In 10 mins. How To Get Into Investing Along Side The Large Venture Capital Funds From Silicon Valley And Make 100x Your Investment.

Since most private banking institutions such as where I used to Bank (Brown Shipley) are getting approval awards for making their literature more understandable in the language of a 6 year old. I utilized chat gpt to make this article the same. I hope this is easier to read and more understandable. This article is not approved nor has been viewed by a plain English representative.

Hey there! The financial industry, which is all about money and investments, has been changing really quickly. It's like going from being super fast to super-duper fast in just a few years! One cool thing that's happening is something called PreIPO trading, where people can buy and sell stocks before a company goes public.

See, before, when a company wanted to become public and sell stocks to the public, they would do something called an IPO. But now, things are different! Companies have more options. They can choose to do a direct listing, which means they can start selling stocks without going through all the traditional steps. They can also do something called a SPAC merger, which is when they join forces with a special kind of company. And guess what? Some companies even decide to stay private and get lots of money from big investors like Tiger Global, Sequoia, A16Z, and IVP. These investors are like really, really smart and have a lot of money to invest!

In the old days, smart-money investors would try to get special deals for IPO stocks from big banks. But now, things are changing, and the smart-money folks are using these new ways to make even more money. They're playing with something called PreIPO securities, which are stocks of companies before they become public. And let me tell you, they're making a lot of extra money from it! Just look at what Tiger Global has done with their last 25 investments. It's like they're getting way more returns than normal, which is pretty amazing. They call this extra money they're making "alpha."

So, you see, lots of cool things are happening in the financial world, and it's changing how people invest and make money. It's like a big adventure with lots of possibilities!

Hey, let's talk about something super exciting called the "Pre-IPO unicorn market"! It's like a special game where people try to get an "edge" or an "alpha." Sounds cool, right?

In this article, I'm going to explain all the rules of this game and give you some tips on how to play it. But watch out for the tricky parts, or what we call "landmines," that you need to avoid. I'll also show you a comparison of how investing in Pre-IPO assets can give you better returns than other types of investments.

Now, the term "Pre-IPO unicorn" might sound mysterious, just like "Defi" in the finance world. But it's actually pretty simple. In the past, people used to make a lot of money when companies went public through IPOs. But now, things have changed. The big money is being made in the Pre-IPO market. If you search for the term, you'll find different meanings, but we're talking about companies that are valued at over $1 billion. These special companies are called "Unicorns." Isn't that a fun name? It was coined by Aileen Lee in 2013.

Now, here's where it gets even more exciting. The Pre-IPO market is huge! It's a multi-trillion dollar market, and it's not just about Unicorns anymore. There are also companies called "decacorns" (worth more than $10 billion) and even "hectacorns" (worth more than $100 billion). Can you imagine that?

Silicon Valley, along with other places around the world, is like a big machine that's creating new Unicorns at an amazing rate—over 100 per year! Right now, there are around 560 Unicorns out there. Can you believe it? Try naming 25 of them! It's not easy, but if you can, you're pretty impressive!

Think of it like an assembly line where super smart people from top universities like Harvard, Princeton, Stanford, MIT, and more are inventing new technologies that are changing our lives and businesses. They're meeting the big demand in the market and creating something that futurist Ray Kurzweil calls "The Singularity." It's like a whole new world! However the th father of the Singularity is Dr. Ben Goertzel.

So, my friend, the Pre-IPO unicorn market is a thrilling place where people are making big moves and finding opportunities. It's like a game with incredible possibilities. Exciting times ahead!

So let me tell you a fun story about how Silicon Valley creates magical creatures called unicorns! It's a bit like a cool assembly line at a special factory.

Step One – (Year 0 to 2):

First, there are special people called venture capitalists who give money to new companies and see if they have the potential to become unicorns. They're like fairy godparents for businesses! If a company is really promising, it gets passed to other special people who give them even more money and help them find super smart managers to make the company grow.

Step Two – (Year 2 to 3):

Now, the super smart people inside the company, like wizards and inventors, work really hard to create amazing things! They come up with new ideas and make the company even better. It's like when a superhero team makes a really cool gadget that changes the world! They also think about how to make the company stand out from other companies.

Step Three – (Year 3 to 5):

Once the company starts making lots of money, it gets even more attention! Big investors start noticing and give the company even more money to grow. It's like when everyone wants to be friends with a really popular kid in school. These big investors have lots and lots of money, and they believe in the company's success.

