 |
| By Jim Nelson |
Editor’s note: Earlier this week, your startup specialist, Chris Graebe, took part in a special event: “The $706 Billion Private Deal Briefing.”
During that event, Chris sat down with John Burke to discuss his latest pre-IPO opportunity.
Today, at the midpoint in the long holiday weekend, we want to share a sneak peek of that interview.
In this section, they discuss what makes this opportunity different from other startup deals … and why it could boost the profit potential through the roof …
 |
| John Burke & Chris Graebe |
John Burke: Alright. So, let’s talk numbers, Chris. As an investor, … how much of an advantage does getting into big deals early like this one really give you?
I mean, I know you showed us some examples of companies that went public and did well …
And of course, the early private investors did far better.
But for this private opportunity that opens up to Weiss Members on Thursday, Dec. 4 …
Just how early will they be getting in, compared to, say … the venture capitalists who got into those deals that you showed us?
Chris Graebe: Well, this upcoming private funding round is even earlier than most of the examples that I shared earlier.
It’s what I call an Alpha Round deal.
John: OK, hold on. Can you explain what an Alpha Round deal is?
Chris: Sure, it’s one of the earliest funding rounds that a company will go through.
And historically, it has the potential to offer far greater returns than even what most venture capital firms can hope for.
Now, I want to make sure everyone watching this clearly understands the different phases of investing … and why getting in at the ALPHA round can be such an advantage.
These are the different funding rounds a private company holds before doing an IPO.
A successful funding sequence in the sector we’re focusing on here today goes something like this:
First, there may be some initial startup funding — this is typically from the Founders.
Second, there’s often some kind of outside infusion of capital in the form of a grant or funding from a university.
Now, third, this is where people may hear the word or hear the term “Series A” round.
This is the first round of proper private funding, which is basically what we call the Alpha Round.
John: Okay, okay, and that’s the one that we’re investing in, yes?
Chris: Right, right. Viewers today can get in at the Alpha Round level.
Now, after that, you’re going to see right there is a Series B, which typically happens after the company reaches some kind of high-performance milestone.
John: In other words, they’re starting to catch fire here.
Chris: Yeah, that’s exactly right. And this is when you’d see more venture capital funds or big family offices start to get involved, and this is what really just drives up the value of the shares for the investors up — the ones who got in before that moment …
Right, now, after that, you might see a Series C round, this is when the major banks take a strong interest.
And if all goes well, there may also be a series D, E and so on. I think you get the idea.
John: I do. I do and again, because I want to make sure that we don’t miss this point — that we’re crystal clear here:
Weiss Members will have a chance to get in on this upcoming private deal before all these other guys, at the Alpha Round level? Do I have that?
Chris: Correct. Look, that’s exactly the opportunity that I’m bringing to the table today.
John: And you said, that’s where the biggest returns have historically been.
So with that in mind, I’m wondering … could you show us how the Alpha Round gains would compare, maybe using one of the companies from earlier? How about that?
Chris: Yeah, sure, can we get Protagonist Therapeutics back up on the screen, please? OK, thank you.
Alright, so as you’ll recall, IPO investors did reasonably well. They had the chance to claim a 562% return. Not bad at all. Nothing to balk at.
Now, skipping back a couple of steps — to the VC guys at the Series C round.
Well, they got in a lot earlier and their performance? Well, they beat the IPO investors by a mile. They’re the ones that could have made as much as 6,582%.
John: Am I the only one that thinks that’s amazing, Chris? I mean, my jaw … it would be on the floor if I opened my computer and saw a return like that.
Chris: Well, don’t let your jaw hit the floor yet, John, because we’re not done.
Because the Alpha Round gains made even the Series C returns look tiny.
So, the Alpha Round investors in Protagonist Therapeutics could have made as much as — get this — 37,989%.
John: My gosh, Chris!
Chris: Yeah! That’s 67 TIMES more money than the IPO investors …
It’s enough to turn a $1,000 grubstake into $380,890 …
Now, a more ambitious investment of say … I don’t know — ten thousand dollars … into more than $3.8 million.
Or, let’s get crazy … somebody puts in a $100,000 stake, they would have ended up at thirty-eight million dollars, John.
John: These numbers … there’s just no other way to say it … it’s just unreal. It’s so motivating.
Chris: Yeah, you can pinch yourself. You’re not dreaming. These are actual, real numbers. It’s crazy.
John: OK, ok. You got me. You convinced me, Chris! I believe you.
Chris: Now, to be transparent, the Alpha Round of funding in that example happened shortly after the company launched, back in ’96.
So that means $38 million between then and now.
And just over $1.3 million per year in returns, when you average it out.
John: I’ll take it!
Chris: Yeah, I thought you’d like that.
John: Alright, getting back to this opportunity at hand here … this new deal opening on Dec. 4 will that also be an Alpha Round deal?
Chris: Yes. And fortunately for Weiss Members, I think this new company could be a much, MUCH faster success story.
The Journal of Medicinal Chemistry calls it “a paradigm shift in drug discovery” …
And The Lancet, one of the world’s most prestigious medical journals, says, “This single innovation has upended decades of pharmaceutical thinking …”
This revolution has produced life-changing gains for early investors, with returns in excess of 30,000% …
But this time, the rewards for early investors could be even more exciting.
All thanks to a new tech breakthrough that is driving an opportunity worth $706 BILLION.
You can watch the full interview here.
But as noted in their conversation, you’ll have to hurry. The details on how to get in on this Alpha Round will be revealed on Dec. 4.
So, get up to speed now … before this deal opens.
And have a great rest of your holiday weekend!
Jim Nelson
Managing Editor, Weiss Ratings Daily
