Private Equity / Venture Capital

[kork13]

What's everybody's thoughts on PE/VC deals? Think "Shark Tank" -esque deals for businesses, products, or otherwise... Basically those early-on investors that help to finance a new business venture.

Through my alumni association's Real Estate Investment group, I just got an offer to join a separate group focused around (non-RE) PE/VC deals. Maybe it's just me stepping down the slippery slope that started with the RELPs that I've already invested in ... But I must admit I'm kinda curious to at least see the kind of deals being slung around. I've gone ahead to join the group, is nothing else to sate my curiosity & hopefully learn some stuff... But TBD how it goes. I've always liked the idea of helping people to create successful businesses ... Just never had the skill set or opportunity to do so.

Curiosity/learning interests aside .... I currently see it as a fairly low chance that I'll actually join into any sort of PE/VC deal. As high-risk as my RELPs are, I see these as an even higher step up the precarious ladder. Although I'm interested in the idea of the PE/VC space ... I've never run a business, never really even studied business (getting an MBA would be nice), and I'm an utter novice here. Very, very high risk of losing every dime if I were to try joining a deal. Lol

[Fishindude77]

I wouldn't have any interest in getting involved in one of these "groups".
If I was going to invest in a business it would be own my own or with a one or more folks I know well, and it would be some type of business I have some knowledge in so I could feel like I'm adding something to help their success other than just money.
If heavily invested I'd want a seat on the board to help guide decisions.

That Shark Tank stuff is just entertainment TV and probably fictional for the most part.
It does not accurately portray how business is done.

[riverwed070707]

I think you nailed it with your last sentence. IMO this isn't even the same ballgame as RE investing, its plain gambling, because you're not only betting on the product or service being successful, you're also betting on the creator being a good business operator. Shark Tank is unique because the investors have the systems and know how in place to help the creators succeed... and even with that leg up, they still fail 50% of the time.

[ua_guy]

I wouldn't have any interest in getting involved in one of these "groups".
If I was going to invest in a business it would be own my own or with a one or more folks I know well, and it would be some type of business I have some knowledge in so I could feel like I'm adding something to help their success other than just money.
If heavily invested I'd want a seat on the board to help guide decisions.

That Shark Tank stuff is just entertainment TV and probably fictional for the most part.
It does not accurately portray how business is done.

Mark Cuban would beg to differ It's dramatized for TV, but real deals do happen. Not always as they are presented on the show, though.

But yes, the VC's I'm aware of are typically deeply entrenched in the industry around their idea, and they serve on the kickstarter company's board, if not helping build the company directly. There's a lot of losing in being a VC...it's the one or two companies that pay off that keep the ball rolling.

[kork13]

Yeah, I'm definitely highly skeptical with this sort of "trust me, it'll be great" kind of pitch... I went ahead & joined the online group for now, and though the group is pretty new (<1mo), it seems like most of the discussion is on learning/teaching. They recently held a couple virtual session on how to evaluate various types of deals, and posted articles discussing some relevant topics. So we'll see what develops out of it. If it's largely academic & information sharing, it should be a pretty nice opportunity to learn.

I was mostly curious if anyone has ever seen first-hand how those type of deals work. This is very deep into the "alternative investments" realm, but figured to check if anyone happened to have experience in the area. The idea of helping a small business grow/expand seems really cool, but as Fishindude said, without the depth of experience in any particular field, I doubt that I'll feel comfortable jumping into anything.

[LivingAlmostLarge]

You are going to lose your money big time. The return on investment is going to be hellish. You need to have a unicorn. And speaking from experience, going through it now, it's a gauntlet. It's hard to make the money back for a VC. I would never do it with money unless you are willing to lose every penny.

we've been scouted for our money. we are currently in a startup with insane work and return. DH has toyed with us doing angel investing/vc/board seats and consulting after this startup. but we both know it's a solid $1m to play with minor companies. Anyone doing less might just be a grifter trying to take your money and give it to friends. I'm not kidding either. Legitimate VC the buy in is minimum 7 figures.

Now if you have a friend/family doing a startup and going around asking for $50k or $100k that's different. That's more people raising money for shark tank. But people ready for shark tank? To play in the equity market you also have to be ready to be "called". If they need more money you have to be ready to dump more in. Read Financial Samurai. The guy explains a lot of higher level investing and he talks about what he did and why.

[kork13]

You are going to lose your money big time. The return on investment is going to be hellish. You need to have a unicorn. And speaking from experience, going through it now, it's a gauntlet. It's hard to make the money back for a VC. I would never do it with money unless you are willing to lose every penny.

. Read Financial Samurai. The guy explains a lot of higher level investing and he talks about what he did and why.

I appreciate the perspective, and the research recommendation. It seems like to do anything like this, you truly need to be filthy rich, like $20M+ to play with.

[LivingAlmostLarge]

Or know the people you are putting your money with. He's not filthy rich and like i think $5m? But he used to work in the space with these people so it's a different game. Knowing people in that space I would say just be willing to lose money. Personally i think 8 figures so $10m would be a minimum.