Step Four – Hypergrowth:

Now comes the super exciting part! The company grows really, really fast, like a rocket shooting into space! More investors join in and give the company even more money. It's like when you get a lot of presents on your birthday! They want to help the company become a unicorn as quickly as possible. And guess what? They succeed!

So, you see, creating a unicorn is like a magical adventure where lots of smart and powerful people come together to make a company really special. It's like a dream come true! And the best part is that the late-stage investors, who have lots of money, can make a lot of extra money too. It's a win-win for everyone!

You know, in the world of PreIPO investments, there are some really experienced people called venture capitalists (VCs). They are like the popular kids at school of investing! They work with big funds like Sequoia, Tiger Global, Andreesen Horowitz, Tencent, and Softbank. They have lots and lots of money to invest, like billions of dollars!

Now, here's something interesting. These VCs usually invest in companies when they are still private and not yet available to the public. They want to get in early and help the companies grow. They do this because they know that when these companies eventually become available to the public (like when they have an IPO), the value of their investment can go way up! That's what they call "alpha," which means they can make a lot more money than usual.

But guess what? You and I can't invest directly with these big funds unless we have a whole lot of money to spare, like millions of dollars! They usually work with really big investors. However, there is another way for people like us to get in on the action. It's called secondary transactions. What happens is that some earlier stage VCs and employees of the companies decide to sell their shares to other investors. These shares are like little pieces of the company. So when we buy these shares from them, the money goes to the person selling, not the company itself.

Why would they sell? Well, sometimes it's because these companies take a long time to grow. They can be older than ten years, can you believe it? And sometimes, the early-stage VCs have already made a huge profit, like 50 times the money they invested! So they might want to sell and enjoy their gains instead of waiting for even more gains when the company goes public. Even employees of the company sometimes sell their shares because they have their own financial needs. It's like when you have a toy that becomes really valuable, and you decide to sell it to buy something you really want.

You know what's really cool? Nowadays, companies understand that employees want to sell their shares, and it doesn't mean anything bad about the company. It's just that people have their own reasons and financial goals.

So, in the world of PreIPO investing, there are big players and lots of interesting things happening. It's like a big puzzle with different pieces moving around. It's exciting to learn about how money and investments work, isn't it?

A long time ago, even before Facebook became a public company, something really interesting was happening. You see, the people who worked at Facebook and the early-stage investors who believed in the company had a special opportunity. They could sell their shares to other people before Facebook went public and became available to everyone. And you know what? Those shares were sold at much lower prices compared to what they were worth when Facebook had its big IPO (which means the first time a company sells shares to the public).

Let me give you an example. When Facebook had its IPO in 2012, the shares were sold to the public for $38 each. But guess what? Less than a year before that, in 2011, those same shares were available for less than $20 each through private sales. So the people who were lucky enough to buy those shares early made a lot of money when Facebook went public.

After that, something really cool happened. It became more common for companies to have a special kind of public debut called a direct listing. One example is a company called Palantir, which went public in 2020. When Palantir had its direct listing, the price of its shares started at $7, but when people started trading them, the price went up to $10. And guess what? After a few months, the shares were being traded at even higher prices, between $21 and $25 per share!

But here's the thing, when people buy shares before a company goes public, they often have to agree to something called lock-up restrictions. It means they have to wait for a certain period of time before they can sell their shares. This is something you need to be careful about and do your research before buying shares. And you know what? I usually don't recommend buying shares before a company goes public unless you plan to hold onto them for a longer time. It's not the same as trading stocks right after an IPO because there are some restrictions that can affect the price later on.

So, it's really interesting to see how the world of investing works, right? People who get in early on companies can sometimes make a lot of money, but there are also some things to consider. It's like a big game with different rules, and it's important to understand them before jumping in.

When it comes to investing in PreIPO companies, there's a general rule that can help you make better decisions. It's a good idea to start buying shares in these companies around two years before they plan to go public. The earlier you can get in, the better it can be for your investment. And once the company goes public, be prepared to hold onto your shares for more than six months after that.

Here's something important to remember: try not to buy shares too close to the time when the company is about to go public, like within six months of their listing. This might seem like a good idea, but it's actually a common mistake that many first-time PreIPO investors make. Let me give you an example with Palantir. Before Palantir went public, people were buying its shares privately for as high as $15.00. But when the company finally had its initial price set at $10.00, those who bought at a higher price were disappointed.

So, the key is to start building your investment in PreIPO companies early on and give yourself enough time before they go public. That way, you can avoid the disappointment of buying at a higher price right before the company's listing. It's all about being patient and making smart decisions based on the timeline of the company's IPO.

