June 11, 2025 • 40 mins
What happens when your wealth manager fires you after losing your money? For Graham Rowan, it became the catalyst for moving into private equity investing before founding The Inside Investor Club.
His club typically invests in companies valued between $20-80 million, making $500k-$2M raises accessible to its community of about 200 high net worth families.
Graham's business model represents the growing direct to investor businesses models proliferating in many different forms. In this one we see investor education merging with exclusive direct investment opportunities
FinPub Pro is produced by The Financial Marketing Summit, the #1 networking and marketing conference for financial newsletter publishers, trader educators, and digital financial media.
John Newtson, host and founder of The Financial Marketing Summit can be reached via LinkedIn at John Newtson
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
All right.
Hey everyone, I'm here todaywith both Graham Rowan, who's
the CEO of Inside Investor Club,and Nick Rathwald.
I'm sorry, nick, I said yourname wrong.
Nick Rathwald, director ofBusiness Development.
Welcome guys, thanks for beinghere.
Thanks.
Joel.
Speaker 3 (00:17):
Great to be here.
Thank you for inviting us.
Speaker 1 (00:20):
Yeah, so, nick, I've known you for 20 years.
Yeah, we go way back to ClaytonMake Pieces Conference, where I
, that's right, yes.
And it's been so great to seeyour career kind of evolve here.
And, graham, you have quite theinteresting background here.
So what we're going to be doingtoday is talking about the
(00:40):
Inside Investor Club.
But I mean you've written abook Diary of a High Net Worth
Investor.
You've had three TV series onsky TV.
Is that right Like make yourmoney work finding financial
freedom, money in me?
You've also spoken at a varietyof places including working
(01:01):
with.
Speaker 3 (01:01):
What is it?
Speaker 1 (01:01):
Beaufort private equity, yeah, yeah, yeah, so
educating basically hundreds ofhigh net worth investors about
private equity investing,correct?
Speaker 3 (01:09):
Yeah, that's right, it's.
I mean, the background reallyis that I came originally from a
corporate background.
I was a director of TexasInstruments that many of your
viewers will know, your viewerswill know and I had a
professional wealth manager whoput all my money into the NASDAQ
(01:30):
and then left it in there whenit crashed and burned at the
beginning of the 2001.
And then they said that thelosses meant that my net worth
was below the level at whichthey looked after clients, so
they would have to let me go.
So I got fired by my own wealthmanager for the losses they
made in my account, and that wasthe start of my journey to
taking personal control of myfinancial future.
(01:53):
And eventually that led me intomaking lots of investments, some
of which worked, some of whichdidn't, and really, because of
the losses they'd made, I waskind of behind the ball.
I was already in my mid-40s, Iwas not where I needed to be, so
I kept looking for how I couldplay catch up to find something
that would give me good aboveaverage returns.
(02:15):
Because if you look atsomething like the S&P 500, it
averages just over 7% a year,net of inflation, which is great
if you've compounded thatacross three or four decades.
But if you're in the position Iwas in, that wasn't going to be
enough.
So eventually, that's what, Iguess, lured me towards direct
private equity, where you canget 3x, 5x, 10x returns in a
(02:39):
relatively short period of time.
So, having kind of found thatsolution myself, friends and
family and so on just keptasking me what you're doing, and
that eventually led me toforming, you know, investment
clubs where I could help them todo the same thing.
And that's really the currentmutation of that, if you like,
is inside investor club that youmentioned.
Speaker 1 (03:00):
Interesting.
So private equity is a broadterm, right, it means it means
lots of things.
When you're talking aboutprivate equity investments,
what's kind of the range ofopportunities that you are
bringing to people right now?
Speaker 3 (03:27):
or KKL or anything like that.
We are looking at directinvesting into growing but
relatively young companies.
So I have a whole bunch ofcriteria I look at.
I certainly want them to besolving a real problem in the
real world, ideally with someunique technology or
intellectual property that canbe protected, so, for example,
through patents.
I'm looking for the size of theaddressable market to see if
they've got the potential to be,if not a unicorn, at least to
(03:49):
be 10x bigger than they aretoday.
I'm looking for the quality andbackground of the founders and
I'm looking for some decent skinin the game from the founders
so that they're going to reallybe focused on making this
particular business work.
So typically we would probablycome into firms that have an
enterprise value of anythingfrom 20 to maybe 80 million.
(04:10):
We'd be looking to do anythingfrom a half million to a two
million raise at those kind ofvalues.
It's not actually uncommon forus to do several raises at
different enterprise valuesacross a two or three year
period.
As the company grows, the storygets better.
People are prepared to come inat higher value.
So typically we're looking forsomething that would 5 to 10x in
(04:35):
a period of anything from threeto seven years.
And I also try and get someclarity on the exit, because
every pitch deck you read saysit's going to be a trade sale or
an IPO.
Well, I want to dig a bitdeeper than that.
Have they already got a targetin mind?
Because these days fewer andfewer companies use IPO.
For the exit there's usuallyeither a trade sale or perhaps a
(04:58):
sale to a private equity fund.
So I want to see how switchedon the founders are to that,
because some of them the reallycool ones they're grooming the
business for only two or threepotential buyers even from when
they very first begin, becausethey can see if they build it to
this level, it'll be such aperfect strategic acquisition
for that company.
Speaker 1 (05:20):
There's two thoughts that I have on that related to
what we've seen in thepublishing space and other sides
.
One you have the founders, whounderstand the business of the
business, and then you have thefounders who also understand the
business of the money and thatonce you start getting into the
world of looking into businessesand investable asset, the
knowledge of the business of themoney side of the business is
(05:41):
critical in that even greatbusinesses otherwise are ruined
because the founder didn'tunderstand the financing side
and kind of what theopportunities were.
And then the other part of thatis that in the publishing space
we've seen, especially on thekind of the crowdfunding product
side, places where people weretrying to invest in private
(06:02):
deals, the issue of the lack ofliquidity for subscribers has
been a real problem for folks,the fact that things a lot of
times things were not going tohave an exit, that even in kind
of a more of a venture capitalkind of product model, you know
that most of those companiesaren't going to work, especially
(06:24):
if they're just scraped off ofcrowdfunding platforms, and so a
lot of the money kind of becamedead money because there was no
exit plan and the analystsweren't really looking at what
had a real exit plan, and sothat became a real problem in
the business for a lot ofreasons, but most fundamentally
because it ended up not beinggood for the customer.
Speaker 3 (06:43):
Yeah, I think there's two points to pick up on there.
I think and the first one isvery definitely part of the
evaluations of founders is, as Isay, they're not just a bunch
of tech head students who had agreat idea.
I look for a bit of maturityand people who've been around
the block a few times.
But also what we find is thatwe inside Investor Club often
(07:04):
end up having to help them totell their story in investor
speak.
You know they can talk all dayabout their technology, but they
can't talk about, you know, howthey're going to increase
enterprise value, how we'regoing to get to these milestones
, where the exit's going to comefrom, what's plan B if that
exit doesn't work out.
So we end up really, you know,holding their toes to the fire
(07:26):
on those things so that we canactually strengthen the story
and go out to our investors.
Because you know I have a bunchof about 200 high net worth
families who are in the club andyou know they are gray haired,
a little bit cynical, beenaround the block, had the kind
of problems you've talked about.
So you know you can't pull thewool over their eyes.
(07:46):
You've got to be clear thatthis is how we believe it's
going to work.
This is the proposed exitstrategy, but the other thing I
would say is we're verydefinitely not the kind of
venture capital spray and praylet's invest in 100 in the hope
that five or six will workapproach.
I very much take the WarrenBuffett approach that he has in
(08:08):
the public markets and applythat in the private markets.
I only want people to make fouror five decisions in their
portfolio and to be clear.
We have a kind of modelportfolio we share with our
members where private equitywould be maybe 20 to 25% of it.
We're not saying put all thechips on red.
(08:29):
We're looking at yes, have someof the public stock markets,
have some dividend paying shares, have some rental real estate,
have some Bitcoin, have somegold definitely keen on that but
for that 20, 25% of yourportfolio.
That's where you're going tomove the dial, and I just
published a white paper thatI'll send across to you after
(08:51):
the call, where one of thethings I point out is there's
this artificial wealth effect.
I called it.
I'm a millionaire, so why do Ifeel poor?
