As we look back at the first quarter of 2021, the initial thought that pops in my mind is “whew, we made it!”
However, when I take a look back and survey the business and economic climate, the thought changes to “oh yeah, we’ve arrived!”
The Market Has Rebounded into A New Golden Era for Investment Growth
The economic numbers are showing that we are setting up for a stronger than expected rebound for 2021, and the future outlook for the economy is hot … like “core of the sun hot!”
Let’s take a look at some of the growth drivers:
- Focused Monetary Policy –Federal Reserve Chairman Powell recently shared his thoughts that inflation is still “soft” and that the Fed will remain focused on its current policy. You can read more about Chairman Powell’s thoughts HERE.
- Government Stimulus –The Government has committed TRILLIONS of dollars in stimulus, and will continue to do so in a coordinated manner to ensure that not only inflation is curtailed, but that people get back to work and GDP is growing at healthy levels.
- Growth in consumer spending –Consumer spending on goods and products grew in 2020, and will continue to grow in 2021. As we go back to a sense of normalcy, it’s projected that pent-up consumer demand for services will be a catalyst for spending growth for services in 2021. This will be a great addition to the already seen growth in goods and products. Here’s an insightful summary of consumer spending projections in 2021.
All of this is setting up 2021 (and the next few years) to be a banner year for all of us individual, everyday investors. We’re positioned to benefit from an unprecedented fiscal stimulus agenda and a thriving economy for consumers across all income brackets.
Private start-up companies have spent the last 16 months (or more) building the next generation of market disruptors and innovators. You know, the next Ubers, Amazons, and Bumbles of the world.
These start-ups are coming into 2021 with well-thought-out business plans, business models, and focused management teams. We investors stand to be the beneficiaries. That means YOU.
As a matter of fact, I believe that we’re at the dawn of the next “golden era” for individual investors.
Yes, you read that correctly. Repeat after me. “We are at the dawn of the golden era for individual investors” that will be driven by massive investment activity by everyday investors like you and me.
I know it’s a pretty bold statement, but I wouldn’t be making it if I didn’t believe it.
Net, net…2021 is setting up to be a great year for investors and I will tell you why – see below!
History Has a Tendency to Repeat Itself
History has shown us that in times of adversity, innovation continues to move forward, and in many cases, start-up companies accelerate their business models during adverse periods.
Remember the dot-com bubble crash from 2000 – 2002? Companies like Tesla (Nasdaq: TSLA) and Facebook (Nasdaq: FB) were being developed during the depths of the crash, and launched in 2003 and 2004, respectively.
What about the 2007 – 2008 global financial crisis? Airbnb (Nasdaq: ABNB) was founded in 2008 and Uber (NYSE: UBER) was founded in 2009. Again, these start-ups took the “lemons” that 2007-2008 gave them, and turned them into “unicorn lemonade.” Sounds tasty!
And as we lived through the chaos of 2020, you can be assured that start-up companies (like the one that I founded) have been working tirelessly to build the foundation and business models to take advantage of the massive growth trends like telehealth and direct-to-consumer e-commerce that surfaced and took hold.
In addition, the “professional” investment community has been ramping up its efforts in 2020 in preparation to start making investments in 2021.
Don’t just take my word for it.
Just look at what the venture capital community did in 2020.
We can all agree that venture capitalists are pretty in tune with the trends and activities in the start-up community. After all, that’s what they do for a living … and a great living at that.
Did you know that the venture capitalists raised a RECORD $69 billion in 2020?
That’s right, a RECORD amount of funds were raised by the VCs in 2020.
To me, $69 billion of newly raised “investment powder” is a great signal that the venture capitalists, who are in the know, rushed to raise A LOT of money to be ready to invest in this next group of start-ups.
The VCs know that the cycle of the next generation of start-up companies being created in times of chaos is happening now. So they raised a record amount of money so they could be primed and ready.
As we come into 2021, these same start-up companies will grow and eventually become the next Wall Street darlings…and most important to Wall Street investment bankers, fueling their wallets with advisory and transaction fees.
Remember, as the VCs make investments in private companies, they then will eventually be fed to Wall Street bankers, who then take them public.
Individual investors like us get the opportunity to buy stock in these companies after they’ve gone public. Unfortunately, we’ve missed out on the ground floor investment opportunities and can only invest once their valuations have been increased.
… BUT THAT’S ALL CHANGED!
Regulation A+ Offerings Allow Everyday Investors to Become VCs
Did you know that the SEC has updated its investment rules for Regulation A+ offerings (also known as Mini-IPOs) to now allow every day, individual investors (like you and me) to have the opportunity to invest in start-ups like a VC?
So what is a Regulation A+ offering?
And what is a Mini-IPO?
Regulated by the SEC, Regulation A+ offerings Mini-IPOs allow for companies to raise capital from a large pool of investors that are both accredited investors (high-net-worth individuals) and non-accredited investors (every day, individual investors). Thus, everyday individual investors can now join net worth individuals to make investments in private start-up companies…just like venture capitalists. You can read more about Regulation A+ offerings HERE.
