Feb. 7, 2023
Don’t let hedge funds, venture capitalists, and angel investors keep all the money to themselves…
When you learn how to invest privately, you gain access to an entire world of hidden wealth. And that world is now bigger and more profitable than ever before: private equity offerings have now surged to a record-breaking $2.5 trillion.
The right opportunities can also put you first in line to make bank on tomorrow’s big winners. Google, Facebook, Nvidia, Uber… these just a few of the famous giants that were first started as small private startups. Just imagine if you’d been in on these companies since the very beginning, long before they were public — and how much your stake would be worth today. But big breakout success stories like this are only one tiny part of private equity’s power as a wealth builder.
Most wealth is built through strategic investments in the thousands of small private companies that stay small (relatively), and yet still generate outstanding returns for investors. Even though they don’t make the news, they can still make you wealthy. There’s an entire investing world that collectively generates trillions — yes, trillions — every year.
If you’re surprised by these numbers, that’s because private equity has been growing quickly. It didn’t always used to be this big. A decade ago, it was just a small fraction of what it is today — but as you can see in the chart below, there’s been a massive uptick in the amount of money that’s moving out of the public markets and into private opportunities.
So who’s behind this massive shift in wealth? The answer is the ultra-wealthy. Now that the long bull market has ended, they’re pulling their dollars from the public markets and putting them where they have more opportunities to see a better return. Hedge funds and venture capitalists have been playing their part as well. More than ever before, private equity is the way that wealthy people get rich and stay rich.
And the numbers above are just for Reg D investments (more on this below) and don’t include new types of private equity… which are growing even faster. All told, it represents a seismic shift in the financial system — and most regular investors are being left out.
But it doesn’t have to be that way! While there are a few requirements to take into consideration, any investor who’s willing to put a little extra time into learning the ins and outs can do well. And because these opportunities have continued to grow in size and scale, it’s now one of the most lucrative places to invest your money.
Let me walk you through the different types of private equity, how it works, and how it can help you achieve your investing goals.
The Securities and Exchange Commission (SEC) are the ones who regulate private stock offerings. They have specific regulations for each level of investing — and the difference between those regulations has an enormous impact on who can invest in what. Here’s a quick breakdown.
When most people tell you they’re investing privately, or when you read an article about venture capitalists making mint on a private company, they’re usually referring to Reg D.
Reg D offerings have been around since 1933 and are the tried-and-true standard of the private investing world. There’s no limit on the amount of capital that’s allowed to be raised, making it the “go-to” choice for larger and more established private companies. You’ll often hear them called private placements, since they’re not usually available to just any investor.
That’s because Reg D offerings come with one major requirement: they’re only available to experienced investors with a high net worth, formally known as “accredited investors.” It’s no accident this term sounds intimidating. You need to have either a $1,000,000 net worth (not including your home) OR an income of $200k a year ($300k if you’re joining with a spouse) to qualify.
But thankfully these rules aren’t quite as scary as they sound — the main reason the SEC wrote these rules is to keep newbie investors from wandering into investments they don’t understand or can’t afford. When you participate in a private placement, all you have to do to qualify as an official “accredited investor” is sign a simple form that confirms you match this description (or click the button, if you’re online). It’s easy and takes just a moment, you’re not asked to submit bank statements or anything like that.
Once that’s out of the way, you’re on to the next step to buy your shares, which in private placements are known as units. Some Reg D offers can only be accessed through a broker. Others can be made directly from a contact at the company. Either way, this process is not too difficult — especially compared to the potential payoff.
Many private placements also have follow-on offerings called warrants that are built right into your original purchase. These give you the right to buy shares later at a set price that, if all goes well, will be lower than the future market price. You could almost think of it like a special coupon that gives you a discount on a future purchase.
The warrant is one of the most powerful wealth-building features of private placements — and that’s why here at Digest Publishing we’ve made using warrants a specialty.
Our Reg D expert Nick Hodge has successfully used them to make money from private placements all across the investing space — in real estate, tech, biotech, you name it. For example, Nick has used warrants to make 233% on a tech innovator, 550% on a private real estate group, and 760% on a uranium company. In each case, the warrants nearly doubled the amount of the total return.
And then our resource expert Gerardo Del Real uses warrants to maximize his profits on private junior mining companies. In many ways junior miners deserve a category that’s all their own, because the mining industry truly has a special love for Reg D. Not only do they make more effective use of it than most industries, but many junior miners will also issue multiple offerings a year. This gives you the opportunity to go back to the same company again… and again… slowly building a lucrative position as the opportunity grows. By the time you factor in warrants, you’ve got a robust investing ecosystem that exists almost entirely outside of the public market.
Another factor that can bring profitability to a Reg D investment is a buyout. Well-run private companies are prime targets for purchase, and can result in an instant windfall return for investors.
The same goes for IPOs. Companies often raise private capital ahead of an IPO so that they can get their operations in tip-top shape before they go public. Investors can make immediate gains the moment shares go on sale in the major markets. Nick Hodge has had great success in getting into promising companies just before their IPO.
But a company doesn’t necessarily need to go public in order to raise funds from a wider group of investors — especially for smaller companies, there are new options that continue to gain momentum…
Before we get started, let’s get one pesky distinction out of the way. You’ll often see Reg A companies referred to as Reg A+. Is this some special premium version of Reg A, you might ask? Or how is this different? The answer is that it’s the exact same thing.