And it's all about the fact that, really, if you look at real
estate the S&P 500, all they'veactually done in recent years is
keep pace with the increase inthe money supply.
(09:13):
So, in a fiat currency world, ifyou double the amount of
dollars in existence and there'sstill the same number of shares
or houses, all you've done isdouble the number of dollars you
need to buy that amount ofhouse or share.
You haven't actually gotwealthier.
So, whilst it's way better thanholding it in cash, because at
least you've kept pace with acombination of inflation and
(09:37):
currency debasing, to make realprogress and move the dial you
need something like privateequity that can go way above and
beyond that.
Otherwise, frankly, you needsomething like private equity
that can go way above and beyondthat.
Otherwise, frankly, you're justmarking time, and a great way
of doing that is to compare theDow Jones to the price of gold,
and you'll see that today we'reexactly where we were just
(09:57):
before the Wall Street crash of1929.
So you get a very differentperspective on where either your
home or your investmentportfolio is at when you come
out of the fiat world andcompare it to something real
like the price of gold.
Speaker 1 (10:13):
Yeah.
So let's step back then andtalk about the Inside Investor
Club as a publishing platform.
So it seems to me that, if Iunderstand it correctly, then
you have there's a membershipand then you have coaching, but
the membership is the corebusiness and that you have.
In that membership, like yousaid, you have your modern
portfolio and you're bringingunique deals.
(10:33):
The tone and everything of thebusiness seems to me, and the
goal of acquiring customers isthat kind of high net worth,
like you said, family high netorder to be able to put 20% of
your portfolio into a deal likethat where you're looking at
(11:04):
maybe a $50,000 to $100,000investment.
Speaker 3 (11:07):
This is not somebody who has $20,000 or $100,000 in
their yeah, no, absolutely, andwe are constrained by regulation
, so we can only deal withaccredited or high net worth
investors.
Obviously, the rules for thatspecifically vary from country
to country, but it's quite a lowbar.
In the UK it's an income of100,000 a year or a quarter of a
(11:29):
million investable assets.
I know it's a bit higher thanthat in the States, but, yeah,
we just want to deal with peoplewho are comfortable with this
kind of investment where it'snot going to make them lose
sleep at night.
You know, to be frank, we foundthat the people at the lower
end are often the ones that arethe hardest the highest
maintenance, if you like.
(11:50):
So, yeah, we only want to dealwith people who are accredited
and within that we only want totalk about 20% 25% of their
portfolio.
So typically we'd be looking atsomebody with a low
seven-figure net worth,something like that.
Usually they've been anentrepreneur or a big real
estate investor, something likethat, and certainly in the UK
(12:13):
there are even tax breaks whenyou move from real estate into
some of these smaller companies,because the government's trying
to encourage this sort ofinvestment to get growth in the
economy.
So, yeah, the starting point isvery definitely, uh, we're not
the at the biz op end of themarket or the.
You know that perhaps some ofthe trading platforms where they
come in with a low initialstake and try to build it, we're
(12:34):
looking for people who'vealready achieved something like
that success low seven figurenet worth upwards and that's
where we find our sweet spot.
Speaker 1 (12:43):
And so what's the customer experience like when
they join the club?
What is it that they get?
What do you do?
Because it seems like you seemto have some events that you do
as well.
So what's that look like from acustomer?
Speaker 3 (12:52):
experience.
I think what makes us prettyunique, I think, is that we
combine the kind of coaching andmentoring that we think is
needed to make somebody aconfident private equity
investor with the access to asmall number of these
opportunities where we've doneall the hard work on due
diligence.
Now we can't give financial orinvestment advice, so we always
(13:14):
have to leave it to theindividual member to make a
decision, but what we're tryingto do is empower them to make
those kind of decisions throughhaving had some training and
coaching.
We also do quite regular marketupdates.
We have a twice weeklynewsletter that keeps them up to
speed, not just with our owncontent but all other stuff
around there on what's happeningin the world.
(13:34):
You know wider in the widerworld.
And then, yeah, we have onlineevents and we have live events,
because one of the things youfind is that people really value
meeting and networking withlike-minded folks.
Because there's so few placesyou do that and if you are into
this kind of investing, thechances are most of your own
(13:55):
friends and family are not.
You know we always find we'refishing in a small pool here.
You know we always find we'refishing in a small pool here.
You know, it's like 3% of thepopulation that seems to care
about their financial futuremore than their next iPhone or
their next holiday.
So when you can get 100, 150people of these people in the
same room, it's frankly, for me,is the kind of master of
ceremonies.
It's quite hard to keep themunder control because they
(14:17):
wanted to talk to each other somuch.
So it's a combination of the.
It's printed information, youknow, it's emails, it's live
updates online.
We do a monthly Zoom call wherepeople can ask me anything
about wealth creation or wealthprotection, and if I can't
answer it, I'll get them intouch with someone who can.
And then there's the whole kindof investment portfolio side.
(14:39):
So it's it's really we do tryto create this sense of
community.
We are quite exclusive, as Isay, less than 200 members at
the moment, but we are.
We're seeing we have somemembers in america already.
We're seeing a lot of interestfrom america and also, obviously
, we're seeing lots of privateequity things happening there.
The next couple of raises thatI'm doing are for companies who
(15:00):
are already strong in placeslike Singapore, india, the UK,
but are also going to migrateinto America because they can
see the opportunities there.
So you know, I would think, ifwe're having this conversation,
in a couple of years time we'llprobably have as many members in
America as we do in Europe.
Speaker 1 (15:19):
Very interesting.
That's very interesting.
I like this approach that is alittle bit more comprehensive,
right.
It's not like here's a tradingstrategy or here's trades, it's
a more comprehensive look atwealth building for somebody.
It kind of reminds me a littlebit of the not exactly,
obviously, but the Tiger 21model where, um, they have high
(15:42):
net worth and it's basicallylike you get together with peer
groups to kind of look at, like,what you're doing with your
money, um, to make sure thatyou're, you know, not not
ruining your portfolio, um, andthat I think it's a very
attractive piece that you havefor that higher net worth person
Because, like you said, thetradition of what they have, or
(16:03):
they have their wealth advisors,a lot of whom are really just
asset gatherers, they'resalesmen, and so having a peer
group and having the expertiseto kind of say let's look at
this a little bit morecomprehensively.
But you're not so you have amodel portfolio.
I'm assuming, then, that you'renot so you have a model
portfolio.
I'm assuming, then, that you'retalking about some of the
(16:24):
larger trends in kind of thegeneral markets at any given
time.
I think there's something goingon with tariffs, I'm not sure
right now.
Oh, wow, yeah, I tell you.
Speaker 3 (16:32):
I mean, I don't know about you, but certainly for any
of us who've been around theblock a few times, I think the
2020s are turning into one ofthe most challenging decades.
I think I would perhaps comparethe 1970s to it, but I just had
access to some research whichisn't going to be officially
published until July, so I'llshare a couple of things from it
(16:54):
with you.
This is all about.
You know, this massive wealthtransfer that has just about
started between my kind of babyboomer generation and then the
gen x and the millennials I meanit's around about 80 trillion
dollars is going to change hands, and there's a survey done of
the family offices where this ishappening and 81 of those next
(17:16):
generation inheritors are sayingthey're going to change their
wealth management companybecause they don't like the job
being done by the one theirparents are using, and 51% of
them are saying the biggestthing that's missing is access
to direct private equity.
So I think we're seeing agenerational shift between the
(17:37):
patriarchs who kind of went for,I guess, for real estate and
bonds and all that kind of moreconservative stuff, the next
generation of saying hold on,there's all these other
opportunities that we're noteven getting access to from our
conventional wealth managementcompanies.
So I'm kind of thinking well,that's very much the space we're
in, so maybe the opportunity isthere to partner with some of
(17:58):
these organizations to fill agap that they clearly are not
providing at the moment.
That could cost them a lot ofbusiness as those kind of wealth
transfers start to really takeoff in the coming years.
Speaker 1 (18:10):
Yeah, that's very interesting.
I think that we've seen thatdefinitely over the last, I
guess, 12 to 15 years, that mostI mean so much money has moved
out of the public market intothe private markets and there's,
you know, kind of the sensethat the public markets have
almost become kind of a mutualfund, in that it's just
everything tracks and that a lotof the alpha is in the private
(18:32):
markets.
And, like to your point earlier, like fewer and fewer companies
are using an IPO as their kindof exit strategy or even part of
their path.
