I’m an economist by training and a capitalist by living. I have been analyzing and assessing market trends for decades and really became a student of it when I discovered my foray into venture capital and early stage investment markets in 2001 was at the downhill slide, not the uptick for that investment trend. But I rode that wave and have been actively (and successfully) building an angel investor community in Atlanta and helping early stage company get the capital and resources they need to grow.
This crazy economic roller coaster we are on now only reinforces what I learned in 2002 when I analyzed why the angel investment and venture capital market got so crazy to create the dot.com explosion and ultimate implosion. Money seeks a way to multiply itself. Think about every big “trend” where great wealth was created by the market makers and the early adopters, only to have it implode and cost the late entries and followers a lot of money. S&L bail out, Junk Bonds, dot.com, to the current hedge fund frenzy and the mortgage collapse. So why do I think that Private Equity Investing will be the Next Hot Thing? I have 5 reasons:
1. Sophisticated investors that haven’t yet participated in angel investing have realized that ALL investment classes are risky. They think: “With the collapse of the stock market and the real estate market, might as well invest in something I know is risky but I have potential to get 4-8X more ROI!”
2. Market Makers are going to be looking for new places to put money and the OTC BB market with the new controls recently implemented will be the next favored market place because it easier to directly reach investors to create the market for that stock.
3. Early stage companies that have received private equity investment from angels will be looking for new ways to exit and the OTC BB public offering is not as expensive as the big exchanges, but still gives access to fund managers for large PIPE investment for growth capital and acquisition isn’t as readily available as it was the past 3-4 years.
4. Angel Investors already know the early stage company’s value is at the bottom and will only go up or go out of business, but they can more effectively impact the company’s value going up than they can with a public company.
5. With the advent of strong investor groups forming and investor portals designed specifically for investors to be able to identify, investigate and invest in early stage companies the way eTrade provides that access to public companies, individual investors can have a community to collaborate with on early stage companies. Visit www.NationalNetworkofAngelInvestors.com (NNOAI) to help build an investor community the way you dream it should be. You can get a free report on the 5 Billionaire Secrets and excerpts from the popular how to book for angels: “Inside Secrets to Angel Investing” when you optin on the NNOAI site.
So watch this space because angel investment will return as one of the best asset classes for sophisticated investors to increase their wealth while the economy enjoys a rebound by early stage companies getting capital to grow and create jobs.