An added strategic advantage to all of this is that investors in start-up companies typically become customers. Many companies like the one I founded, Greenfield Groves, have a direct-to-consumer focus, which is a huge value-add. Just think of those thousands of investors who become customers who then tell their friends and family about the company’s products and services, and it becomes a multiplier effect!
So, as you evaluate 2021 investment opportunities, I would suggest you don’t sleep on making investments in private companies that have Regulation A+ offerings, especially those that are offering ground floor investments. The Greenfield Groves Regulation Mini-IPO is your chance to invest responsibly and become part of a rare opportunity.
Investors Have Many Options to Get Liquid
So how does my Regulation A+ Offering investment become liquid?
In the past, private start-up companies either went public (through a traditional IPO or reverse merger) or were folded into another company through a merger or acquisition (M&A). Only when this happened did investors become liquid and stand to recognize gains from their investments.
However, in today’s environment, investors in a private start-up company’s Regulation A+ Offering now have many more liquidity options than in years past…which is AMAZING.
Current liquidity options for investors in Regulation A+ Offerings now include:
- Private market secondary transactions
- Merger and acquisitions
- Direct listings
- Special Purpose Acquisition Companies (SPAC)
- Going public via a traditional IPO
Because there are now so many different liquidity options, it’s a great time to be an investor in Regulation A+ Offerings.
Let’s now take a deeper look at each of these liquidity options.
Private Market Secondary Transactions
Some start-up companies decided to stay private longer, so there was a need for early investors and employees to explore potential liquidity options that didn’t necessarily align with the timelines of the company.
Thus, there was an opportunity for the creation of “private market secondary transactions.” These allow for shareholders of private companies who are seeking liquidity to find private buyers and sell their shares directly to them.
The nice thing is shareholders can be both early investors and employees who own stock in a company, and the stock they sell can be both preferred and common shares.
The one downside to private market secondary transactions is the valuation and price of the shares. Many companies close several rounds of venture capital investments, referred to as a “Series” that typically have increased valuations from Series to Series. While these step-ups for a company are exciting for the early Venture Capital firm, it is typically hard if not near impossible for everyday retail investors to find a reasonable share price for the shares that are being offered in the secondary market.
Mergers and Acquisitions (M&A)
Investors can recognize liquidity through the private sale of a company to an acquiring company or private equity firm. Mergers and acquisitions have long been a traditional way for investors to recognize gains from their investments in companies.
With all of the momentum in the stock market, let’s not forget that M&A transactions were some of the key drivers in building eye-popping and newsworthy stock gains.
Oh, and given how weird 2020 was, did you know that the M&A market had historic gains?
Did you also know:
- In the 4th quarter of 2020, there was a RECORD of 1,250 global M&A transactions that totaled $1 trillion?
- Sponsored deals (private equity firm deals) comprised 26% of overall M&A activity in 2020, which is the HIGHEST % since BEFORE the global financial crisis?
- Financial sponsors (again, private equity firms) have amassed a RECORD $2.9 trillion of capital that is available to be used to buy companies?
Here’s a more detailed outlook of the M&A market by Morgan Stanley that includes the above points.
Given the low cost of capital … like really, really cheap money that can be borrowed, government stimulus, pent-up demand, and euphoria to get back to doing normal things, I believe that the M&A market will continue to be a hot market that provides liquidity options to investors for many more years to come.
What is a direct listing?
Direct listings allow for private companies to sell their shares to the public without hiring an investment bank to underwrite the process like in a traditional IPO. Companies can pursue direct listings on the Nasdaq and have recently been approved to do so now on the NYSE.
Direct listings have demonstrated to be a GAME CHANGER for companies, as they truly democratize the IPO process, and create opportunities for everyday investors to get into IPOs, which has not been the case when investment banks run the process in traditional IPOs.
For private companies that have an existing large investor base, direct listings become an even more attractive option because they have a built-in shareholder base that could create trading volume from day one of being listed on an exchange.
Benefits of doing a direct listing include cost savings of underwriter fees that are paid to investment bankers (fees are approx. 7%+ and higher), AND opportunities to attract more investors to purchase shares, which would increase the shareholder base.
In 2018, music streaming platform Spotify (Nasdaq: SPOT) was one of the first major companies to go the direct listing route. Since then, others have followed that included security company Palantir Technologies (NYSE: PLTR) and work management platform Asana (NYSE: ASAN).
Oh, and did you hear that the recent multi-billion dollar Coinbase IPO is a direct listing?
Additionally, the NYSE has plans to allow for an “auction” process to sell shares via direct listings, which would allow for investors to participate in the direct listing and give companies a better chance to achieve their fundraising goals. The Nasdaq is pursuing approval for a similar auction process for its direct listings with the SEC.
These recent and ongoing developments could make direct listings a very popular option for companies to create liquidity for their investors.
Love them or hate them. However you feel about traditional initial public offerings (IPOs), they’re still one of the most popular liquidity options for many companies and their investors.
Because they are proven to work. For decades, traditional IPOs have created tremendous wealth for company founders, angel investors, venture capitalists, and private equity investors. IPOs are also synonymous with Wall Street. The last time I checked, Wall Street isn’t going away anytime soon.