And then you kind of add tothat that there's so much
restrictions on who can invest.
And we've seen things like inthe US with, like the rise of
(18:53):
the crowdfunding market and Iknow this in the reggae market
raises.
But and obviously this week wehad a big I think it was Newsmax
Um, you know they, they had areggae earlier on that people
were able to invest in and theyhad a very large IPO.
But it's very rare for reallysuccessful companies to offer
any type of investorparticipation, um, to retail
(19:17):
investors in any way at thispoint and they stay private
longer and most of the exits,like you say, are to other
companies.
And so it's definitely an areathat's grown across the board
and, from a publishingstandpoint, we've seen a
shrinking of the number ofstocks over the last 25 years,
and that means the number ofopportunities to choose and how
(19:37):
much interest has moved towardsthat.
Private markets and one of themessaging things that I see, and
I'm seeing it this week, andhow much interest has moved
towards that private markets andone of the messaging things
that I see, and I'm seeing itthis week and very much, is that
one of the kind of sales pointsthat I see the salesmen and the
bankers and stuff using thesedays is oh look, the market's in
(19:57):
free fall, but the value ofthese private deals hasn't
changed, and so it's beingpositioned correctly and in some
cases incorrectly as beingdisconnected from the market as
a whole and so it's not asvolatile.
Now there's different issues,obviously, besides that, but it
(20:18):
is an interesting dynamic to seethe conversation go in that
direction, where it's, like youknow, public markets are very
tricky, especially in times likethis.
Private markets offer somestability to the value of the
investment that we're not seeingin a more volatile market.
Speaker 3 (20:37):
Yeah well, I think this is definitely true of
private equity because it's notmark to market in a kind of real
time basis, the way the S&P 500is.
It means you can sleep at nightwhen it goes through a period
like this.
Now, obviously it doesn't meanthat they're completely isolated
from economic developments andeconomic reality, but they do
have control over when there'sgoing to be a capital event.
(21:00):
So you know they will onlyissue more shares if they need
more money, and they would onlyand they would time any exit for
a good period in the market.
So we shan't know the impact ofall these tariffs for at least
a couple of years.
So we've got time to sit backsee how that's going to evolve.
Of course there'll be winnersand losers, and I think some of
(21:21):
them will be quite unexpected,if you like, in terms of the way
things will be tweaking around.
So this is a good time to notbe in the public market from a
volatility perspective.
And yes, obviously at somepoint you will become relevant
to that if you're going to IPO.
But if you're just going tosell to another private equity
(21:42):
company, you're not going tofind that problem.
And there has been a viewbecause some of the private
equity funds have been tradingat a discount to their net asset
value.
So there's been a kind of arumor that they were overvalued
and if they did actually come tomarket they'd be a lot lower.
Well, that hasn't actually beenthe case.
Where the big funds have beenexiting companies, it's been at
(22:03):
or above the net asset value onwhich they were being held on
the balance sheet.
So that's one point to bear inmind.
The other thing to bear in mindabout the wider private equity
sector is that the fastestgrowing area now is what they
call secondary funds, where youperhaps invested in a company
early doors.
It's now gone into two or threeyears.
(22:25):
And then there's a possibility.
There's, for example, aplatform in London called
jenkins where you can go onthere and buy private equity
shares from the original owner,if you like, um, and that means
they can get liquidity but at ahigher price than they
originally paid.
You come in kind of halfwaythrough the journey, so they
might be going to an ipo or atrade sale and you effectively
(22:49):
pay more than you would havedone, but you also save three or
four years of time.
So those secondary markets aregoing to become bigger and
bigger, I think, and there aresecondary funds out there now
that specialize in acquiringcompanies that are effectively
secondhand, as it were.
They've gone through two orthree years of growth.
So that will also, I think,start to address the liquidity
(23:11):
issue as we go forward, becausethere'll be people that want to
sell and there'll be people thatwant to buy into a story.
So, for example, you look atsomething like SpaceX.
That's a privately held companyNow it's now worth I don't know
how many billions, but imagineif you'd been able to get into
that when it was worth 50 or 100million and go on that journey
into the mega billions.
(23:32):
You'd see a tremendous returnfrom that company.
So some of those shares, theydo a secondary sale every six
months, I think.
So you're getting intocompanies like that on the
private secondary markets as awhole new emerging sector as
well.
Speaker 1 (23:47):
Yeah, that is an exciting area and I think I'd be
curious to know too sinceyou're not a fund here and
you're bringing individualinvestors and you're doing these
raises what's the, what's thekind of company perspective on
working with?
You know, 100 or more retailinvestors, high net worth, to
raise money, like where does?
(24:07):
What kind of conversations areyou hearing from them?
Obviously they're interested init.
They're doing the deals withyou.
How do they kind of view thisversus going to a traditional
fund?
I mean, I'm assuming they'redoing that as well and this is
just another kind of tranche ofraise for them?
Speaker 3 (24:23):
Yeah, I think the attraction to our investment
partners, if you like, is thatwe are not acting like a VC fund
where we're going to try andtake control or have voting
rights above and beyond ourshareholding.
We are enablers but we're notcontrollers.
So they're quite like that.
Sometimes they're perhaps toosmall for the private equity
(24:47):
funds but perhaps too big forthe pure VCs.
So we're kind of in the middleof that kind of tier.
But, yeah, mostly the foundersare looking for the investment
and a little bit of support.
Sometimes I get asked to jointheir advisory board and things
like that, but they don't wantto cede control.
Most of them actually like theidea of increasing the spread of
(25:10):
their cap table.
They've often just got founders, friends and family on there.
We are often the first to comein after that stage and before
any institution.
So one of the things again backto the liquidity point one of
the things that we sometimeslook for is at what point
they'll be ready for aninstitution, because that can be
an exit for us.
So, for example, we're just, infact I'm waiting to hear,
(25:32):
hopefully today about an exitfrom a Swiss-based company that
we got into.
That's in the aerospace anddefense sectors which, as you
can imagine, are very hot at themoment and our investors are
potentially going to get I thinkit's going to be an 8.8x exit
in three years from that fund.
So that's because aninstitution is coming in to take
(25:56):
I don't know 20% of the companyand they want to clean up the
cap table and take out the earlyinvestors.
So some of the companies wetalked to would prefer it if we
came in as a single entity, anSPV company, something like that
.
Most of them are actually okaywith taking in a bunch of
investors.
Typically it's only about 20 or30 people that would come in on
(26:17):
a given round that we do, soit's not hundreds.
But as we get bigger that mayalso become more relevant.
We might look at perhapsco-investing through an entity
like an SPV If we were doing afive or 10 million raise.
Our direction of travel isupwards.
When we first started we weretypically averaging a 20K clip
size per investor.
(26:38):
It's now more like 80K and asthat gets up towards quarter of
a million, half a million, thenI think we may well look at some
kind of structure to investthrough.
But at the moment it's justdirect investing.
Each person becomes a directowner of shares in the target
company, um, and, and both thecompany and the investors are
very happy with that directrelationship right, so then,
(27:01):
obviously, that's.
Speaker 1 (27:02):
My next question was related to you.
You've been doing this longenough, then, to be seeing exits
on on these deals.
Um, what kind of experienceshave you had with those uh kind
of exits then?
Speaker 3 (27:13):
yeah, we've seen a mixture.
We've seen exits on the, whenan institution comes in.
We've seen exits on a secondaryplatform, um, we're seeing
things like middle eastsovereign wealth funds wanting
to come into some of thesetechnology companies as they
grow, um.
But we've also, to be fair,we've seen delays.
You know.
We've seen things where theywere.
They were hoping to do it.
Obviously, covid got in themiddle of a lot of things for
(27:34):
many companies, and also there'salways this trade-off between
between timing and value.
You know, if you're, if you'rejust a few months away from some
big contract wins that aregoing to have a major impact on
the value, founders tend to bereluctant to press ahead and
sell too soon, you know.
So there's always this elementof negotiation and timing.
(27:54):
But yeah, for example, we'vejust finished a raise for a
company that's dealing with thewhole area of digital
inheritance.
You know, we all own so manymore digital assets, like crypto
, but even things like you knowyour medical records.
I've got eight pages of A4 ofusernames and passwords.
My wife goes crazy.
(28:15):
What happens to me?
How am I going to cope if youget run over by a bus?
