![]() ![]() That reflected slightly lower returns, shorter hold periods, and a record number of new acquisitions. The aggregate pre-tax internal rate of return for investors was 32.6% through the end of 2019, down from 33.7% in a 2018 analysis, and the return on invested capital was 5.5x, down from 6.9x in 2018. A 2020 analysis by the Center for Entrepreneurial Studies at Stanford found that from 1984 through 2019, at least $1.4 billion of equity capital was invested in traditional search funds and their acquired companies, generating approximately $6.9 billion of equity value for investors and an estimated $1.8 billion for entrepreneurs so far. When successful, this has resulted in a relatively fast path for the young graduates to become an owner-CEO and attractive financial returns for both investors and searchers. Then the B-school graduates go out and look for a privately held company, or companies, valued at $6 million to $10 million - it could be a car wash, a health company, a lifestyle company. The group forms an investment vehicle, often a partnership structure. The way it typically works is that group of investors identify and back “searchers,” who may be newly minted MBAs, or MBAs that have been in the workforce for less than a decade. The term originated at Harvard Business School in 1984, was popularized at Stanford Graduate School of Business and has spread steadily to business schools, entrepreneurs and private investors around the world. It's part private equity, part venture capital. There’s a way to do both, through something called a “search fund.” The idea behind a search fund is to back future CEOs in their search for a good company to acquire and lead for six to 10 years. I’m passionate about investing and about mentoring. Brazil is still lagging behind the renaissance streaming has caused in the global music industry, but we’re betting it will catch up and artists will have a bigger share of profits, like it’s happening everywhere else. The strategy is to do almost like a private equity and bring those songs back to people’s lives, be it through advertising, a Netflix documentary on the artists and so on. It’s definitely a risky bet for $1 million, but one that could come with a nice payoff.Īnother way to play: We’ve recently invested in a startup buying stakes in the rights to Brazilian hit songs that people have kind of forgotten about. If they succeed, they could see a 20-fold increase in revenues in five to seven years. And it’s now shifting its business model away from advertising, which has tighter margins, toward making money out of being a broker for sporting bets. Its app, theScore, is Canada’s biggest sporting media app and the third biggest in the U.S. There’s a Canadian small cap, Score Media and Gaming, which could hugely benefit in our view. That kicked off similar changes all around the globe, with the most recent country to legalize it being Canada. Supreme Court paved the way to make it legal. ![]() Sport betting was a black market in practically the entire world until 2018, when the U.S. ![]() One place we’ve been looking for that is in the sport-betting sector. So the real opportunity for gains lies in finding big digital businesses with fast organic growth that could benefit from a winner-takes-all strategy. We also asked for some alternative, creative ideas for allocating that kind of cash in your portfolio, and we got some fun responses that just might inspire you, ideas like investing in a minor league hockey team or hunting for the next big digital hit.įrom a macro standpoint, the world isn’t a very exciting place right now: You don’t have huge growth anywhere, there’s a lot of social inequality. They moved well beyond the standard world of funds and 401(k)s and into the more colorful - and potentially riskier - domains of venture capital, startup investing and even sport betting. We asked a panel of experts who offered us their best ideas on where to put that amount. What are the best opportunities for your money in this environment? Investing $1 million in one shot opens up more possibilities - and of course can involve greater risk. A sense of optimism is building, but it's still difficult to shake the uncertainties of the past year. The pandemic is receding and technology is reshaping the way people across the world invest. Get our new personal finance newsletter delivered weekly to your inbox. ![]()
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