Private Deal MasterClass

Introduction

What You Can Expect

This course educates retail investors on private equity investing, including topics such as valuing a startup, finding deals, and using a simple formula to evaluate deals.

Module 1

You're Right on Time to Be an Early-Stage Investor

In his personal journey, Chris Graebe shares how his experiences in the non-profit sector and Amazon business now helps retail investors participate in equity crowdfunding.

Module 2

Your Chance to Be Part of Private-Deal History

The history of private deals investing and the Jobs Act of 2012.

Module 3

Risk, Reward And What's Right for You.

Investors to be cautious and selective when investing in equity crowdfunding, allocate a specific portion of their portfolio to speculative holdings, and diversify their investments in different sectors.

A: Before You Make your First Private Deal

To prepare for your first private deal, start by watching the Private Deal Masterclass, and research companies, understand your risk tolerance, and determine your investment strategy.

B: The Type of Deals You Can Invest in

Chris details the levels of deals such as Reg-CF, Reg-A, and Reg-A+ that are open to everyone regardless of income or net worth.

C: How to Calculate what you can Invest.

The details of specific Reg-CF limits in investing may have different rules, Chris discusses and risk tolerance and time horizon, and explores levels of investment opportunities.

Module 4

Why More Startups Are Turning to the Crowd

Understanding the details of startup valuation and its impact on investors. Venture capitalists may suggest a lower valuation to get better terms for themselves, but founders can use their own judgment and research to determine the company's worth and turn to regulation crowdfunding to raise money at a higher valuation while keeping control.

A: The Value Behind Valuations

Explore the topic of startup valuations through two scenarios and emphasizes the significance of considering the investor type and the company's expected earnings when targeting valuations, while also warning against investing in startups with unjustifiable high valuations and urging caution against deceptive valuations.

B: Three Ways to Value a Startup

Multiple evaluation models and knowledge of "EBITDA multiples" in different industries can help investors determine the worth of startups, while understanding a sector can increase confidence in investment decisions.

C: Tranches as a Valuation Tool

Tranche analysis is key for managing risk and allocating capital and a method of dividing a pool of assets into smaller, more manageable pieces with different terms and characteristics, such as maturity date, interest rate, and risk level.

D: Rolling Closes as a Valuation Tool

This approach offers flexibility, builds momentum for the offering, and minimizes the risk of over-commitment for both the issuer and investors.

E: Timing as a Valuation Tool

The timing in valuing a company or securities offers how it can impact the value of an investment or company, and the need for investors and companies to carefully consider the analysis when making investment or financing decisions.

Module 5

Chasing Unicorns

Learn about the potential benefits of investing in unicorns, privately held startups with a valuation of at least $1 billion, but also emphasizes the importance of diversification and managing risk in early-stage startup investing.

Module 6

F.I.V.E. Steps to 5x Capital Returns

Learning the private equity investment strategy called the FIVE methodology, which involves evaluating a deal based on the founder, the founding team industry, the valuation, and the exit potential, in order to aim for a 5x return.

Module 7

A: Overview of Seed Rounds

Chris explains that individual investors can participate in the Alpha Round or seed funding round, the earliest stages of a company's development, through equity crowdfunding, which allows early access without the risks of the pre-seed round reserved for insiders, and he promises to provide more information on pre-seed rounds in the next module.

B: Pre-Seed Rounds

In this module, Chris highlights the challenges of starting a company, the role of pre-seed funding from friends and family, the importance of early backers and founder investment, the growing trend of seeking retail investors, and the transition to series-round funding.

C: Series Rounds

In this module, Chris discusses the impact of regulation crowdfunding, making private investing more accessible, and highlights the benefits of equity crowdfunding for investors and startups, with a focus on Series A funding rounds and the opportunities for investors at different stages of a company's growth.

Module 8

A: Getting Your Share(s)

Private equity entails investing in private companies for ownership, with convertible notes and SAFE notes being examples of instruments that offer future equity in exchange for funding.

B: Convertible & SAFE Notes

Convertible notes and SAFE notes in startup investments, emphasizing the preference for convertible notes with defined terms or guaranteed equity through priced rounds.

C: Price Rounds

The concept of priced rounds as an alternative to notes for startups, explains the capitalization table and the option of debt, provides an example of a company offering bonus shares, and hints at the next segment discussing how to obtain shares.

D: Preferred & Common Stock

Chris explains the process of converting notes into equity and obtaining shares upfront, discussing the advantages of preferred and common stock for investors. It also shares a personal example of investing in Vulcan Augmentics through WeFunder and receiving preferred shares that may convert to common stock in the future.

E: The Secondary Market

The advantages of investing in secondary markets for private equity shares, particularly through Forge Global, while noting the requirement of being an accredited investor, and mentions the Deal Hunters Alliance as a platform targeting early-stage companies with lower minimum investment thresholds.

Module 9

A: Acquisitions & IPOs

Chris prioritizes working with founders based on their character, evaluates businesses for equity crowdfunding, and highlights the potential of successful exits like acquisitions and IPOs in the world of private investing.

B: Going Public: Perks, Pitfalls & Profit Potential

Module 9B explores the process, challenges, and potential benefits of startups transitioning from private companies to conducting Initial Public Offerings (IPOs), while emphasizing that IPOs are not common and most startups do not reach that stage.

This Module explores common exit scenarios for equity-crowdfunding investments, emphasizing the challenges faced by startups, the importance of due diligence and pivoting, and the potential returns or losses investors may encounter.

D: Getting Your Shares

The goals of investors, including the preference for a company to go public or be acquired, emphasizing the role of transfer agents in facilitating communication, transactions, and returns for investors.

Module 10

3 Sectors I'm Watching Now

Chris introduces three sectors on his watchlist: AI, Real Estate, and Software as a Service (SaaS). The module explains the growth and potential of AI, the opportunities in real estate, and the potential returns from investing in franchises.

Module 11

Portal Walk Throughs

In this module number, the focus is on portals, specifically platforms where private investments can be made.

Module 12

Private Deal Masterclass invites you to review 3 Case Studies.

Startup Investing Specialist

About the Author

Chris Graebe knows a great private-equity deal when he sees one. His specialty is finding red-hot, breakthrough companies and investing in them before venture capitalists get in. And now, in Deal Hunters Alliance, he shows our Members how they can do the same.