So they've built a platformwhere you store all these things
and you have your trustees whocontrol the handover and your
beneficiaries, your children orcharities, whatever and that
kind of platform is raised there.
So we've done a raise now andthen the founders are saying
that in about six months time wegot in at 20 million, they're
(28:39):
going to, they want to do apartial exit at 50 million.
So there'll be a further chancethere for us to come out in a
few months with a two, two and ahalf times uplift or indeed to
reinvest again if we can see,because we can see a route to a
250 value in a couple of years'time.
So where we can try andengineer those kinds of what I
call mini exits, we do that aswell and we can get a win-win
(29:01):
where those who want a quickturnaround and are happy to take
2x now rather than 10x later,we try and accommodate that as
well.
So it all kind of gets builtinto whatever the founders are
looking to do as well.
So it's all kind of get, youknow, gets built into whatever
the founders are looking to doas well, because clearly they're
going to drive it as majorityshareholders.
But if we can engineer either asecondary, a partial exit or an
institution, then we try andwork to give that liquidity to
(29:25):
our members that's great.
Speaker 1 (29:28):
Then, are you seeing, um so like from a kind of
American publisher standpoint?
It's interesting to me that youhave the.
You're an access point to theEuropean private markets at a
time when it would seem that,like you mentioned the defense
company that there was a lot ofinvestment starting to happen,
(29:53):
like an increase in the volumeof investment potentially quite
a bit across Europe, with justthe nature of the geopolitical
situations and the way theworld's changing, and so that's
an interest there's a lot of.
I mean, we've seen the DAX gostraight up this year, basically
, and so it's really interestingto me that you are a channel
(30:16):
for anyone who's interested tokind of get into that market on
the private side through apublishing model, either as an
affiliate or maybe perhaps moreclosely aligned.
I know you're very open andinterested in kind of exploring
partnerships with differenttypes of groups here in the US.
(30:37):
Obviously, there's wealthmanagers and things like that
and there's all the publishingworld that we have here.
What kind of alliances orpartnerships are you looking to
explore?
I guess?
Speaker 3 (30:53):
alliances or partnerships are you looking to
explore?
I guess, yeah, I think, yeah,ideally anyone who's got access
to a database of accreditedinvestors who are interested in
investing.
The fact that they aresubscribing to a publication
such as the kind of ones thatyour ecosystem includes would
mean that they are above averageinterest in investment
(31:13):
opportunities.
So, yeah, I think there could bea very significant synergy
there, both for accessing Europeand also, you know, places like
India and Singapore where wealso have quite strong links.
So there's a lot of stuff goingon outside of what's already
happening in America.
I think they would perhaps wantsome exposure to and because we
(31:36):
have the combination of, youknow, being involved in content
creation and being involved inactually finding the investment
opportunities, then I think, atie-up with some kind of
publisher who wanted a morespecialised publication, you
know, a direct, even a directprivate equity newsletter of
some kind, where maybe it's kindof a new opportunity to reuse
(31:59):
existing contacts that they havein their database but to make a
new kind of offer to them intosomething that perhaps they
hadn't considered before, Ithink it could be quite credible
and therefore, yeah, be morethan open to a conversation.
We do charge a fee for peoplejoining the club, and we'd be
more than happy to share thatwith whoever could provide us
(32:24):
with access to those kinds ofpeople.
Speaker 1 (32:27):
And are the events deliverable?
A membership benefit then?
Or are they sold separately, orhow do you work that piece?
Speaker 3 (32:35):
Well, if it's an online event, then yes.
So, for example, we have 30hours of video in our Kajabi
platform where anyone that joinsgets access to that, so
immediately, in their own time,they can start learning about
the whole private equity sector.
And where we fit in that, theyobviously get access to the
(32:56):
newsletter that comes twice aweek.
They get access to the monthlycalls.
In terms of live events, I'd bemore than happy to look at
holding any if they wanted to.
If they could get a criticalmass together, we can do it in
America.
If they would like to send somepeople to our european events,
um then again, more than happyto discuss that.
I actually live in portugal.
(33:17):
I'm, I suppose, what you call atax exile from high tax uk.
Uh, nick still has themisfortune of being out there at
the moment, but uh he likestime being yeah you just like
paying a lot of tax, don't younick um?
so yeah, we would be more thanhappy to talk about inviting
people.
I think Lisbon would be a greatplace for events obviously
(33:38):
London, but equally if it's NewYork or California, whatever,
wherever there's a critical mass, I think there's so much
benefit from getting people inthe same room.
I've seen some of the eventsyou run, John, and it's clear
that people so value being ableto get together face-to-face as
well as whatever the content isthat you deliver.
The networking is priceless.
Speaker 1 (34:01):
Yeah, and I do think that the kind of community event
piece is something that's goingto be increasingly attractive
to people, just as the overwhelmwith online content and AI is
speeding it up, and so I thinkthe in-person stuff is
definitely interesting and Ithink that obviously in the US,
(34:21):
like the one of the things onthe investment side that we've
seen is a persistent trend, hasbeen that a travel related piece
for people is always attractive.
I mean, frankly, just people isalways attractive.
I mean frankly, just it's alwaysattractive, like it's here's a
reason to to go to to Lisbon forlike investment purposes
(34:41):
related things.
It's a nice setup and it wasone of those things that I put
in one of my state of inputpresentations a couple of years
ago.
Was that one of the only areasof overlap from kind of the
boomer generation and themillennial generation when it
comes to how they spend money isboth spend money on travel at a
very high rate compared toother groups or other
(35:02):
generations, and it was alwaysinteresting to me that the you
know we've seen that with likeconferences, like the money show
adding investment cruises andthings like that that there is a
there was a real appetite, Ithink, out there for, especially
in the higher net worth side ofthe of the of the market, for
traveling to to an event, forsomething that's interesting, to
meet people in person and do itin a great location that they
(35:25):
would go to regardless if theyhad a reason to, just because
they, they, they like thevacation.
Speaker 3 (35:31):
Yeah Well, I mean there's a lot on a on a wider
scale of that thinking.
There's a lot of Americansrelocating to Portugal now.
You know there are road showsbeing held in America talking
about it.
Yeah, so we've got new directflights coming in.
I'm in the Algarve, in thesouth of Portugal.
We've got new direct flightsfrom, I think from Newark, to
Faro now.
(35:53):
So there's a huge interest thereand I think there's a few
coming to the UK as well.
So the travel part could benice and we could also even
include, because one of the youknow what we do is wealth
creation.
But once you've created it, theproblem becomes protecting it.
So that's into tax planning,estate planning, residency
planning, citizenship byinvestment programs, you know.
(36:16):
So we can also put people likethat onto the agenda so that
they could talk about, if youcame to UK or Portugal, what are
the tax considerations, whatare the residency considerations
.
And then it becomes a slightlymore holistic thing because I
know you know, depending onwhere you sit on the spectrum
some people are keen to leaveAmerica now.
Some people are very happy atwhat's going on there.
(36:38):
But whichever side of thatdivide you're on coming to
Europe and having a look atthese opportunities from an
investment perspective, but alsoadding a little bit about
lifestyle tax et cetera might bequite helpful for people.
Speaker 1 (36:51):
Yeah, absolutely, and so that's a great thing.
If anyone's out there who'sinterested in maybe exploring a
partnership, I'm happy to makeconnections for you to Graham
and Nick.
And I think this is an areathat we'll see kind of an
increase in interest and it's ahigher price of an increase in
interest and it's a.
It's a higher price, higherniche, a higher value part of
the market.
Um, again, it's not like we'regoing for 50 000 customers here.
(37:13):
Um, it's that like very premiumside of the market um which I
think there's.
Speaker 3 (37:18):
There's a lot of room to grow in right now, um, and
that's very attractive, I thinkyeah, yeah, and, and it's true,
and I think I just saw thelatest family office report from
UBS in Switzerland and theywere saying that across all the
family offices they survey,they're putting 22% of their
total assets into private equity.
(37:38):
Now, so when you think how wellinformed they are, I think that
does reinforce how important apart of anyone's.
I think that does reinforce howimportant a part of anyone's
portfolio this should be.
And, yeah, finding the rightopportunities obviously is key,
but also, I think, being part ofthe right community, and I
(38:01):
think a publishing company isvery good at building that kind
of long-term relationship withits subscribers.
