The Underground Ventures Model
Updated: Jul 22, 2019
Early stage investing is the riskiest, yet most rewarding investment vehicle. We've seen people like David Cohen ($50,000 investment in Uber now worth $248.3 million), Alfred Lin ($30,000 investment in Uber now worth $149 million), Peter Thiel ($500,000 investment in Facebook now worth over $1 billion), and countless others hit the jackpot with their early stage investments. Conversely, even the best early stage investors get the majority of their picks wrong with the strongest investors winning on about 20% of their portfolio.
While I was able to exit my previous company at a personal profit, I was not able to bring back positive returns for my investors - showing how easy it is for investors to lose money even if a company is acquired for millions of dollars. I created the Underground Ventures model with these facts and experiences in mind.
A company's chances of raising meaningful capital from sophisticated investors are slim to none without a functioning product and for non-technical founders it can be difficult to ensure that what you are building is quality. With Underground Ventures' goal being to help underrepresented founders raise institutional capital and eventually have a successful exit, we take a hands on approach to helping companies with product development. Underground Ventures will invest an equal amount (up to $50,000) as the founding team into the product development to help offset the cost of building a Minimal Viable Product (MVP).
This model ensures that entrepreneurs will have a quality product built, yet mitigates Underground Ventures' risk of a company having a premature exit as both Underground Ventures and the founder group will have invested capital into the venture. Underground Ventures' relationships and partners add immense value to our portfolio companies as we can introduce companies to their next round of capital, a vetted CTO, press, and potential customers.
While the model is not traditional - it provides meaningful capital to early stage companies, ensures that our portfolio companies' MVP's are best in class, and our founders have access that most founders do not receive until much later in the life cycle of the business. If you think your company or any others you know could be a good fit for Underground Ventures shoot me an email at firstname.lastname@example.org.