Investing in Private Companies Around the World?

Dec 5, 2023
Investing in Private Companies Around the World?

Will Jeff Brown Be Investing in Private Companies Overseas and Outside the U.S.?

Jeff, as you have been a pioneer in introducing to us investors to “Day One Investor,” I heard that new technological development is becoming more distributive around the world. For example, over a decade ago, there were unicorns in 30 different cities in the world and in 2021 there were unicorns in 170 different cities around the world. So I wanted to know if you would be researching new startups outside of the U.S. as the trend of successful startups outside the U.S. is growing exponentially. — John S.

Hi John,

This is an interesting question, because it is easy to jump to conclusions about investment opportunities.

Before I answer it for the larger audience, a quick bit of context for those just joining us for the first time...

Day One Investor was a premium research service I developed and founded under my former employer. It focused on leveraging my 30+ years of boots-on-the-ground experience networking and business building in tech… to bring the very best private investment opportunities to regular investors.

I’m referring specifically to Reg CF and Reg A/A+ private deals. These deals are made possible by crowdfunding regulations.

These regulations make the sort of deals that previously had only been available to accredited investors and high net worth individuals available to all investors. And now, thanks to the help recent legislation of the last few years, regular investors can access these opportunities for as little as $100.

This mission became very near and dear to me. So much so, it’s now a cornerstone mission here at Brownridge...

If you’re interested in hearing more about my plans for this, I recorded a quick video here.

A Brownridge Mission

The Brownridge Mission Video
The Brownridge Mission Video

Getting back to the question at hand…

You’re absolutely right about the fact that technology is spreading faster than ever before. And technological development is accelerating, which is both exciting and daunting at the same time.

The primary reason this has been happening is that the cost to use and develop new technologies, and to launch new businesses, has declined dramatically over the last 20 years.

With high-speed internet now widely available, and cloud-based software platforms cheap and accessible anywhere in the world, it’s easier than ever to start and grow a new business.

And cloud service providers like Amazon Web Services (AWS) and Google Cloud are inexpensive ways to access powerful computing platforms.

When we combine this with technologies that are open-sourced for anyone to use and build upon, we have a recipe for growth around the world in any market where capital is available to invest and where there is an educated workforce.

On the surface, this creates interesting investment opportunities around the world… to your point.

With that said, I’ve invested in more than 400 early stage private companies, and only a handful were based outside of the U.S. I know that seems counterintuitive, but there is a good reason for that…

Whenever we think of a private investment opportunity, we’re not just thinking about if it is attractive today, and whether or not we believe that it will grow into a unicorn. We’re also thinking about the likely exits for this company...

Will it be a likely acquisition target? Will it likely merge with another company? Does it have a path toward an IPO? Or will it stay private forever?

These questions are just as important as the attractiveness of the company, perhaps more so.

As investors, we want our portfolio companies to be successful in their mission, and we also want them to have a clear path towards an exit. This is critical considering the risk that we’re taking by investing.

This leads us to the capital markets and the venture capital/private equity infrastructure.

Put simply: There is no other market in the world that has more mature and robust venture capital, private equity, and public markets than the U.S.

The U.S. market is not perfect — no market is. But when it comes to building private companies, and unicorns, the U.S. is unmatched.

U.S. venture capital firms are aggressive and risk tolerant in how they deploy capital. And they are good at extrapolating future value. This results in the willingness to invest large amounts of capital to fuel growth in companies that they believe in. This also means that valuations rise just as quickly.

It’s like a large flywheel that feeds on itself. At each stage of a private company’s growth, there are new categories of institutional investors that help take private companies to the next level.

The “infrastructure” is so well built that there is a natural momentum to fueling accelerated growth. That’s why there have been so many unicorns in the U.S. market.

And as an investor, we like to see these rapid and regular increases in valuation as companies rise through their growth to $1 billion+ companies.

This doesn’t mean that there aren’t good investment opportunities outside of the U.S. markets. There are. It just means that there are a lot more in the U.S.

Said another way, it’s a way to stack the deck in our favor by investing in capital markets that move fast and accelerate growth.

With that said, I am open to companies outside of the U.S. — as long as those markets have good investor protections, liquid capital markets, and a clear path towards an exit.

And as long as the companies are willing to take advantage of U.S. crowdfunding regulations which enable all investors, regardless of accreditation status, to invest. 

Thanks again.

I'm looking forward to taking more of your questions on the next AMA. Please feel free to submit them here.

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