Risks

When we talk about investing in PreIPO securities, there are some things we need to be careful about. Let's look at a few important points:

1. Liquidity: Imagine you have a toy that you want to sell. If there are many people who want to buy it, you can sell it quickly. But with PreIPO securities, it's not that easy. It's like having a toy that not many people want to buy, so it takes a long time to find a buyer. And once you buy these securities, you might have to keep them for at least two years or even more. So if you like things that you can easily buy or sell, PreIPO may not be the best choice for you.
2. No Information: Normally, when you want to buy something, you can learn a lot about it. You can read about it, ask questions, and get all the information you need. But with PreIPO securities, it's a bit different. You don't get all the information you usually get with other investments. It's like buying a toy without knowing much about it. Some big investors can invest a lot of money without knowing much either, but they have people who help them make smart decisions.
3. Due Diligence: When you buy something from someone, it's important to make sure that everything is legal and there are no problems. It's like making sure the toy you're buying belongs to the person selling it and there are no issues with it. When you invest in PreIPO securities, you need to do something called "due diligence." It means you have to be really careful and make sure everything is okay before you buy. Hire a lawyer, to help you check if everything is safe and good to go. The lawyer will for example help to: a)verify that the seller owns the shares. b) check for encumbrances such as liens or UCC filings. c) confirm that the seller is on the issuer’s cap table. In recent years, fake shares in high-demand companies such as SpaceX have been offered fraudulently.

4. Right of First Refusal: Sometimes, the people who originally owned the securities have the right to buy them back if someone else wants to buy them. It's like if you wanted to sell your toy, but your friend had the right to buy it first. This can take some time, and it can be frustrating if you already decided to buy something, but then someone else buys it instead. So it's important to understand this rule and be prepared for it.

Remember, investing can be a bit complicated. So it's always good to have someone you trust, like an advisor, to help you understand and make the right choices.

There are two main ways to invest in PreIPO companies: direct share purchases and through funds. Let's talk about each of them:

1. Direct Share Purchases: This is when you buy shares of a company directly from someone who wants to sell them. It's like buying a toy directly from another person. But this option is usually available to big investors like hedge funds and private equity funds because they have the resources to research and do proper due diligence.
2. Investing through Funds: This is like joining a group of people who pool their money together to invest in PreIPO companies. It's like having a bunch of friends who all put their money together to buy toys. There are two types of funds you can consider:

• Managed Portfolios: These are portfolios managed by professionals who choose a mix of different securities, including PreIPO companies. It's like having an expert friend who helps you decide which toys to buy. They take care of the research and due diligence for you. Some of these managed portfolios are even traded publicly, so you can invest in them easily.
• Special Purpose Vehicles (SPVs): These are funds dedicated to investing in one specific company or issue. It's like a group of people who come together to buy a particular toy they all like. They offer more protection because professional advisors manage them. High net worth investors and family offices often invest through SPVs.

If you're just starting out and want to invest in PreIPO companies, it's a good idea to go for a managed portfolio. There are some interesting options available, and some of them are even traded publicly, making it easier for you to invest. Look for reputable fund managers or brokers who are registered and regulated by the securities regulators in your country. They have rules to follow to protect investors like you.

For example, if you're interested in a tech portfolio that includes PreIPO companies like Elon Musk's SpaceX, you can check out Baille Gifford's managed funds or similar offerings from Fidelity Investment and T. Rowe Price. You can invest through brokers, advisors, or fund managers who are regulated and can provide you with better information and guidance.

Remember, it's important to invest through trusted and regulated channels to ensure your money is safe and to get the best advice. So, talk to a grown-up or a professional to help you make the right choices.

When it comes to investing in Special Purpose Vehicles (SPVs), it's important to understand the requirements set by your state and federal regulations. To be on the safe side, I recommend sticking to registered advisors who follow the rules. At the very least, the SPV fund itself should be filed with a securities regulator. In the United States, most SPVs are filed under a Reg D exemption.

Now, let's talk about ultra-high net worth investors and family offices who qualify as accredited investors. They have the opportunity to invest in SPVs that are specific to a particular company. SPVs offer some advantages in this context. For example:

1. Creating Your Own Portfolio: You can build your own portfolio by investing in multiple company-specific SPVs. It's like selecting different toys to play with and having control over what you invest in.
2. Avoiding Right of First Refusal (ROFR): ROFR can sometimes be a hassle. But with SPVs, you're usually not subject to ROFR, which means you have more freedom to make your investment decisions.
3. Anonymity: Since you're not listed on the cap table (a record of shareholders), you can remain anonymous. This is something that many family offices value for privacy reasons.
4. Controlling the Exit: You have more control over when you decide to sell your securities. It may make sense to hold onto them even after they go public. The SPV approach allows you to be your own venture capitalist, carefully choosing which investments to hold onto and when to sell them.

