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For some people, becoming rich is easy 💰

They inherit a bunch of money, or their dad passes down the successful family business. Some people make products or services that people like and that makes them rich.

It’s not to say these people don’t work hard or deserve their success, but they also get lucky.

For others, it’s not so easy.

Sure, you can work your ass off for 20 years at some corporate job hoping to make a $200,000 salary.

But that won’t make you the kind of rich I’m talking about and chances are you’ll be too old to even enjoy it anyways.

Investing in stocks and ETF’s is a great way maintain wealth, but not a great way to build it.

So how do people that aren’t so lucky make their riches?

They take risks.

And a lot of them do this through private equity.

Private equity is basically investing to own a portion of any company that isn’t publicly traded.

But in reality, private equity is investing in early stage companies before most people even know they exist.

Historically, investing in these sorts of companies was limited to accredited investors, family offices and investment firms.

Think venture capital.

So as you’d expect, the rich get richer. 

Take Facebook for example.

If you invested $10,000 in Facebook during their series A round in 2005, it would be worth over $96 million today 👇

But of course, not everyone could invest in that round. - and up until recently this issue kept the public from taking these high reward risks.

So what’s changed?

One thing: Crowdfunding.

Accessing exclusive deals through crowdfunding

Crowdfunding allows companies to raise capital directly from a large number of individual investors, typically through online platforms.

Retail investors like us can contribute small amounts of money in exchange for equity.

This means accessing early-stage companies before anyone else.

Crowdfunding began in the early 2000s as an online method for raising funds for various projects and businesses.

You’ve probably heard of Kickstarter which was founded in 2009, but focuses more on creative products.

The Jumpstart Our Business Startups (JOBS) Act of 2012 in the United States changed everything when it allowed for equity crowdfunding.

Equity Crowdfunding Platforms

There are a few types of crowdfunding platforms to choose from - but the rich don’t waste their time with Kickstarter and Indiegogo.

The rich want to own.

Equity based crowdfunding is where the money is made. Platforms like Republic and Vested allow investors to own a piece of the pie.

And we’re not talking small companies either. Companies like Gumroad and LMNT are two examples of $5 million+ revenue companies using crowdfunding to raise capital.

The key to building wealth through these deals in getting in early, and doing as many as possible (with due diligence, of course).

Risks

Investments don’t come without risks - and this is where things get tricky with private equity.

On the stock market, if you want to sell your shares you can. With private equity, it’s not so easy. You need to find someone willing to buy your portion of the business, or wait for a liquidity event, like the company going public or being sold.

Understanding the companies future plans can help mitigate this, but know that private equity investments is not trading.

You are buying an early stage company, and you need to have patience.

Something that you’ll hear over and over is that the rich are patient and understand that the key to investing is time.

In private equity this can’t be more true.

Future of Crowdfunding

If you want to stay rich, invest in stocks.

If you need to get rich, take risks.

Gone are the days of the rich getting richer.

Well, that’s not completely true, the rich will always get richer - but why not join them.

👋 Colton, Stock Monster.

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This newsletter is for informational purposes only and should not be considered financial advice. Always conduct your own research before making any investment decisions. We have not been compensated in any way for this pick or content; we genuinely just like it.