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Here in startup-land, we have our own words for everything. We invest in unicorns, decacorns, and dragons. We talk about bootstrapped businesses and file startups into categories: B2B, B2C, D2C. It’s enough to make your head spin.

If you’re feeling lost in the vocabulary, you might want to take a look at your exclusive Silicon Valley dictionary, found here. You don’t need to know it all – I’d be impressed if you did – but there’s one word we use that will quickly become your favorite. That word is exit.

Exits are all the ways that we angel investors make money: IPOs, mergers, acquisitions, and so on. When we exit, we get paid, and hopefully see huge returns on our investments.

Recently, I sat down with a well-known angel investor to put together a first-of-its-kind presentation – a chance for us both to lay out some of the industry’s best-kept secrets.

See, we both came from working-class families, and we’re tired of watching doors slam shut whenever everyday investors try to get in on these life-changing private equity deals.

We talked a lot about the different types of exits and what they each mean for your bottom line. And you’d be surprised how critically important the differences are. In case you missed it, you can catch a rebroadcast of that presentation by clicking here.

You’ll have to see it for yourself if you want the full scoop – but, in the meantime, let’s talk about my personal favorite kind of exit.

It might not surprise you too much to hear that my favorite returns are those in which I’m offered cash up front. But not every angel feels the same way I do.

Many angel investors prefer to hold onto their shares or negotiate other perks in the event of an exit. That’s fine, but I think it’s important to keep this in mind: if you have a deal that gives you 50 or 100X your money back, how greedy do you really want to be?

Personally, once I’ve made an amazing return, I like to take my money and walk. I believe there are bigger fish to fry out there, and that exiting from investments early and often is the best way to boost your bottom line.

And the numbers don’t lie – my system works. Take my investment in Remitly as an example. Remitly is a platform for international remittances – in other words, it helps people send money to their loved ones abroad, faster and with lower fees than wire transfers.

I invested $25,000 into Remitly when it was still just a small operation. A few years later, when the company was much larger, I was given the opportunity to sell my shares for $425,000. That’s a 17X return that I wasn’t about to turn up my nose at, and here’s why: companies don’t grow exponentially forever.

So, while I could have held my shares and seen them grow in value, I decided to take the cash and plug some of that capital into 13 or 14 new startups. Think of it this way: even if they all failed, I’d still come out in the positives overall. And, as you know, when you’re making 13 or 14 bets, you’re more likely to hit a big winner than you are to strike out (more on that here).

My advice? Exit early and exit often.

Until next time,

Neil Patel


Comments

40 responses to “This Type of Exit is the Fastest Way to Make Amazing Returns”

  1. Neil:

    I love your concepts, but being a cash strapped investor at the moment, (I can inly invest about $200 a month), what would be the best route for me to take in being able to grow that cash quickly and cash out so that I can re-invest either in more opportunities or with more cash? I would not like to wait years to see a return.

  2. I to have little to start with. What would you say is the least amount to invest monthly to see any real gains. I am hurting for certain so really could use your help.

  3. This is all Greek to me and like some of the others I live paycheck to paycheck so how can I make enough to retire I’m already 71!

  4. I am a 72 year old female and I am at the stage in my life where an investment would enhance my quality of life completely.
    My question, is this $50.00 a “ONE TIME INVESTMENT” OR A MONTHLY ONGOING INVESTMENT??? I am on fixed income and need to know this prior to investing.

  5. VERY intrigued. Have around 200.00 p/m to invest…how do I get started?
    Very intrigued
    How do I get started?

  6. Neil, this is all new to me. It is a lot to take in and to figure out which deals will bring the most financial success. I am 69 still working and I am looking like every one else to make a better life for myself. I can invest about 200 a month and want to make the right choices on the right investment. I am reading everything you are sending out and trying to understand it all. This is intriguing to me and praying as I look at the companies that I choose the right companies to invest in.

  7. There is room for Bulls and Bears in the market, but theres no room for Pigs. Warren Buffet says your never wrong if you are taking a profit…

  8. I can invest $200 per month. I’m very excited about your program. I already signed up and became a member. I have failed before, so a little scared.

  9. I need too make an investment that will break a family curse of many generations of poor relatives! My parents were sharecroppers! I’m # 11 out of 14! Only 8 are still living! The youngest is 57 I’m 65 the rest are older!
    Help me! Help my family! I have one Sister in a nursing home not fit for animals! God help me!!!! I will pay it forward and help my family and others!!!!!

  10. When you invest in startups i.e new companies looking for money to grow, they take money from the public (you and I) via a process called Crowdfunding in various stages of fund raising with different and increasing amounts or threshold within a stipulated time period. The most common raise is the RegCF. An angel investor can make a one time investment or several investments of varying amounts that cannot be lower than the minimum investment amount specified by the company and the CF platform. Congress passed the JOBS Act that includes Title III which allows regular members of the public to invest early in startups looking for money to grow. This kind of investing was only actionable available to rich venture capitalists i.e those guys on Shark Tank.

    Minimum investment in a startup can be as low as 50 bucks, or as high as 10000, even more depending on whether you’re Title III investor (2500 max/yr) or accredited investor with higher levels of income and investment capability.