So, how do you pick the winners? Well, that's a topic that requires a more detailed discussion. Professional advisors have their own unique approaches. One simple method is to look at Series D rounds where top-tier venture capitalists (VCs) invest in multiple rounds, starting from Series B or C and continuing. If these VCs are participating in three or more rounds, it's a significant indicator of the company's potential. There are also specific VCs that invest only at a very late stage, and their involvement can give you insights into when the company might be preparing for a public exit.

Deciding whether it's worth paying the annual management fees and carried interest to professional managers depends on what they offer. Let's explore some factors to consider:

1. Exclusive Access: Some SPV managers have exclusive access to certain high-demand companies. These companies may only work with a limited number of SPV managers to control their cap tables and manage secondary sales. If you're interested in investing in such companies, working with these managers may be the only way to gain access. However, keep in mind that these managers may charge higher fees due to their exclusive market access.
2. Thematic Focus and Research: Some managers specialize in specific themes and provide in-depth research and analysis on lesser-known unicorn companies. If you value their expertise and the research they provide, their fees and carried interest can be justified as they contribute to your investment decision-making process.
3. Fee Discounts and Compliance: Many managers offer fee discounts for larger investments, which can help reduce the overall costs. Additionally, reputable managers often have robust compliance infrastructure, providing regular statements, updates, and accurate valuation of your positions. These services can add value and justify the fees they charge.
4. Reduced Fees for Advisors: If you're an advisor considering PreIPO investments for your clients, some managers offer SPVs with reduced fees specifically for advisors. This is similar to a fund of funds structure, where the total fees and carried charges to your clients are kept in check, ensuring that they are not excessively burdened.

When considering investing in an SPV (Special Purpose Vehicle), it's crucial to review the offering documents carefully. Here are some key points to keep in mind:

1. Private Placement Memorandum (PPM): The PPM provides detailed information about the SPV, including its structure, fees, use of proceeds, management obligations and rights, management background, and risks. Read the PPM thoroughly to understand what you're getting into.
2. Operating Agreement: The PPM should be accompanied by the Operating Agreement for the SPV. Review this document to understand your rights regarding the liquidation or distribution of shares in the event of a liquidity event. Ensure that you have the right to have the shares transferred to you upon notice of an exit. Pay attention to how the liquidation process is managed.
3. Hypothecation: Avoid SPVs with documents indicating a manager's intent to hypothecate or borrow against the shares. Hypothecation is common in publicly traded ETFs but is a red flag in private SPVs. Be cautious if you come across such terms in the offering documents.
4. Form D Exemption: Verify if the SPV has filed a Form D exemption with the SEC. If it hasn't, it could be a red flag and warrant further investigation.
5. Understanding Your Ownership: In an SPV, you are not directly purchasing shares in the company but rather buying an interest in the SPV itself. This interest represents an equivalent stake in the underlying shares of the company. Understand how many "equivalent shares" you are purchasing and any fees that may be deducted from the liquidation proceeds or charged in addition to your investment.
6. Clarity and Communication: Ensure that the series (dedicated to one issuer) within the SPV is clearly referenced in the subscription agreement and corresponds to the Certificate of Designation for that series. If you have any doubts or confusion, request a side letter that explains all the terms and conditions in plain language.
7. Seek Legal Advice: It's advisable, especially for first-time investments with any manager, to have an attorney review the offering documents. They can provide legal guidance and ensure your interests are protected.

Ultimately, it's important to evaluate the value proposition of professional managers based on their access, research, compliance capabilities, and fee structure. Consider your investment goals, risk tolerance, and the specific benefits that these managers bring to the table. Conduct thorough due diligence and seek advice from experts in the field to make an informed decision.

Three-Piece Puzzle Strategy

Imagine the PreIPO market as a puzzle that you're trying to solve. The Three-Piece Puzzle Strategy can help you put the pieces together in a strategic way:

Piece 1: Look for a top-tier VC firm that consistently invests in the company across multiple funding rounds. This is like finding a corner piece of the puzzle—it provides a solid foundation and direction for your investment. Take note of this piece and move on to the next step.