It's a relationship of trustand I think, at the end of the
day, any investment decision isbased on trust and I think
because they would already havebuilt that relationship and then
they introduce Inside InvestorClub to that as a further
trusted component I think thatplus meeting together in live
events could create a reallystrong bond between the
(38:22):
subscribers, the publisher andthe club.
Plus meeting together in liveevents could create a really
strong bond between thesubscribers, the publisher and
the club.
Speaker 1 (38:31):
Yeah, I think that's great.
I think the idea of maybeco-hosted events and things like
that makes a lot of sense,especially as an entry point for
people who are interested inexploring it.
So, like I said, I'm happy tomake these connections for
anybody.
There's some people I can thinkof right now that I'd like to
talk to specifically about this,to kind of connect you guys
with um, but I'll put this outthere for everybody to see and
(38:51):
um see what kind of interest wehave coming back, and I really
appreciate you guys coming andtalking about this, because this
is a very interesting part ofthe market to me, um, and I do
think it's one of those, like Isaid, one of those areas in the
market that I think there's alot of room for growth.
So super interesting what youguys are doing.
Speaker 3 (39:06):
Right.
Speaker 1 (39:07):
Well, it's great to have a chance to talk about it.
Speaker 3 (39:09):
Yes, and thanks for the introduction, nick.
Speaker 2 (39:12):
Thank you, john as well.
I think Graham's covered mostof the bases there and, yeah, I
think there's some veryinteresting things we can do.
Just thinking back to your FMSconference in September 2019 and
all the great guys I met therea lot from the States, obviously
(39:33):
you and lots of others as wellI think something like a Lisbon
event or a London event reallycould work well on all sorts of
levels.
Speaker 1 (39:37):
Yeah, well, that was probably one of the hardest
things that COVID did to me wasit killed my London conference
for FMS and it's definitelysomething that I've looked to
bring, thought very hard aboutbringing back in in in either
actually Lisbon or London, sothat's definitely something to
talk about.
But thank you very much, guys.
This has been great.
I will get this out toeverybody and, like I said,
(39:58):
anybody who has any interest inkind of having a conversation
just let me know.
Thank you very much.
Thank you very much.
All right.
Hey everyone, I'm here todaywith both Graham Rowan, who's
the CEO of Inside Investor Club,and Nick Rathwald.
I'm sorry, nick, I said yourname wrong.
Nick Rathwald, director ofBusiness Development.
Welcome guys, thanks for beinghere.
Thanks.
Joel.
Speaker 3 (00:17):
Great to be here.
Thank you for inviting us.
Speaker 1 (00:20):
Yeah, so, nick, I've known you for 20 years.
Yeah, we go way back to ClaytonMake Pieces Conference, where I
, that's right, yes.
And it's been so great to seeyour career kind of evolve here.
And, graham, you have quite theinteresting background here.
So what we're going to be doingtoday is talking about the
(00:40):
Inside Investor Club.
But I mean you've written abook Diary of a High Net Worth
Investor.
You've had three TV series onsky TV.
Is that right Like make yourmoney work finding financial
freedom, money in me?
You've also spoken at a varietyof places including working
(01:01):
with.
Speaker 3 (01:01):
What is it?
Speaker 1 (01:01):
Beaufort private equity, yeah, yeah, yeah, so
educating basically hundreds ofhigh net worth investors about
private equity investing,correct?
Speaker 3 (01:09):
Yeah, that's right, it's.
I mean, the background reallyis that I came originally from a
corporate background.
I was a director of TexasInstruments that many of your
viewers will know, your viewerswill know and I had a
professional wealth manager whoput all my money into the NASDAQ
(01:30):
and then left it in there whenit crashed and burned at the
beginning of the 2001.
And then they said that thelosses meant that my net worth
was below the level at whichthey looked after clients, so
they would have to let me go.
So I got fired by my own wealthmanager for the losses they
made in my account, and that wasthe start of my journey to
taking personal control of myfinancial future.
(01:53):
And eventually that led me intomaking lots of investments, some
of which worked, some of whichdidn't, and really, because of
the losses they'd made, I waskind of behind the ball.
I was already in my mid-40s, Iwas not where I needed to be, so
I kept looking for how I couldplay catch up to find something
that would give me good aboveaverage returns.
(02:15):
Because if you look atsomething like the S&P 500, it
averages just over 7% a year,net of inflation, which is great
if you've compounded thatacross three or four decades.
But if you're in the position Iwas in, that wasn't going to be
enough.
So eventually, that's what, Iguess, lured me towards direct
private equity, where you canget 3x, 5x, 10x returns in a
(02:39):
relatively short period of time.
So, having kind of found thatsolution myself, friends and
family and so on just keptasking me what you're doing, and
that eventually led me toforming, you know, investment
clubs where I could help them todo the same thing.
And that's really the currentmutation of that, if you like,
is inside investor club that youmentioned.
Speaker 1 (03:00):
Interesting.
So private equity is a broadterm, right, it means it means
lots of things.
When you're talking aboutprivate equity investments,
what's kind of the range ofopportunities that you are
bringing to people right now?
Speaker 3 (03:27):
or KKL or anything like that.
We are looking at directinvesting into growing but
relatively young companies.
So I have a whole bunch ofcriteria I look at.
I certainly want them to besolving a real problem in the
real world, ideally with someunique technology or
intellectual property that canbe protected, so, for example,
through patents.
I'm looking for the size of theaddressable market to see if
they've got the potential to be,if not a unicorn, at least to
(03:49):
be 10x bigger than they aretoday.
I'm looking for the quality andbackground of the founders and
I'm looking for some decent skinin the game from the founders
so that they're going to reallybe focused on making this
particular business work.
So typically we would probablycome into firms that have an
enterprise value of anythingfrom 20 to maybe 80 million.
(04:10):
We'd be looking to do anythingfrom a half million to a two
million raise at those kind ofvalues.
It's not actually uncommon forus to do several raises at
different enterprise valuesacross a two or three year
period.
As the company grows, the storygets better.
People are prepared to come inat higher value.
So typically we're looking forsomething that would 5 to 10x in
(04:35):
a period of anything from threeto seven years.
And I also try and get someclarity on the exit, because
every pitch deck you read saysit's going to be a trade sale or
an IPO.
Well, I want to dig a bitdeeper than that.
Have they already got a targetin mind?
Because these days fewer andfewer companies use IPO.
For the exit there's usuallyeither a trade sale or perhaps a
(04:58):
sale to a private equity fund.
So I want to see how switchedon the founders are to that,
because some of them the reallycool ones they're grooming the
business for only two or threepotential buyers even from when
they very first begin, becausethey can see if they build it to
this level, it'll be such aperfect strategic acquisition
for that company.
Speaker 1 (05:20):
There's two thoughts that I have on that related to
what we've seen in thepublishing space and other sides
.
One you have the founders, whounderstand the business of the
business, and then you have thefounders who also understand the
business of the money and thatonce you start getting into the
world of looking into businessesand investable asset, the
knowledge of the business of themoney side of the business is
(05:41):
critical in that even greatbusinesses otherwise are ruined
because the founder didn'tunderstand the financing side
and kind of what theopportunities were.
And then the other part of thatis that in the publishing space
we've seen, especially on thekind of the crowdfunding product
side, places where people weretrying to invest in private
(06:02):
deals, the issue of the lack ofliquidity for subscribers has
been a real problem for folks,the fact that things a lot of
times things were not going tohave an exit, that even in kind
of a more of a venture capitalkind of product model, you know
that most of those companiesaren't going to work, especially
(06:24):
if they're just scraped off ofcrowdfunding platforms, and so a
lot of the money kind of becamedead money because there was no
exit plan and the analystsweren't really looking at what
had a real exit plan, and sothat became a real problem in
the business for a lot ofreasons, but most fundamentally
because it ended up not beinggood for the customer.
Speaker 3 (06:43):
Yeah, I think there's two points to pick up on there.
I think and the first one isvery definitely part of the
evaluations of founders is, as Isay, they're not just a bunch
of tech head students who had agreat idea.
I look for a bit of maturityand people who've been around
the block a few times.
But also what we find is thatwe inside Investor Club often
(07:04):
end up having to help them totell their story in investor
speak.
You know they can talk all dayabout their technology, but they
can't talk about, you know, howthey're going to increase
enterprise value, how we'regoing to get to these milestones
, where the exit's going to comefrom, what's plan B if that
exit doesn't work out.
