Everything I have learned and where we are now.
I would never have guessed two years ago discovering equity crowdfunding (and Medium about the same time) would have gotten me where I am now. It landed me a job as the head of Benzinga’s startup news division, I have made dozens of investments in startups and tons of great connections along the way.
While I have enjoyed the trip thus far, I did, however, get into startup investing to ultimately make some money. So how is that going? Here are some of the stats:
60 Investments (30/year) Exits this year: 1 Total Exits: 3 Bankruptcies: 0
On the bright side, none of my investments have officially went under yet. There’s 1 or 2 that effectively ran off with my money and another that sent out an email essentially saying things were at a critical level (but rebounded), but that’s, unfortunately, to be expected. Despite being in the thick of a recession and an all-around terrible year for startups, I am pretty happy with this metric most of all.
With my longest-held startup sitting at around two years, I did not expect to have any exits, so having some already is actually really solid. Technically, I have only had one real exit, and that was Knightscope in early 2022, which IPOd. I ultimately sold 50% of my shares for a ~120% gain, and held the rest. Meaning I made a little bit of money and currently holding the rest of my stock for long-term gains.
The other two ‘exits’ were actually on StartEngine Secondary, which I sold for about 100% gains. Usually, if a company I hold lists on Secondary, I would put in some sell orders for 100% gains because you will never hear me complain about 100% gains. Two companies were ultimately listed, and I sold for about 100% gains. Those were last year, however.
While I haven’t had any exits just yet, I have had tons of companies break away from the pack. Solgaard, for example, is one of my earliest investments and on track to 10x revenue since my investment and doing millions in profits. They will likely hit $30 million in revenue this year.
Boxabl, StartEngine, and Piestro all broke away from the pack this year, and sitting at a significant multiple of my initial investment. Boxabl is sitting at over 10x my initial investment, StartEngine is sitting at 10x, and Piestro is sitting at about 5x. They each have had their own respective great years, so pleased with those.
There are a few more that I find incredibly promising, including MSB.AI, LaneAxis, AtomBeam, Blendid, WebJoint, and a few others that have hit significant growth milestones since leaving, but not quick break-out growth. Several others are stagnant but not declining or slight growth. While I am worried about 3, and completely gave up on 1 investment.
Expectations for 2023
As I said, I didn’t expect much after 2 years of startup investing. These things take time, and I have been pleased with my “breakaways” because if they all exited right now, I would be sitting at a good return. Further, since the second half of 2022 has been a recession, with speculative assets like startups and IPOs especially taking a beating, I am not expecting an exit anytime soon.
My expectations for 2023 are pretty simple: about the same as 2022. I have a few plays that weren’t long-term, like Republic’s Fig Gaming shares that I invested in, and so I will begin receiving dividends in those. As well, some things will likely list on Secondary, and I will evaluate those opportunities as they arise.
I would like to see my first exits start rolling in late 2024 or 2025, however. Meaning that I think going into 2025, the market will be closing in on all-time highs again or higher, and several of my investments will still be thriving. Meaning, those that survived will be waiting for a good time to IPO, and 2024/2025 will be that time. After those first ones start rolling in, I expect to see 2–3 a year consistently, as I will continually be re-investing any gains every year, and have been making about the same number of startup investments each year.
I also expect some bankruptcies. While unfortunate, it seems the macroeconomic outlook isn’t looking much better. I know there are some companies struggling right now, and it’s just a matter of time before they go under. I could honestly see about 10 of my initial 30 investments going under before 2025. I see about 5 of those scaling to exit before the end of 2026, and the other 15 eventually going bankrupt, staying stagnant for a while, or getting bought out for lackluster returns.
All around, it’s actually been a pretty good year. I don’t plan to stop investing in startups, so hopefully it pays off in the long term, but we will see.
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