Let’s stop with Bitcoin for a moment. What do you think about Andy Gordon and his Early Investingshow? He’s talking about getting in on the ”new” Nasdaq or rather getting in on companies before they even get to the IPO stage. He mentions
that come January 18 2018 we should be seeing a big shift in money coming out of the markets and into private investing but on a much smaller
scale as the rules on private investing has changed since Bush’s regulatory rule 107204 has been changed.What is your opinion on this Travis?
This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.
I think pre-IPO investing is fun but not particularly profitable. Large venture capital firms have a lock on the best deals, and private companies that are appealing are not cheap… I have no interest in giving up the regulatory oversight of the SEC and the “crowdsourcing” of company data that Wall Street provides, those things make it easier to identify terrible businesses and scams (though certainly some ugliness makes it through to the public markets).
Mostly, I think there’s a bubble in private company finance… and it’s being exacerbated by the ICO movement, where tech companies can raise money by inventing a new “token” currency, and don’t have to give up any of their equity or control to do so… which means venture firms are going to compete even more and overpay more for some of the best little companies to deter them from going the ICO route.
I have invested in some funds of private companies, like PRIVX and GSVC, but they’re not particularly enriching investments… partly because they focus on more mature private companies and often overpay to get access, and partly because their operating costs are pretty high. To make good gains in private companies you’d have to buy individual ones, and then you get into picking and choosing winners from among various R&D shops and pre-commercial corporations. I don’t think individual investors (or newsletter writers) are going to be very good at that, not when they’re up against Kleiner Perkins and all the other massive VC firms that have multi-billion-dollar mandates from institutions to find the next big thing… and when individual investors do get access to deals, they’re either going to be the rejects (companies that conventional VC won’t fund, or that don’t lend themselves to creating a cryptocurrency) or they’re going to be way too expensive. There will be some 10,000% winners, but there will also be a large number of 100% losers… and I don’t think most of us have the skill or foresight to tell one from the other for the tiniest of startups.