You see, for much of its history, Reg A involved a lot of cumbersome rules that made it impractical to use. And because it was a pain in the neck, it wasn’t very popular. So it didn’t get much use until 2015, when the SEC finally fixed this problem with a complete overhaul of its rules. Private investing experts were overjoyed, and in their enthusiasm for these welcome changes they started calling it “Reg A+” to celebrate the much-needed improvements. (Which means that unless you have a time machine that’ll bring you back to pre-2015, it’s the same regulation.) So now that Reg A was finally useful, companies began to actually use it, and we’ve continued to see significant growth in this space ever since.
The SEC still made it slightly complicated (they’re still the SEC, after all!), with two different tiers that set a cap on how much a company can raise in a given period of time ($20 million vs $50 million). But the main point of a Reg A offering is that ANY INVESTOR can buy in without restriction, so long as they’re not spending more than 10% of their net worth (which probably wouldn’t be a smart idea anyway). In short: Reg A offerings are essentially “mini-IPOs” for small companies, and anyone in the know can buy shares.
And as I highlighted with Reg D, many Reg A companies are also on a path toward a buyout or IPO. They can be an effective way to get into a company early, at a discount, and then if all goes well, you’re rewarded with a larger share of the profits. For example, we recently covered a Reg A company that made us a total of 551% gains once the company completed its IPO. (I can’t share its name here, since it’s still a special recommendation in Nick Hodge’s Private Intel portfolio.)
***Also, an exciting announcement: we’re about to launch a new service called Profit Cycle Pro, which will include occasional Reg A and Reg CF offerings as part of the service. Big things are ahead, stay tuned to find out more!***
Reg CF, also known as Regulation Crowdfunding, is the new kid on the block. And while it may still look young, pimpled, and shaggy haired… in my estimation this is the most likely up-and-coming billionaire-next-door in the investing world.
Reg CF was created by the JOBS Act of 2012. AOL founder Steve Case and Lotus founder Mitch Kapor contributed heavily to its structure (along with a strong bipartisan effort from legislators on both sides of the aisle), and the purpose is to allow companies to make a capital offering to investors through an internet-based platform.
Reg CF cuts through most of the normal red tape with a machete. And in return for its lean oversight, it delivers easy-to-access, easy-to-follow online updates on the progress of any investment. It’s also easy to purchase shares, which is allowed through SEC-sanctioned platforms like DealMaker, Equifund, StartEngine, WeFunder, Yieldstreet, and then of course the original and most established, Crowdfunder. (It seems the two-name portmanteau may as well be a requirement for these platforms.)
Reg CF allows private companies to raise up to $5 million from the general public in a 12-month period. The low barrier to entry makes it possible for a wide variety of companies to participate — even tiny startups — and still attract a large number of investors. Up to this point the most profitable Reg CF opportunities have come from mid-size companies that are using the Reg A-style business model and are only choosing Reg CF by default, because the online platforms make it so easy to buy shares. But this is likely just the beginning of much bigger things to come, as companies learn how best to make the most of the simplified rules.
Private Equity Is What We Do Best
Our private investing experts Nick Hodge and Gerardo Del Real have used their expertise to help a lot of independent investors make money in this otherwise “hidden market.” They’ve used their insights, experience, and connections to make millions of dollars on a single trade — and they’re just getting started. There’s a lot more ahead as the world (driven by the EV revolution, wars and defense crises, plus unprecedented production shortages) continues to shell out ever-greater amounts to small private companies who offer an edge on innovation.
Hodge Family Office Private Intel
Nick Hodge is one of the most generous people I’ve ever met. And yet, he doesn’t mess around when it comes to his family’s money. If you’re ready to take private investing seriously, he’s willing to show you the secrets that have led to seven-figure paydays from Reg D private investments.
As one subscriber named Tim F wrote to Nick:
“My investments have been going very well in your Private Intel service. Thanks for helping me and others to gain access to these private placements. The lithium stock [1,480%!] has been on an amazing run… Thank you for this great opportunity.” — Tim F.
Nick can help any investor learn how to make money on these private companies. There’s just one catch: Nick has perfected Reg D to an art, and so you need to be an accredited investor (ie, have a high net worth) to be in on most of his trades. But if you’re prepared for the high-dollar, high-return investments that Nick covers in this premium publication, you’ll likely walk away happy.
Junior Resource Insider
Gerardo Del Real is on a first-name basis with most of the junior mining companies of the US, Mexico, Canada, Australia, and beyond. Why? Because he offers a symbiotic relationship between motivated investors with a “yes-let’s-go!” attitude and junior mining companies willing to carve out deep discounts for new mining-friendly capital. There’s no magic or mystery involved: Gerardo finds the best private mining deals and then tries to match them with the best resource investors. Is that you? When everyone wins, this is how the real wealth is made. If you’re ready to invest like a pro in the junior mining space (which, even if you’re still new, is as easy as following Gerardo step-by-step through a trade) you can make million-dollar returns on a single mining stock. For example, he just closed a seven-digit return on an EV metals stock. Gerardo proves it’s not hard to make giant gains in the resource space when you’re investing with the best in the business.
So don’t let the $2.5 trillion-dollar world of private equity remain a “hidden market.” This is your chance to get in on the top-flite returns that are normally reserved for the ultra-rich — just as we’ve been doing for more than a decade. This is your invitation to build a fortune of your own.
Editor, Daily Profit Cycle