Piece 2: Pay attention to the completion of a Series D funding round. This piece is like finding the border pieces of the puzzle—it helps define the shape and scope of the investment opportunity. Series D funding indicates that the company has achieved significant milestones and is on a promising trajectory.

Piece 3: If any Series D or later funding round exceeds $100 million and involves the participation of reputable VCs, it's like finding a key central piece of the puzzle. This piece brings everything together and signals a strong investment opportunity. It suggests that the company has garnered significant support and validation from influential players in the market.

By collecting and placing these three puzzle pieces together, you gain a clearer picture of a potential investment opportunity in the PreIPO market. Just like completing a puzzle, it's important to consider each piece's shape, fit, and how they contribute to the overall picture. This approach can help you make more informed investment decisions while understanding the risks and uncertainties involved.

Do you want to know more about raising capital? Do you want to know how you can take your company public via other methods such as reverse merges? Do you want to know about structuring deals via onshore/offshore vehicles? And do you want to know about instruments? Subscribe to this newsletter...

In monopoly (UK Version) it works out that Pentonville road, Angel of Islington & Uston, the light blue sites on the left give you 159% return and are the best in terms of arithmetical return but the dark green sites which are what people think that are better Oxford Street, Bronze Street, and Regent Street only give you 101% return so they are very bad. The next best sites are the orange ones which are Bow Street, Vine Street, and Malbrough Street. They give you 141% return but they are better than Pentonville Road, Uston & Angel of Islington because there is an increased incidence of landing on them.?You land on them more often and the reason for that is, there is a card in the chance that orders you to go to jail. And if you go to jail, you are past the blue sites and about to land on the orange ones. In addition to that, there is another card in chance, ordering you to advance to Pall Mall which does the same thing, it takes you past the blue sites and another one demanding to advance to Marly Bourne Station.

There’s also another one demanding you to go back three spaces, which in one position will land you on Vine Street. So there’s an overwhelming case for having the orange sites. Now, most people do not know that.??

Quote

"Life is movement and movement in my opinion is represented as a wheel. It may be a car wheel, bicycle wheel,?or even a semi-truck wheel. In the end, you choose the size, width,?and type of rubber. What’s even better, you also have a choice to fill it with more air than the recommended pressure (for some that’s un heard of), however, one thing is crystal clear; to live a full life and have choices you must be willing to transform into a wheel rather than being a spoke on that wheel."

Amer Alamer, a.k.a Lamar Sidwell, is a venture capitalist with a strong background in structuring real estate and business transactions. He has been an active player in the mergers and acquisitions space, as well as property development.

L.G.Sidwell has been awarded multiple times for his contribution to the industry. Notably, he won three Real Estate Development Awards in 2019-2020: Best Developer Europe, Best Five Star Developer Turkey, and Best International Developer. The awards were presented by UK Members of Parliament and 80 other prominent judges at the prestigious Savoy Hotel in London.

Besides his career in real estate, Lamar Sidwell is also committed to helping small to medium-sized businesses scale and exit using public vehicles. His knowledge and experience in the venture capital industry have made him a valuable asset to the field. In 2021, he won a Gold Stevie Award for Best Innovation in the Financial Industry Middle East.

Lamar Sidwell's dedication to helping entrepreneurs grow their businesses and his continuous success in the field of venture capital and real estate are a testament to his expertise and hard work. In addition to his achievements, he is also an accomplished author. He has written "How To 144X Your Options In Life," a book that teaches readers how to structure real estate and business transactions using options, as well as how to take them public on a recognized stock exchange. Lamar's expertise and knowledge have garnered him media attention, including a 4-page feature story in Smart Investor Magazine. His insights and perspectives on the industry have been highly valued by readers and colleagues alike. L.Sidwell has established himself as a trusted source of information and advice for entrepreneurs and businesses seeking to achieve their goals through innovative and strategic approaches.

Disclaimer

This article is for information purposes only, does not constitute individual (investment) advice and investment decisions must not be based merely on this article.

The contents of this article are based on publicly available information and/or sources which we deem trustworthy. Although reasonable care has been employed to publish data and information as truthfully and correctly as possible, we cannot accept any liability for the contents of this document.

Investing involves risks and the value of investments may go up or down. Past performance is no indication of future performance. Any projections and forecasts are based on a certain number of suppositions and assumptions concerning the current and future market conditions and there is no guarantee that the expected result will ultimately be achieved. Currency fluctuations may influence your returns.?

The information included is subject to change and Lamar Sidwell (aka Amer Alamer) has no obligation after the date of publication of the text to update or inform the information accordingly.