When you think about who makes the big bucks from professional sports, two groups of people come to mind:
The players and, of course, the gamblers.
But as it turns out, a third group makes more money than both of them:
The owners of professional sports teams.
Can you imagine what it would be like to own your own team?
VIP seats at all the games…
Hanging out with famous athletes at exclusive events…
Maybe even winning a shiny championship ring.
Well, I’ve got good news for you:
If this is one of your dreams, you can make it happen today—and you can do it for far less than you might have imagined.
But (and it’s a big but)… there’s a hitch.
And if you don’t pay serious attention to it, you could lose your shirt.
NYC’s Newest Pro Team
Let me introduce you to New York City’s newest professional sports team.
It’s a basketball team called the Gotham Ballers.
The Ballers are part of the Champions Basketball League, a new pro summer league that kicks off in July of 2017.
You might recognize some of the guys managing the team—from Walt “Clyde” Frazier, to Earl “The Pearl” Monroe.
You might recognize some of the players, too, since they come from the NBA. They include Al Harrington, Kenyon Martin, and Anthony Mason, Jr.
As Sports Illustrated wrote, “This is an impressive list of NBA and former NBA guys.”
But the Ballers aren’t just a sports team. They’re also an early-stage private company. They recently inked a broadcast deal with ESPN, and according to their financial projections, they expect to make about $3 million in 2017.
Sounds like an interesting business…
But could it be an interesting investment?
Private Market Math
To answer this question, let’s start with something you’re familiar with: investing in the stock market.
In the stock market, very few folks set a “profit target” before they make an investment. Instead, they buy a stock, hope it goes up a bit, and then sell.
But when you invest in an early-stage private company, it’s a different story…
Successful early-stage investors aim for gains of at least 1,000%.
That means 10x your investment.
Why? Because, simply put, not every company you invest in will be a “winner.”
That’s why you need to invest in a portfolio of many, many start-ups—and that’s why you need your winners to return at least 10x.
You see, if you can earn 10x or more on your winners, your overall start-up portfolio will still provide you with sizable gains—even when you include the “losers.”
In fact, the average returns for a portfolio of early-stage investments is 27% per year. That’s about 4x higher than the stock market.
How To Improve Your Odds
To be fair, earning 10x your money on a deal isn’t easy.
But we’re about to show you a simple way to dramatically increase your odds of doing so.
All it takes is a simple but powerful investment tactic. Here’s what you need to do:
Before you invest, look at a start-up’s valuation. (“Valuation” is just another way of saying “Market Cap.”) You have to make sure its valuation is “reasonable.”
You see, when start-ups become successful, bigger companies often come knocking on the door and try to buy them. (This path, “M&A,” is far more likely than an IPO.)
But despite all the press about billion-dollar takeovers (like Walmart’s $3.3 billion acquisition of Jet, or Facebook’s $19 billion acquisition of WhatsApp), the price for the vast majority of acquisitions is far lower than that:
Simply put, on average, most private companies get acquired for less than $50 million.
So, if your goal is to earn 10x your money, then in order to increase your odds of hitting that return, your best bet is to invest in companies that have valuations of $5 million or less.
Why? Because $5 million x 10 = $50 million.
If you invest at higher valuations, all else being equal, your chances of earning a 10x return go down.
Now that you understand this, let’s look at the Gotham Ballers investment…
Back To Gotham
Gotham Ballers is currently raising money from investors like you.
The minimum investment is $140—so, like I mentioned earlier, less than you might have thought.
But here’s the hitch I mentioned earlier:
Its valuation is a whopping $84 million. That far exceeds our $5 million target.
Could it be worth 10x that amount someday? Could it be worth close to $1 billion?
Well, in 2014, the Clippers were bought for $2 billion. And according to Forbes, the average NBA team has gone up in value more than 10x in the past 20 years.
But this isn’t the NBA!
However promising this business might be (and it certainly has very attractive qualities), it’s still an early-stage private investment.
So if your primary interest is to earn a profit, proceed with extreme caution!
Happy investing.
Best Regards,
Founder
Crowdability.com
