The first 3 questions to ask when investing in a private company
Friday, February 22, 2008 | Dylan JovineRating:
THE BUSINESS PLAN HAS BEEN SITTING ON YOUR DESK FOR ALMOST TWO WEEKS NOW.The entrepreneur who sent it to you has already called twice asking if there was any more information she could provide to help make your decision a little bit faster.
She's not really trying to rush you into making a decision before you're ready, but she is on a tight timeline. As she explained the first time she pitched you the idea, your investment may be the difference between success and failure... between getting her dream off the ground or going back to work in a 9 to 5 job that's been sucking her life energy from her daily.
You respect where she's coming from. Maybe you tried to start a business yourself once before. Or maybe you're related to an entrepreneur and have seen first-hand the struggles they go through to get a business off the ground.
But you've been around long enough to know the rules of the game and you know she's just doing whatever she has to do to make it happen. The last thing you want is for your indecision to seem disrespectful or worse, to actually be harmful to the execution of her plans.
And though you promised to give her an answer within the next 72 hours, you're not even sure the weekend will be long enough for you to make up your mind. The bottom line is that you're being asked to invest a lot of money into a new business, and, after two weeks, you're still not sure what you should do. It's like you never left square one.
The easiest decision is to "just say no" and be done with it. Not only is it the path of least resistance, but it's also the best way to protect you from making a bad investment and losing all of your money.
But out of respect for the game of business, and out of respect for the player, you can’t just say "no" without a darn good reason for it.
You both know you have the money to make the investment if you want to. And you both know that however good the "surprise" excuse you come up with may sound on the phone, it won't be good enough to buy you your dignity back.
Let other investors she's pitching weasel out and disrespect the game with weak excuses. That's not the way you'd want to be treated if you were in her shoes, and that's certainly not the way you're going to treat her now. You're not, and you'll never be, "that guy".
On the other side of the coin, you're always on the hunt for opportunities to make money. You know that the greatest wealth generation machine in American history can be summed up in one word: STOCK.
And nothing - I repeat "NOTHING" - is better than owning the stock of a successful business from the ground floor! Lots and lots of stock!
You could make millions... tens of millions... hundreds of millions... even billions - for sitting on your butt all day while other people work their tail off for you running the company you invested your money into! You don't want to be the person who walked away from making an investment in the next Google do you?
And that's why you wanted to read this business plan in the first place. But you're still not sure whether to invest in the company or not. And time is running out.
What do you do? That's when I come in...
Next week I'm going to share with you the first 3 questions I ask anytime I get pitched an idea in which to invest. In subsequent weeks, I'll dive deeper and deeper into the subject with you.
As I mentioned in my last article, my goal in writing this series is to help you learn how to identify tremendous money-making opportunities - and avoid devastating losses - when investing in private companies.
But I have a confession to make before I go on...
I've never revealed information like this in public before, and to be perfectly candid I have mixed feelings about doing it.
Of course, a huge part of me is thrilled to share such powerful knowledge with the best readers in the world. But the other part of me is concerned that I may be letting too much of the cat out of the bag.
You see, the investing secrets you learn from me in the coming weeks and months are all focused on one thing: investing in private companies.
And in case some of you haven't noticed, not only am I a writer for The Tycoon Report, but I'm also the founder and one of the owners of the company.
In other words, I'm going to share secrets with you on how to invest in private companies while I'm currently running a private company.
Do you see where I'm coming from? I'm not thrilled with the idea of sharing my business playbook in public for all of my competitors to see. The secrets I'll be sharing with you are the same business methods I use now virtually each and every day. And it's not like I'm rich like Bill Gates and could retire tomorrow. I have to work hard every day for my money.
That's why friends and business associates (not to mention a few people who work here) were shocked when they found out I was planning to share this in public, in The Tycoon Report, absolutely FREE.
(I thought one old friend from Wall Street was going to reach through the phone line and try to slap me yesterday when I told him the topics I wanted to talk about).
The reason I'm doing this is because I want to help make The Tycoon Report the most valuable free financial newsletter on earth. Our goal is to make The Tycoon Report INVALUABLE to you and other investors across America.
But I need your help...
For starters, I'm not going to do this if you're not that interested in learning about it. The way I judge whether you're interested - or even paying attention - is by seeing how responsive to the questions I ask you here each week.
No joke: if this subject isn't something most of you want to learn more about that's cool. If that's the case, I'll teach it to 100 people over a three day seminar that'll cost $10,000 per person to attend. Even with a $10,000 price tag, I'm convinced every single person will feel like they got 100 times what they spent by the end of the event.
However, if you are interested in learning how to make money investing in private companies, you can prove it by helping me make The Tycoon Report as invaluable as I know it can be.
Together I know we can do it. But we can't do it alone. We need your help to go from good to great. That's where I'm coming from folks. That's why I'm willing to share these (and many other) secrets with you in the coming weeks and months and years.
How can you start? One step at a time. You can start by clicking the link inside the question below and posting an answer to my question for this week -
Not only will your answers reveal your level of interest in this subject, they’ll also help me write next week’s article.
Thanks in advance for your cooperation folks. Until next week.
(PS--Below are a few of the answers to last week’s question, "What is the worst business idea a friend has ever asked you to invest in?" I'd like to thank all of you for your wonderful input last week folks. You left some truly wonderful posts for us)
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Dylan Jovine
Chief Investment Officer
The Tycoon Report