So we end up really, you know,holding their toes to the fire
(07:26):
on those things so that we canactually strengthen the story
and go out to our investors.
Because you know I have a bunchof about 200 high net worth
families who are in the club andyou know they are gray haired,
a little bit cynical, beenaround the block, had the kind
of problems you've talked about.
So you know you can't pull thewool over their eyes.
(07:46):
You've got to be clear thatthis is how we believe it's
going to work.
This is the proposed exitstrategy, but the other thing I
would say is we're verydefinitely not the kind of
venture capital spray and praylet's invest in 100 in the hope
that five or six will workapproach.
I very much take the WarrenBuffett approach that he has in
(08:08):
the public markets and applythat in the private markets.
I only want people to make fouror five decisions in their
portfolio and to be clear.
We have a kind of modelportfolio we share with our
members where private equitywould be maybe 20 to 25% of it.
We're not saying put all thechips on red.
(08:29):
We're looking at yes, have someof the public stock markets,
have some dividend paying shares, have some rental real estate,
have some Bitcoin, have somegold definitely keen on that but
for that 20, 25% of yourportfolio.
That's where you're going tomove the dial, and I just
published a white paper thatI'll send across to you after
(08:51):
the call, where one of thethings I point out is there's
this artificial wealth effect.
I called it.
I'm a millionaire, so why do Ifeel poor?
And it's all about the fact that, really, if you look at real
estate the S&P 500, all they'veactually done in recent years is
keep pace with the increase inthe money supply.
(09:13):
So, in a fiat currency world, ifyou double the amount of
dollars in existence and there'sstill the same number of shares
or houses, all you've done isdouble the number of dollars you
need to buy that amount ofhouse or share.
You haven't actually gotwealthier.
So, whilst it's way better thanholding it in cash, because at
least you've kept pace with acombination of inflation and
(09:37):
currency debasing, to make realprogress and move the dial you
need something like privateequity that can go way above and
beyond that.
Otherwise, frankly, you needsomething like private equity
that can go way above and beyondthat.
Otherwise, frankly, you're justmarking time, and a great way
of doing that is to compare theDow Jones to the price of gold,
and you'll see that today we'reexactly where we were just
(09:57):
before the Wall Street crash of1929.
So you get a very differentperspective on where either your
home or your investmentportfolio is at when you come
out of the fiat world andcompare it to something real
like the price of gold.
Speaker 1 (10:13):
Yeah.
So let's step back then andtalk about the Inside Investor
Club as a publishing platform.
So it seems to me that, if Iunderstand it correctly, then
you have there's a membershipand then you have coaching, but
the membership is the corebusiness and that you have.
In that membership, like yousaid, you have your modern
portfolio and you're bringingunique deals.
(10:33):
The tone and everything of thebusiness seems to me, and the
goal of acquiring customers isthat kind of high net worth,
like you said, family high netorder to be able to put 20% of
your portfolio into a deal likethat where you're looking at
(11:04):
maybe a $50,000 to $100,000investment.
Speaker 3 (11:07):
This is not somebody who has $20,000 or $100,000 in
their yeah, no, absolutely, andwe are constrained by regulation
, so we can only deal withaccredited or high net worth
investors.
Obviously, the rules for thatspecifically vary from country
to country, but it's quite a lowbar.
In the UK it's an income of100,000 a year or a quarter of a
(11:29):
million investable assets.
I know it's a bit higher thanthat in the States, but, yeah,
we just want to deal with peoplewho are comfortable with this
kind of investment where it'snot going to make them lose
sleep at night.
You know, to be frank, we foundthat the people at the lower
end are often the ones that arethe hardest the highest
maintenance, if you like.
(11:50):
So, yeah, we only want to dealwith people who are accredited
and within that we only want totalk about 20% 25% of their
portfolio.
So typically we'd be looking atsomebody with a low
seven-figure net worth,something like that.
Usually they've been anentrepreneur or a big real
estate investor, something likethat, and certainly in the UK
(12:13):
there are even tax breaks whenyou move from real estate into
some of these smaller companies,because the government's trying
to encourage this sort ofinvestment to get growth in the
economy.
So, yeah, the starting point isvery definitely, uh, we're not
the at the biz op end of themarket or the.
You know that perhaps some ofthe trading platforms where they
come in with a low initialstake and try to build it, we're
(12:34):
looking for people who'vealready achieved something like
that success low seven figurenet worth upwards and that's
where we find our sweet spot.
Speaker 1 (12:43):
And so what's the customer experience like when
they join the club?
What is it that they get?
What do you do?
Because it seems like you seemto have some events that you do
as well.
So what's that look like from acustomer?
Speaker 3 (12:52):
experience.
I think what makes us prettyunique, I think, is that we
combine the kind of coaching andmentoring that we think is
needed to make somebody aconfident private equity
investor with the access to asmall number of these
opportunities where we've doneall the hard work on due
diligence.
Now we can't give financial orinvestment advice, so we always
(13:14):
have to leave it to theindividual member to make a
decision, but what we're tryingto do is empower them to make
those kind of decisions throughhaving had some training and
coaching.
We also do quite regular marketupdates.
We have a twice weeklynewsletter that keeps them up to
speed, not just with our owncontent but all other stuff
around there on what's happeningin the world.
(13:34):
You know wider in the widerworld.
And then, yeah, we have onlineevents and we have live events,
because one of the things youfind is that people really value
meeting and networking withlike-minded folks.
Because there's so few placesyou do that and if you are into
this kind of investing, thechances are most of your own
(13:55):
friends and family are not.
You know we always find we'refishing in a small pool here.
You know we always find we'refishing in a small pool here.
You know, it's like 3% of thepopulation that seems to care
about their financial futuremore than their next iPhone or
their next holiday.
So when you can get 100, 150people of these people in the
same room, it's frankly, for me,is the kind of master of
ceremonies.
It's quite hard to keep themunder control because they
(14:17):
wanted to talk to each other somuch.
So it's a combination of the.
It's printed information, youknow, it's emails, it's live
updates online.
We do a monthly Zoom call wherepeople can ask me anything
about wealth creation or wealthprotection, and if I can't
answer it, I'll get them intouch with someone who can.
And then there's the whole kindof investment portfolio side.
(14:39):
So it's it's really we do tryto create this sense of
community.
We are quite exclusive, as Isay, less than 200 members at
the moment, but we are.
We're seeing we have somemembers in america already.
We're seeing a lot of interestfrom america and also, obviously
, we're seeing lots of privateequity things happening there.
The next couple of raises thatI'm doing are for companies who
(15:00):
are already strong in placeslike Singapore, india, the UK,
but are also going to migrateinto America because they can
see the opportunities there.
So you know, I would think, ifwe're having this conversation,
in a couple of years time we'llprobably have as many members in
America as we do in Europe.
Speaker 1 (15:19):
Very interesting.
That's very interesting.
I like this approach that is alittle bit more comprehensive,
right.
It's not like here's a tradingstrategy or here's trades, it's
a more comprehensive look atwealth building for somebody.
It kind of reminds me a littlebit of the not exactly,
obviously, but the Tiger 21model where, um, they have high
(15:42):
net worth and it's basicallylike you get together with peer
groups to kind of look at, like,what you're doing with your
money, um, to make sure thatyou're, you know, not not
ruining your portfolio, um, andthat I think it's a very
attractive piece that you havefor that higher net worth person
Because, like you said, thetradition of what they have, or
(16:03):
they have their wealth advisors,a lot of whom are really just
asset gatherers, they'resalesmen, and so having a peer
group and having the expertiseto kind of say let's look at
this a little bit morecomprehensively.
But you're not so you have amodel portfolio.
I'm assuming, then, that you'renot so you have a model
portfolio.
I'm assuming, then, that you'retalking about some of the
(16:24):
larger trends in kind of thegeneral markets at any given
time.
I think there's something goingon with tariffs, I'm not sure
right now.
Oh, wow, yeah, I tell you.
Speaker 3 (16:32):
I mean, I don't know about you, but certainly for any
of us who've been around theblock a few times, I think the
2020s are turning into one ofthe most challenging decades.
I think I would perhaps comparethe 1970s to it, but I just had
access to some research whichisn't going to be officially
published until July, so I'llshare a couple of things from it
(16:54):
with you.
This is all about.
