When we do deals, they are almost always proprietary. We do it this way for a couple of reasons. First, we like to keep things intimate. The more players, the more cooks there are in the kitchen. It’s not that we’re control freaks, but keeping everything in-house keeps things more quiet and more simple. Second, we like a deal that can stand on its own. If a company’s technology and team doesn’t stand well on its own, it’s not something we want to invest in. Some larger funds tend to go with the shotgun approach, knowing their returns will be based on an aggregate of some winners and some losers.
Because our deals stand-alone, we often like to find individual accredited investors to participate in private equity offerings. Thanks to some of the great private placements we’ve done in the past decade, we are seeing a larger demand for participation and subscription is some of our small, proprietary deals. We have also seen a great deal of interest for being able to invest in such deals with individual retirement account money. Consequently, we have partnered with Silverstone.net for investing in private equity with a self-directed IRA. The partnership allows us to give the following services to potential investors:
Investing in private equity with an IRA has several upside characteristics, including:
There are a number of risks with investing your retirement funds in private equity which always need consideration. Private equity, especially early-stage deals, can carry a larger amount of inherent risk. You will need to have a strong stomach to handle the risk/reward trade-off. For many, IRA funds are considered sacred as they represent a way to make a steady “get rich slowly” return without having to pay the tax burden. Extreme caution must be exercised when doing deals with money from a self-directed IRA or similar solo retirement investment vehicle. If you are able to make returns even given the amount of inherent risk, you will recognize a great deal of upside, tax free. There certainly is a trade-off, but the opportunity can be very big indeed.