    If you invest $100 in XY Company when it’s only worth 4M, you’re buying the right or rights to own some equity or shares of the company in the future. If the company grows and becomes 20M in valuation for instance, your prior meager investment of $100 could have grown by more than 100%, giving you a much larger ROI (returns on investment) than you could ever make in the main stock market.

    You don’t have to invest monthly, although you can plan to invest in a different startup every month. However, your total investments cannot exceed $2500 per Title III regulations. If you had invested $50 in Uber or Amazon when they started in the basement or garage, your 50 would have become thousands of dollars now. Angel investing is supporting new and hungry companies your little amount of cash, hoping they become big companies, so that you can earn massive returns in the future.

    Note: Investing in startups is a risky deal, and that’s why you only invest what you can afford to lose. You could lose all your $50, or you could be rewarded with $50 x 1000. It all depends on how the company performs. Therefore, make sure you research the companies you might be interested in, the quality of the products and/or services they are offering, the cash flow, valuation, founders’ backgrounds and expertise, and your personal convictions and preferences. This is called Due Dilligence.
    To our success.

  11. Neil, As I look at making my first investment I have forecasted $100-$200 per month. In an effort to forecast returns and future investments should I expect several months to years to exit/receive a return? Thanks much for opening these doors of speculation and potential return.

  12. It is good to see that I am not the only one with very little capital to invest.I have approximately $500.00 and that is that in my brokerage account.I am also a pensioner scraping by day to day.

  13. I don’t have a lot to invest and I like many people are concerned how this works. Please explain what one has to do to get started.

  14. I have launch cloud base SAAS business and are realizing early success and am interested in what your doing with both angle investors/ helping raise cap but also being angle investor!
    I have also invested and launched call center within the credit and collections Industry. Suffered very bad accident in 2017 and still have drive to launch start-up and invest in stater ups.

  15. All this investing is new to me, I’m working, but will like to prepare myself since my job do not offer no benefits for retirement. By the way I’m 57 what is your suggestions

  16. Mr. Patel, I’m really interested in this investment, i can start with 50 to 100 dollars a month what can that do for me and family

  17. Thank you Neil for all of the information you have provided for us. I have read what I believe to be most of your introductory presentations as well as watched a few videos in the media center. I know you that you shared about your $25,000 turning into over $400,000, and then later you mentioned Exiting with 8 million dollars after investing $100,000. Both of these returns are absolutely mind blowing! I have a couple of questions. Could you tell us the possibilities of a return for a $200-$400 investment in a start up? And, how long does it take to have a good return while exiting in the way you describe here?

  18. I just turned 71 yesterday. I also am on a fixed income like
    many of the people who’s emails I have read. My problem is I am deeply in debt due to some very bad MLM scams. I am very interested in getting started with about $500, then going from there.

  19. This is a very good opportunity and I can not wait to see the results. I started an investment club back in the 80,s at work and we made some money but when people learn how to invest like we did then they get excited and want to learn more. I believe a lot of people in this will learn a lot but they just have to be patient and try to learn how great an opportunity this is.

  20. I’m also interested & have been in investing. Have read many of The Motley Fool newsletters & it looks like (some) marijuana stocks are (or will be) on the rise. As well as demand for network switching, there’s only a few players who holds the control of the Internet flow in their hands.

    But what they don’t tell is how to get in, if through them, or using middlemen (brokers) whom gets a cut off the top (i presume the ‘load’), regardless of if we win or lose. Nor will they respond to my questions & ask of them via email. I guess they want my $49 first.

    Is your way the type of that cuts out the middlemen, or just one out of hundreds of advisors who steers us to them? In my opinion, if starting with $50, getting docked by a minimum or $3.95-$4.95 per share isn’t for me. That’s how THEY make money, off of the backs of hard working persons & that also means less cash working for us.

    Also, is it possible to transfer my cash sitting in the Pension Benefit Guaranty Association into a fund you carry w/out being penalized? If so, I have nearly $1,000 to invest. Am 56 years old & disabled.

  21. Yes, there are lots of us here who are “small investors”.
    To answer the question as best I can that a lot of people are asking about, “How long till I see a return?” – There’s no single, hard and fast answer to that, but I would say generally you need to expect a few years (two to three, minimum) for any of these opportunities to pay off.
    I hope that doesn’t sound discouraging, because it shouldn’t be. Let’s say you invest $100 a month, picking one new company each month to invest in – a year from now, you’ve got 12 $100 investments. Now, what if just one of those $100 investments hits it big and shows you a return of $5,000 three years from now. Now you’ve got $5,000 to invest. But also, in those three years you’ve made another 12-24 investments and some of them may pay off, too.
    Realistically, while nothing is guaranteed, I’d say there’s a decent shot at building yourself a small fortune within, say, 10 years – so even if you’re around retirement age now, you’ve still got time to make it big.

  22. I just joined up. Looking forward to learning more. Like most I have little to invest at the moment, probably $100 every month perhaps every other month. Hope it helps on the positive side. Also on a fixed income. 👍

  23. I’m very excited about this opportunity. A long time in coming for sure. I plan to invest between 50 and 500 a month depending on other things in my financial world. Thank you for creating such a unique opportunity.

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