The world's richest people are on a constant lookout for ventures that are reshaping the world, and they're usually going for startups before they go public.
If investors get in on the early stages of companies, they can have more influence and boost their value by drawing media attention to them. Investing in early-to-mid-stage startups that eventually reach an initial public offering (IPO) or are acquired by a bigger company tends to reel in returns that most investors don't see in their entire lives.
Microsoft Corp. Co-Founder Bill Gates, one of history’s greatest entrepreneurs, has a portfolio filled with startups. Through Breakthrough Energy, he has acquired shares in companies that are tackling climate change.
When Gates was building Microsoft, you couldn't invest in it until it was listed on a stock exchange. The same goes for Amazon.com Inc., Google and many tech startups of the early 2000s that would've made you a millionaire today. But today, the landscape is different. You can build an entire startup portfolio today with $1,000.
Gates, whose resources are more plentiful, allocates tens of millions each year to companies that work to reduce CO2 emissions. So far, through Breakthrough Energy, he has invested in 96 startups, most of which you've probably never heard of. For example, Breakthrough holds a stake in Fleetzero Inc., a company that's building battery-powered cargo ships to affordably decarbonize long-distance ocean freight. It's also invested in Bloom, a startup that working to build a world where materials and fuels are made from sustainable bio-based carbon.
Gates isn't the only entrepreneur in the top 10 wealthiest with an extensive portfolio of pre-IPO startups. Tesla Inc. CEO Elon Musk, Amazon Founder Jeff Bezos, Oracle Corp. Co-Founder Larry Ellison and others have also heavily invested in startups. And since the enactment of the Jumpstart Our Business Startups (JOBS) Act, so can you.
Artificial intelligence (AI) is disrupting entire industries and it's only warming up. At the turn of the century, as the world was going online, only institutional investors like hedge funds could own a stake in pre-IPO startups. Now, you don't have to miss profiting from some of the greatest technological advancements in the 21st century.
Investing in a single startup with as little as $100 or $150 is now possible, providing everyday investors ample room for diversification. With $1,000, you can create an entire portfolio and mitigate the risk. That may not seem significant, but investing that sum into Google, Microsoft or Amazon at their IPOs would've made you a millionaire by now.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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