the DD for a potential investment. This is a very small fund in Cali that has been growing significantly over the past 2 years. I'm also very close with the founder and he's willing to let me put my own capital in play. I followed up on this and looked at the numbers, talked to the founding team, and sat in on a few meetings. If I could, I'd probably provide 100-150k of funding, but I'm concerned about the regulatory hurdles. Does anyone have any insight they could share? Mainly concerned about the legal side of this and will probably retain a lawyer later on.
Dear god 100-150K? If you can afford to lose that much, drop it on crypto and retire a multimillionaire in 5 years
Or the entire crypto market could be wiped out before then. I have 0 expertise in crypto and much rather stay away from it. On the other hand, VC is a safer investment. I’m investing in something tangible, a product, the management team, or even an idea.
Fair enough. I don't know the total size of your investment portfolio, but 150K in one startup seems a bit concentrated nonetheless.
I agree. I can’t really invest in individual stocks, but I timed the market rebound pretty well last year and went all in on SPY thereafter. Accounting for my bonus (~110k) plus ~40k in savings, and 180k profits from investing, I’m not too concerned. This doesn’t mean I won’t do a lot of due diligence, but if the startup fails, I still have a lot of time to bounce back. This could be my way out of IB, and if everything goes as expected I can focus a bit more on investing which is my true passion.
It’s $100k. Who cares if it’s wiped out. Your downside is 100%. Your upside is 10000%
Following because I'm in a similar position, but the cheque size I'd be willing to cut is quite small compared to yours..
The one thing I will say is that there are a lot of firms that facilitate angel investing for professionals, and I vaguely know a couple of bankers who are involved through this. From that, I'd say it's possible but if my experience with our internal compliance means anything, then I'd say it really isn't worth the headache
They really want us to continue slaving away don’t they?
Depends on your firms policies, but generally as long as you disclose it through compliance you'll be fine. I will say though, I think you are vastly overestimating the chance of success and would try to approach this with a smaller check size if you are able. VC strategy = Babe Ruth.
Crypto as a whole market is a scam - just focus on Bitcoin and Ethereum
Nobody cares about the boomer coin that Bitcoin is, it's only pumped by institutions whose clients FOMO hard
You seem to know a lot from crypto from your posts. What would you seriously recommend to someone trying to jump in? I don’t need huge returns I have a decent amount of capital I can deploy and definitely want my downside protected. I was perhaps looking into some tokensets that are actively managed which seem to hedge well, not sure if this the right direction to look in?
However I would say I have a good feel for the market. The crypto market however is full of scams so I would only focus on the big players like bitcoin ethereum cardano litecoin etc. You can value bitcoin by the stock to flow method, or a multiple of electricity used in dollar usage, or looking at what percent it could take from the gold market (recently over last ten years gold has returned O% by the way). I can’t guarantee returns but I think it’s safe to say at this stage put an amount of your portfolio no greater than 10% If you want to be conservative. Heck just put 100 dollars into it and get your feet wet. The way I think about it is we are like in the third innings of crypto (coins mentioned above) with the tenth inning being full price discovery. I say third inning because <10% of the population is invested in it. Bitcoin is digital gold, ethereum is smart contracts, dodgecoin (hard to really say on this one but I think it’s acting just like a better version of cash). Just do your own research and read around and think how is this benefitting not just me but people all around the world. Also don’t be swayed by celebrities and try to formulate your own opinion. If you can’t handle the volatility then I would say do not invest but if you have extra cash lying around and want an uncorrelated asset class (for the most part) then it could be a hedge in your overall portfolio. Ray Dalio recently talked about BTC, Chamath has, warren buffet, Steve Wozniak so you can check out their views.
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There won't be a wealth transfer from boomers to younger generations because boomers want to die broke and will do anything to achieve that goal. That's why they sell their houses to Blackrock and spend hundreds of dollars just to afford a few more years of life in a hospital bed. Bitcoin has absolutely no use compared to modern cryptocurrencies and as I said is only pumped by 1) traders 2) normies and boomers who don't know anything about crypto but buy BTC because it's the only coin they know
You are thinking about BTC with respect to your privileged life “interning in IB - M&A” and failing to focus on how it affects people in poor nations.
You typically have to disclose to compliance for approval that you are making a VC investment.
I have stakes in a few private companies. I'd consider writing a smaller check - especially if this is Pre-Series-A.
This guy fucks and I mean that in the most sincere way.
Would also add that you’d need to be an accredited investor (easiest way is if you’ve made 200k+ income in the last two years)
Keep your promises in word bro. Sometimes startups shark around for "parachute" packages. If you really do believe in the company I'd say go for it.
Top BB here - I invested low 5 figures in something and only had to disclose it, no issues otherwise.
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