5

I have been made aware of a UK company that I think will be extremely profitable in the next year or two. It is currently privately held and they compete for market share with Intel and NVidia.

Is it possible to invest and make a profit from a privately held start-up?

  • 1
    My own experience of working for a couple of companies who thought they could "compete for market share with Intel and NVidia" is that it won't end well for anyone but Intel and NVidia. – timday Dec 30 '16 at 13:51
11

Yes, but only if they're looking for investors. You would need to contact them directly. Unless you're looking to invest a significant sum, they may not be interested in speaking with you. (Think at least 6 figures, maybe 7 depending on their size and needs). This is otherwise known as being a Venture Capitalist. Some companies don't want additional investors because the capital isn't yet needed and they don't want to give up shares in the profit/control.

Alternatively, you could try and figure out which investment groups already have a stake in the company you're interested in. If those companies are publicly traded, you could buy stocks for their company with the expectation that their stock price will increase if the company you know of does well in the long run.

  • Let's say I do know the investors. Is there a way to invest in the specific part of the Venture Capitalist firm that funded the startup? – grldsndrs Dec 26 '16 at 20:52
  • 2
    @grldsndrs - You'd have to ask that firm. I very much doubt you can only invest in a specific part of a firm, especially if they're publicly traded. – BobbyScon Dec 26 '16 at 20:55
  • It's technically impossibe to invest in part of a firm, shares do not work that way. It's technically possible for the VC company to sell you some of their shares, but they would probably also need assent of the company, and both of those happening is vanishingly unlikely. – Harper Dec 26 '16 at 22:54
  • @Harper: the first half of your first sentence is untrue. It is possible to invest in parts of a firm. You incorrectly assume that the only investment possibility is a single class of shares. A counter-example would be an asset-backed loan, e.g. a loan guaranteed by an oil well. – MSalters Dec 27 '16 at 23:54
  • 1
    @MSalters that loan wouldn't be an investment of the sort the OP is looking for. If the value of the company (either the private company or the VC firm) tripled, you wouldn't get paid back three times as much for the loan - you'd get the exact same capital + interest that was agreed. We're looking for something that will capture that capital growth. – Andrzej Doyle Jan 3 '17 at 12:57
4

Another way to do this is go to work for that company. Companies in this situation normally offer low pay, long hours, and stock options. Given a sufficient grant, it could be all very lucrative or worthless.

Even if you have no electronics background you might be able to work in a different capacity. There were secretaries at various companies that became wealthy off of their stock options.

  • This is a great alternative solution. If you're in a spot where you can join a company at the ground floor, you could certainly get a big payout. The company I work for now used to have to pay the staff with stocks (20+ years before my time). Those original employees that held onto their stocks made 7 figure returns. This is very much like playing the lottery, but at least you can do adequate research into the viability of a company. – BobbyScon Dec 27 '16 at 18:18

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.