Too small. Too hard to pick winners - let's see about that.
In Venture Capital, Seed-stage investing has turned out to be the most profitable stage of private startup investing.
CB Insights says that about three-quarters of the top 20 VCs are investors who put money into startups during their early rounds.
Sure, the later rounds offer certain advantages. Startups are more mature. They usually have growing revenue. And how they’re monetizing is open to your evaluation.
But in return for this increased certainty, you pay much more for shares.
The payouts are more frequent but lower than your early-stage startups that turn into winners.
This strategy doesn’t pay off nearly as well as investing in the earliest stages. Study after study confirms this.
CB Insights offers the latest proof. Since the late 1900s, it says, between two-thirds and three-quarters of the VC industry’s returns have been generated by early-stage investments.
Early-stage investors in companies like Google, PayPal, Facebook, LinkedIn, Zynga, Twitter, Salesforce and many others acquired enormous wealth.
The idea of grabbing shares early while they were still cheap began attracting hordes of VC investors.
Seed funding surged as a result.
It seems that everybody nowadays is doing seed investing – from friends and family to billion-dollar funds.
Needless to say we're not talking about just start-up company's here at the Seed Investor, we're talking about an entire Start-up Industry - Marijuana.
This is a huge opportunity to investors, but only if they know how to play it right.
The Seed Investor is here to help.
For more on this topic reade Andy Gordon's Complete Post here.