Even in a crazy 2020, where bankers worked from home, and real roadshows were replaced by virtual Zoom roadshows, the IPO market was red hot.
According to Stock Analysis, there were 480 IPOs on the U.S. stock market in 2020, which was a RECORD NUMBER in a single year. The previous record was 2000 when 397 companies went public. FactSet estimates that $174 billion was raised from IPOs in 2020.
The 2020 numbers are a little misleading due to the record amount of SPACs that came to market – more on that below.
That said, traditional IPOs will still be a valued option for companies seeking to provide liquidity for their investors, founders, and employees.
Special Purpose Acquisition Companies (SPACs)
Many of you will ask, what a special purpose acquisition company, also known as SPAC. A Special Purpose Acquisition Company (SPAC) is a company that raises money by going public in an IPO and THEN looks to acquire a company. SPACs are also referred to as “blank check companies” because they raise money and then use the monies as a “blank check” to look for a company to purchase.
SPACs have been around for a while, but they have really become popular over the last few years. So much so that they’re the MAIN REASON why the overall IPO market had a record year in 2020.
Here are some interesting things you should know about SPACs:
- Monies are raised blindly without having a target company to acquire.
- SPACs have up to two years to find a company to merge into OR they need to send the monies raised back to the investors.
- Investors can request their money back if they don’t like the company the SPAC intends to buy.
- SPACs still need to create awareness and attract investors to buy and sell their stock to create trading volume, AND once an acquisition has been announced, SPACs will still need to create trading volume for any follow-on fundraising rounds.
According to SPAC Insider, 248 SPAC IPOs raised $83.3 billion in 2020. Both the number of SPAC IPOs and the total amount raised were record-setting figures.
Not to be outdone by 2020, SPAC Insider has reported that 2021 has already seen 306 SPAC IPOs come to market, representing $98.9 billion in monies raised. That compares to the 55 traditional IPOs that have raised $21.7 billion so far this year, per data from IPO research firm Renaissance Capital, referenced in this Crunchbase article.
The fact that 2020 was a record year for SPAC IPOs and we’ve now already seen more SPAC IPOs and total monies raised in the FIRST FOUR MONTHS of 2021 … is just INCREDIBLE!
And according to a Wall Street Journal article, start-ups are now looking at SPACs as an alternative to venture capital investments.
Another possible interesting idea is for private companies that already have large investor bases to merge into SPACs.
For example, companies that have a Regulation A+ offering could theoretically have thousands of investors. A large and established investor base would possibly be very attractive to a SPAC because they have existing shareholders who could help create trading volume for the SPAC’s stock.
Is your mind blown with the possibilities given the fact that SPACs have a limited time to find a company to acquire, AND have a need to create trading volume?
Oh, how about the fact that start-up companies that have Regulation A+ offerings could be very interesting targets for SPACs? Are you thinking Greenfield Groves? I thought so. Keep reading to learn more…
Get In…or Risk Missing Out
Now that we’ve reviewed all of the various options of how investors can become liquid, what’s the next step?
Well, if you’re not in the game, then you can’t play…and that’s certainly no fun!
And if you’re not playing, then you don’t have a chance to get liquid.
And if you don’t have an investment that eventually creates a liquidity event, then you’re not creating wealth for yourself and your family. Boom.
It’s just that simple.
I want you to be in the game, so you can play … and eventually get liquid, and create wealth.
I happen to have the perfect Regulation A+ offering opportunity that you should not miss out on. It’s called Greenfield Groves.
Greenfield Groves is pursuing disruption in the massive $5 trillion Global Wellness Market and it’s appealing to the wellness needs, consumption habits, and buying decisions of the Matriarch audience that controls $43 trillion of global consumer spending.
FULL DISCLOSURE, I founded Greenfield Groves. I believe so much in the market opportunity and I am passionate about what The Company is pursuing…so why would I keep it all to myself and not share it with you, a possible investor, and my readers?
Here are some highlights about Greenfield Groves and the foundation that has been built over the last 18 months. We know it’s important for you to understand who we are, what we do, and why we do it.
- Has a proprietary, HIPAA-compliant telehealth platform that is can scale telemedicine and virtual wellness consultations.
- Successfully formulated and brought to market a private label wellness brand for a celebrity.
- Developed its own unique, proprietary wellness and beauty brands to keep the mind and body sound, especially in our world’s current environment.
- Built out an agile supply chain to support the development and production of 100+ beauty and wellness formulations.
- Successfully farmed its own CBD hemp botanicals and turned crops into finished oils that represent 1.25 billion milligrams of raw material to be utilized into seed-to-shelf finished products with an estimated MSRP value of $175 million.
- Developed a multi-channel ad network footprint for broad marketing campaigns.
- Developed e-commerce and automation technologies.
- Assembled a team of entrepreneurial operators who understand retail, branding, technology, search, digital advertising, and direct-to-consumer e-commerce.
Here’s to the Wellness of Your Wallet!
The Entire Greenfield Groves Team