You know, this massive wealthtransfer that has just about
started between my kind of babyboomer generation and then the
gen x and the millennials I meanit's around about 80 trillion
dollars is going to change hands, and there's a survey done of
the family offices where this ishappening and 81 of those next
(17:16):
generation inheritors are sayingthey're going to change their
wealth management companybecause they don't like the job
being done by the one theirparents are using, and 51% of
them are saying the biggestthing that's missing is access
to direct private equity.
So I think we're seeing agenerational shift between the
(17:37):
patriarchs who kind of went for,I guess, for real estate and
bonds and all that kind of moreconservative stuff, the next
generation of saying hold on,there's all these other
opportunities that we're noteven getting access to from our
conventional wealth managementcompanies.
So I'm kind of thinking well,that's very much the space we're
in, so maybe the opportunity isthere to partner with some of
(17:58):
these organizations to fill agap that they clearly are not
providing at the moment.
That could cost them a lot ofbusiness as those kind of wealth
transfers start to really takeoff in the coming years.
Speaker 1 (18:10):
Yeah, that's very interesting.
I think that we've seen thatdefinitely over the last, I
guess, 12 to 15 years, that mostI mean so much money has moved
out of the public market intothe private markets and there's,
you know, kind of the sensethat the public markets have
almost become kind of a mutualfund, in that it's just
everything tracks and that a lotof the alpha is in the private
(18:32):
markets.
And, like to your point earlier, like fewer and fewer companies
are using an IPO as their kindof exit strategy or even part of
their path.
And then you kind of add tothat that there's so much
restrictions on who can invest.
And we've seen things like inthe US with, like the rise of
(18:53):
the crowdfunding market and Iknow this in the reggae market
raises.
But and obviously this week wehad a big I think it was Newsmax
Um, you know they, they had areggae earlier on that people
were able to invest in and theyhad a very large IPO.
But it's very rare for reallysuccessful companies to offer
any type of investorparticipation, um, to retail
(19:17):
investors in any way at thispoint and they stay private
longer and most of the exits,like you say, are to other
companies.
And so it's definitely an areathat's grown across the board
and, from a publishingstandpoint, we've seen a
shrinking of the number ofstocks over the last 25 years,
and that means the number ofopportunities to choose and how
(19:37):
much interest has moved towardsthat.
Private markets and one of themessaging things that I see, and
I'm seeing it this week, andhow much interest has moved
towards that private markets andone of the messaging things
that I see, and I'm seeing itthis week and very much, is that
one of the kind of sales pointsthat I see the salesmen and the
bankers and stuff using thesedays is oh look, the market's in
(19:57):
free fall, but the value ofthese private deals hasn't
changed, and so it's beingpositioned correctly and in some
cases incorrectly as beingdisconnected from the market as
a whole and so it's not asvolatile.
Now there's different issues,obviously, besides that, but it
(20:18):
is an interesting dynamic to seethe conversation go in that
direction, where it's, like youknow, public markets are very
tricky, especially in times likethis.
Private markets offer somestability to the value of the
investment that we're not seeingin a more volatile market.
Speaker 3 (20:37):
Yeah well, I think this is definitely true of
private equity because it's notmark to market in a kind of real
time basis, the way the S&P 500is.
It means you can sleep at nightwhen it goes through a period
like this.
Now, obviously it doesn't meanthat they're completely isolated
from economic developments andeconomic reality, but they do
have control over when there'sgoing to be a capital event.
(21:00):
So you know they will onlyissue more shares if they need
more money, and they would onlyand they would time any exit for
a good period in the market.
So we shan't know the impact ofall these tariffs for at least
a couple of years.
So we've got time to sit backsee how that's going to evolve.
Of course there'll be winnersand losers, and I think some of
(21:21):
them will be quite unexpected,if you like, in terms of the way
things will be tweaking around.
So this is a good time to notbe in the public market from a
volatility perspective.
And yes, obviously at somepoint you will become relevant
to that if you're going to IPO.
But if you're just going tosell to another private equity
(21:42):
company, you're not going tofind that problem.
And there has been a viewbecause some of the private
equity funds have been tradingat a discount to their net asset
value.
So there's been a kind of arumor that they were overvalued
and if they did actually come tomarket they'd be a lot lower.
Well, that hasn't actually beenthe case.
Where the big funds have beenexiting companies, it's been at
(22:03):
or above the net asset value onwhich they were being held on
the balance sheet.
So that's one point to bear inmind.
The other thing to bear in mindabout the wider private equity
sector is that the fastestgrowing area now is what they
call secondary funds, where youperhaps invested in a company
early doors.
It's now gone into two or threeyears.
(22:25):
And then there's a possibility.
There's, for example, aplatform in London called
jenkins where you can go onthere and buy private equity
shares from the original owner,if you like, um, and that means
they can get liquidity but at ahigher price than they
originally paid.
You come in kind of halfwaythrough the journey, so they
might be going to an ipo or atrade sale and you effectively
(22:49):
pay more than you would havedone, but you also save three or
four years of time.
So those secondary markets aregoing to become bigger and
bigger, I think, and there aresecondary funds out there now
that specialize in acquiringcompanies that are effectively
secondhand, as it were.
They've gone through two orthree years of growth.
So that will also, I think,start to address the liquidity
(23:11):
issue as we go forward, becausethere'll be people that want to
sell and there'll be people thatwant to buy into a story.
So, for example, you look atsomething like SpaceX.
That's a privately held companyNow it's now worth I don't know
how many billions, but imagineif you'd been able to get into
that when it was worth 50 or 100million and go on that journey
into the mega billions.
(23:32):
You'd see a tremendous returnfrom that company.
So some of those shares, theydo a secondary sale every six
months, I think.
So you're getting intocompanies like that on the
private secondary markets as awhole new emerging sector as
well.
Speaker 1 (23:47):
Yeah, that is an exciting area and I think I'd be
curious to know too sinceyou're not a fund here and
you're bringing individualinvestors and you're doing these
raises what's the, what's thekind of company perspective on
working with?
You know, 100 or more retailinvestors, high net worth, to
raise money, like where does?
(24:07):
What kind of conversations areyou hearing from them?
Obviously they're interested init.
They're doing the deals withyou.
How do they kind of view thisversus going to a traditional
fund?
I mean, I'm assuming they'redoing that as well and this is
just another kind of tranche ofraise for them?
Speaker 3 (24:23):
Yeah, I think the attraction to our investment
partners, if you like, is thatwe are not acting like a VC fund
where we're going to try andtake control or have voting
rights above and beyond ourshareholding.
We are enablers but we're notcontrollers.
So they're quite like that.
Sometimes they're perhaps toosmall for the private equity
(24:47):
funds but perhaps too big forthe pure VCs.
So we're kind of in the middleof that kind of tier.
But, yeah, mostly the foundersare looking for the investment
and a little bit of support.
Sometimes I get asked to jointheir advisory board and things
like that, but they don't wantto cede control.
Most of them actually like theidea of increasing the spread of
(25:10):
their cap table.
They've often just got founders, friends and family on there.
We are often the first to comein after that stage and before
any institution.
So one of the things again backto the liquidity point one of
the things that we sometimeslook for is at what point
they'll be ready for aninstitution, because that can be
an exit for us.
So, for example, we're just, infact I'm waiting to hear,
(25:32):
hopefully today about an exitfrom a Swiss-based company that
we got into.
That's in the aerospace anddefense sectors which, as you
can imagine, are very hot at themoment and our investors are
potentially going to get I thinkit's going to be an 8.8x exit
in three years from that fund.
So that's because aninstitution is coming in to take
(25:56):
I don't know 20% of the companyand they want to clean up the
cap table and take out the earlyinvestors.
So some of the companies wetalked to would prefer it if we
came in as a single entity, anSPV company, something like that
.
Most of them are actually okaywith taking in a bunch of
investors.
Typically it's only about 20 or30 people that would come in on
(26:17):
a given round that we do, soit's not hundreds.
But as we get bigger that mayalso become more relevant.
We might look at perhapsco-investing through an entity
like an SPV If we were doing afive or 10 million raise.
Our direction of travel isupwards.
When we first started we weretypically averaging a 20K clip
size per investor.
(26:38):
It's now more like 80K and asthat gets up towards quarter of
a million, half a million, thenI think we may well look at some
kind of structure to investthrough.
But at the moment it's justdirect investing.
Each person becomes a directowner of shares in the target
company, um, and, and both thecompany and the investors are
very happy with that directrelationship right, so then,
(27:01):
obviously, that's.
