| January 19, 2014 | | | | | | | |  | | | | A Crowdfunding Gold-Mine in Biotech | | | | | | | | | | The Daily Reckoning's Sunday Investment Review | | | Dear Daily Reckoning Reader,
By now, you've probably heard about the JOBS (Jumpstart Our Business Startups) Act. What you may not know is that it just opened up an incredibly lucrative new option for direct investment that has not existed for most of us in 80 years -- private equity crowdfunding.
In the wake of the 1929 crash, laws governing investing were passed that made direct investment in a business the exclusive domain of people called "accredited" investors: essentially, professional, government-sanctioned investors with very deep pockets. These investors have been raking in cash on private equity deals for years. The rest of us have been left out in the cold.
As of September 2013, all that changed.
Now any investor with enough capital can legally invest in a startup and potentially produce enormous gains. Our fearless leader, Addison Wiggin has, with cautious optimism, made the following prediction: 2014 will be the year you can become your own venture capitalist on a shoestring budget.
That's why we've created the YouTube video exclusive below. In it you'll get a brief overview explaining private equity crowdfunding and learn why this is so important for investors like you. Simply click here or click the screengrab below to watch it. (It takes under three minutes to watch and gets right to the point.) After you're finished watching, read on below as our own Matthew Milner outlines the uncharted territory of biotech private equity crowdfunding...
Regards,
Peter Coyne
Managing Editor, The Daily Reckoning | | | | | | | We're Rolling Out the Red Carpet…
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You're invited to get in on one of Agora Financial's best-kept (and most profitable) secrets.
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| | | | | | The Sunday Investment Review Presents…
| | | | A Crowdfunding Gold-Mine in Biotech | | | | by Matthew Milner |
Get ready for action…Over the next several weeks, we're going to break out our "crystal ball".
Wondering who's going to win the Super Bowl, or the men's downhill in the Winter Olympics? Umm, if so, you might be reading the wrong email. But if you're looking for predictions about major business trends – and for advice about how to make money from them through equity crowdfunding – you've come to the right place.
Ready for our first piece of advice? Here we go: Get Vertical.
Simply put, there are two main approaches to building a business. The first is to sell a wide range of products or services to a wide range of people. Amazon is a great example of this: they sell everything to everyone. That's called a "horizontal" approach.
But when I send my girlfriend flowers, I don't go to Amazon. I go somewhere that specializes in flowers – for example, 1800flowers. Companies like this take a "vertical" approach. Since they focus on one single thing, they become experts in that area. And they can use that expertise to source (and to deliver to their customers) the most relevant, high-quality products.
These two different approaches – horizontal versus vertical – can also be seen with "equity crowdfunding platforms," the websites that match start-ups with investors.
| AngelList was one of the first web-based equity crowdfunding platforms. | Let's look at examples of each, and then predict which direction the wind is blowing in 2014…
AngelList was one of the first web-based equity crowdfunding platforms. Today they're still one of the best. They currently host 30,000+ companies that are raising money. Given the large quantity of deals – and the fact that their companies range from enterprise software to lingerie brands – it's fair to say that they're a "horizontal" business.
Another platform called CircleUp, on the other hand, specializes strictly in consumer products like foods and beverages – from freeze-dried snacks and natural baby food to organic wines. That's a definite vertical.
RealtyMogul is in a different vertical. As the name suggests, they specialize in real estate deals. And RealCrowd specializes even further; they focus on commercial real estate deals. The question is, what specialization will come next?
We predict that the next big equity crowdfunding vertical to emerge in 2014 will revolve around the $2.5 trillion market for healthcare and "life sciences." This is a natural sector for specialization. Healthcare is incredibly complicated and requires an encyclopedic understanding of (among other things): Medical research, the FDA approval process and Government healthcare policy.
Two platforms that focus on this sector have been on our radar for some time now. This first is call Poliwogg -- a company has a penchant for healthcare. And that's no surprise given their CEO's background… | | | | | | |
| | | | | | | | | Gregory Simon, Poliwogg's founder and CEO, has experience as a senior executive at pharmaceutical company, Pfizer. He's also been a healthcare entrepreneur.
Beyond that, he has extensive experience overseeing healthcare initiatives as a member of Congress and the White House. In fact, Simon was involved with programs spanning the National Institutes of Health, the National Cancer Institute, and the FDA.
In brief, Greg has a broad wealth of knowledge covering everything from healthcare and healthcare policy, to drug research and drug development. With a CEO like Simon, Poliwogg's deal flow in the healthcare sector is likely to be strong – and he's likely to have a good sense for what might be successful. This benefits you. If Poliwogg brings in strong deals, that means less research and less worries for you – and potentially, it means better profit opportunities.
The other platform focusing on life sciences is VentureHealth. Its founder, Mir Imran, has been in medical technology and healthcare since the late 1970s. In fact, Imran is one of the world's leading healthcare inventors and entrepreneurs. He holds more than 200 patents, and has founded more than 20 medical device companies.
Even more impressive: 15 of his companies have gone public or been acquired.
| If Poliwogg brings in strong deals, that means less research and less worries for you | He's also founded a research lab and a life sciences venture fund, sits on the board of many "med tech" companies, and is Chairman of a product development company that focuses specifically on medical devices. Just like with Poliwogg, the founder's specialized background adds up to better deals for you.
Poliwogg and VentureHealth's management teams have strong sector knowledge and deep connections to government and industry. This gives them an advantage in identifying and vetting healthcare start-ups, and in understanding the market potential of a new drug or medical device.
Equally as important, their vertical focus means that – when the time is right – they'll know where to go to secure a key partnership or additional funding on behalf of the start-up, or how to create a merger or sale. These types of advantages are significant – which is why we're predicting that other platforms will jump on the verticalization trend, too.
Given our excitement about Poliwogg and VentureHealth, we'll soon be incorporating some of their investment opportunities into our own site called Crowdability. We hope there will be some exciting money-makers in there for you! Here's to a happy, healthy, profitable 2014!
Regards,
Matthew Milner
for The Daily Reckoning
P.S. My colleague Wayne Mulligan and I will have an exciting opportunity opportunity we're developing for you. It's not quite ready yet… but we want to make sure you stay ahead of the curve on this one. When we're ready to unveil the finished product, you'll have everything you need to invest directly in companies that we personally vet on your behalf. This is where the real money is. Stay tuned… | | | | | | |  Matthew Milner is the founder of Crowdability, a free platform that aggregates investment opportunities in private-equity crowdfunding from across the web directly to you. | | | | | | | BE SURE TO ADD dr@dailyreckoning.com to your address book.
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