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Message
Early seed round Investing vs. traditional (am I crazy?)
Posted on 2/7/23 at 2:13 pm
Posted on 2/7/23 at 2:13 pm
My wife and I have very well paying jobs, both of us max out 401k, IRA, etc. every year. We have a solid emergency fund and also have a separate market account we are building for early retirement. I started out investing in some smaller stuff, restaurants, a couple of rental properties, etc. It was more of a headache and pretty boring.
Lately I've taken the approach that I'll be setup for retirement just fine and I'm going to just swing for the fences. I've started throwing money into about two - three startups per year with a group of other investors. We typically have 15-20 companies approach our group per year and I invest in 2 or 3. Most of these are friends and family rounds before they go out for Series A funding. It's a very illiquid investment and I probably won't see a return on these for years. Am I crazy for taking this investment approach instead of just continuing to invest in the market and real estate?
Lately I've taken the approach that I'll be setup for retirement just fine and I'm going to just swing for the fences. I've started throwing money into about two - three startups per year with a group of other investors. We typically have 15-20 companies approach our group per year and I invest in 2 or 3. Most of these are friends and family rounds before they go out for Series A funding. It's a very illiquid investment and I probably won't see a return on these for years. Am I crazy for taking this investment approach instead of just continuing to invest in the market and real estate?
6
Posted on 2/7/23 at 2:21 pm to JL
have you gone completely away from more traditional investing like real estate?
All it takes is one of the early round investments to hit it big and you could be set.
All it takes is one of the early round investments to hit it big and you could be set.
Posted on 2/7/23 at 2:46 pm to JL
I wouldn’t do it unless I really knew what I was doing ,e.g., knew the sector really well.
Put the money in an index fund and it will double every 7 years assuming a 10%return or double every 10 years assuming a 7% return.
What would you do with home run money that a safer solid return wouldn’t pay for?
Put the money in an index fund and it will double every 7 years assuming a 10%return or double every 10 years assuming a 7% return.
What would you do with home run money that a safer solid return wouldn’t pay for?
This post was edited on 2/7/23 at 2:48 pm
Posted on 2/7/23 at 2:49 pm to JL
quote:
Most of these are friends and family rounds before they go out for Series A funding. It's a very illiquid investment and I probably won't see a return on these for years. Am I crazy for taking this investment approach instead of just continuing to invest in the market and real estate?
Just invest in it with the expectation of nothing ever coming from it. If you are still comfortable with your long-term retirement outcome assuming you lit that money on fire, then no harm.
What you describe sounds like "Coast FIRE"...you've accumulated enough in traditional mechanisms that it will lead you to the promised land. You family and friends investments are more like gambling / a hobby than something relief upon.
Posted on 2/7/23 at 2:52 pm to SaintsTiger
Damn, you wasted your millionth post on this?
The group I'm riding with has a pretty strong track record. We each bring a level of expertise to the venture in different areas. I'm already plowing into the markets, I just find this really exciting. Pretty much like gambling, but you are able to help advise companies and help them grow till they get to their next funding round.
The group I'm riding with has a pretty strong track record. We each bring a level of expertise to the venture in different areas. I'm already plowing into the markets, I just find this really exciting. Pretty much like gambling, but you are able to help advise companies and help them grow till they get to their next funding round.
Posted on 2/7/23 at 2:57 pm to JL
quote:
Most of these are friends and family
Never mix friends/family with money
Posted on 2/7/23 at 3:00 pm to UltimaParadox
It's not actual friends and family, loose term is friends and family round. Basically the first people to invest in the company before they go out for funding from PE.
Posted on 2/7/23 at 3:08 pm to JL
I invest in 3 or 4 a year and have been for about 10 years. As was stated here, don’t expect a return but if one company gets bought out you could make a lot of money.
I usually invest no more than 25k initially and if the company shows promise I double up (or more) in later rounds.
I usually invest no more than 25k initially and if the company shows promise I double up (or more) in later rounds.
Posted on 2/7/23 at 3:17 pm to JL
Closest I've gotten to what OP is describing is a buy-in for SpaceX. There was a poster last year (?) that described the process and the lock-up.
Posted on 2/7/23 at 4:38 pm to JL
Dude you’re like a real time “angel” investor. Help a brother out.
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