Speaker 1 (27:02):
My next question was related to you.
You've been doing this longenough, then, to be seeing exits
on on these deals.
Um, what kind of experienceshave you had with those uh kind
of exits then?
Speaker 3 (27:13):
yeah, we've seen a mixture.
We've seen exits on the, whenan institution comes in.
We've seen exits on a secondaryplatform, um, we're seeing
things like middle eastsovereign wealth funds wanting
to come into some of thesetechnology companies as they
grow, um.
But we've also, to be fair,we've seen delays.
You know.
We've seen things where theywere.
They were hoping to do it.
Obviously, covid got in themiddle of a lot of things for
(27:34):
many companies, and also there'salways this trade-off between
between timing and value.
You know, if you're, if you'rejust a few months away from some
big contract wins that aregoing to have a major impact on
the value, founders tend to bereluctant to press ahead and
sell too soon, you know.
So there's always this elementof negotiation and timing.
(27:54):
But yeah, for example, we'vejust finished a raise for a
company that's dealing with thewhole area of digital
inheritance.
You know, we all own so manymore digital assets, like crypto
, but even things like you knowyour medical records.
I've got eight pages of A4 ofusernames and passwords.
My wife goes crazy.
(28:15):
What happens to me?
How am I going to cope if youget run over by a bus?
So they've built a platformwhere you store all these things
and you have your trustees whocontrol the handover and your
beneficiaries, your children orcharities, whatever and that
kind of platform is raised there.
So we've done a raise now andthen the founders are saying
that in about six months time wegot in at 20 million, they're
(28:39):
going to, they want to do apartial exit at 50 million.
So there'll be a further chancethere for us to come out in a
few months with a two, two and ahalf times uplift or indeed to
reinvest again if we can see,because we can see a route to a
250 value in a couple of years'time.
So where we can try andengineer those kinds of what I
call mini exits, we do that aswell and we can get a win-win
(29:01):
where those who want a quickturnaround and are happy to take
2x now rather than 10x later,we try and accommodate that as
well.
So it all kind of gets builtinto whatever the founders are
looking to do as well.
So it's all kind of get, youknow, gets built into whatever
the founders are looking to doas well, because clearly they're
going to drive it as majorityshareholders.
But if we can engineer either asecondary, a partial exit or an
institution, then we try andwork to give that liquidity to
(29:25):
our members that's great.
Speaker 1 (29:28):
Then, are you seeing, um so like from a kind of
American publisher standpoint?
It's interesting to me that youhave the.
You're an access point to theEuropean private markets at a
time when it would seem that,like you mentioned the defense
company that there was a lot ofinvestment starting to happen,
(29:53):
like an increase in the volumeof investment potentially quite
a bit across Europe, with justthe nature of the geopolitical
situations and the way theworld's changing, and so that's
an interest there's a lot of.
I mean, we've seen the DAX gostraight up this year, basically
, and so it's really interestingto me that you are a channel
(30:16):
for anyone who's interested tokind of get into that market on
the private side through apublishing model, either as an
affiliate or maybe perhaps moreclosely aligned.
I know you're very open andinterested in kind of exploring
partnerships with differenttypes of groups here in the US.
(30:37):
Obviously, there's wealthmanagers and things like that
and there's all the publishingworld that we have here.
What kind of alliances orpartnerships are you looking to
explore?
I guess?
Speaker 3 (30:53):
alliances or partnerships are you looking to
explore?
I guess, yeah, I think, yeah,ideally anyone who's got access
to a database of accreditedinvestors who are interested in
investing.
The fact that they aresubscribing to a publication
such as the kind of ones thatyour ecosystem includes would
mean that they are above averageinterest in investment
(31:13):
opportunities.
So, yeah, I think there could bea very significant synergy
there, both for accessing Europeand also, you know, places like
India and Singapore where wealso have quite strong links.
So there's a lot of stuff goingon outside of what's already
happening in America.
I think they would perhaps wantsome exposure to and because we
(31:36):
have the combination of, youknow, being involved in content
creation and being involved inactually finding the investment
opportunities, then I think, atie-up with some kind of
publisher who wanted a morespecialised publication, you
know, a direct, even a directprivate equity newsletter of
some kind, where maybe it's kindof a new opportunity to reuse
(31:59):
existing contacts that they havein their database but to make a
new kind of offer to them intosomething that perhaps they
hadn't considered before, Ithink it could be quite credible
and therefore, yeah, be morethan open to a conversation.
We do charge a fee for peoplejoining the club, and we'd be
more than happy to share thatwith whoever could provide us
(32:24):
with access to those kinds ofpeople.
Speaker 1 (32:27):
And are the events deliverable?
A membership benefit then?
Or are they sold separately, orhow do you work that piece?
Speaker 3 (32:35):
Well, if it's an online event, then yes.
So, for example, we have 30hours of video in our Kajabi
platform where anyone that joinsgets access to that, so
immediately, in their own time,they can start learning about
the whole private equity sector.
And where we fit in that, theyobviously get access to the
(32:56):
newsletter that comes twice aweek.
They get access to the monthlycalls.
In terms of live events, I'd bemore than happy to look at
holding any if they wanted to.
If they could get a criticalmass together, we can do it in
America.
If they would like to send somepeople to our european events,
um then again, more than happyto discuss that.
I actually live in portugal.
(33:17):
I'm, I suppose, what you call atax exile from high tax uk.
Uh, nick still has themisfortune of being out there at
the moment, but uh he likestime being yeah you just like
paying a lot of tax, don't younick um?
so yeah, we would be more thanhappy to talk about inviting
people.
I think Lisbon would be a greatplace for events obviously
(33:38):
London, but equally if it's NewYork or California, whatever,
wherever there's a critical mass, I think there's so much
benefit from getting people inthe same room.
I've seen some of the eventsyou run, John, and it's clear
that people so value being ableto get together face-to-face as
well as whatever the content isthat you deliver.
The networking is priceless.
Speaker 1 (34:01):
Yeah, and I do think that the kind of community event
piece is something that's goingto be increasingly attractive
to people, just as the overwhelmwith online content and AI is
speeding it up, and so I thinkthe in-person stuff is
definitely interesting and Ithink that obviously in the US,
(34:21):
like the one of the things onthe investment side that we've
seen is a persistent trend, hasbeen that a travel related piece
for people is always attractive.
I mean, frankly, just people isalways attractive.
I mean frankly, just it's alwaysattractive, like it's here's a
reason to to go to to Lisbon forlike investment purposes
(34:41):
related things.
It's a nice setup and it wasone of those things that I put
in one of my state of inputpresentations a couple of years
ago.
Was that one of the only areasof overlap from kind of the
boomer generation and themillennial generation when it
comes to how they spend money isboth spend money on travel at a
very high rate compared toother groups or other
(35:02):
generations, and it was alwaysinteresting to me that the you
know we've seen that with likeconferences, like the money show
adding investment cruises andthings like that that there is a
there was a real appetite, Ithink, out there for, especially
in the higher net worth side ofthe of the of the market, for
traveling to to an event, forsomething that's interesting, to
meet people in person and do itin a great location that they
(35:25):
would go to regardless if theyhad a reason to, just because
they, they, they like thevacation.
Speaker 3 (35:31):
Yeah Well, I mean there's a lot on a on a wider
scale of that thinking.
There's a lot of Americansrelocating to Portugal now.
You know there are road showsbeing held in America talking
about it.
Yeah, so we've got new directflights coming in.
I'm in the Algarve, in thesouth of Portugal.
We've got new direct flightsfrom, I think from Newark, to
Faro now.
(35:53):
So there's a huge interest thereand I think there's a few
coming to the UK as well.
So the travel part could benice and we could also even
include, because one of the youknow what we do is wealth
creation.
But once you've created it, theproblem becomes protecting it.
So that's into tax planning,estate planning, residency
planning, citizenship byinvestment programs, you know.
(36:16):
So we can also put people likethat onto the agenda so that
they could talk about, if youcame to UK or Portugal, what are
the tax considerations, whatare the residency considerations
.
And then it becomes a slightlymore holistic thing because I
know you know, depending onwhere you sit on the spectrum
some people are keen to leaveAmerica now.
Some people are very happy atwhat's going on there.
(36:38):
But whichever side of thatdivide you're on coming to
Europe and having a look atthese opportunities from an
investment perspective, but alsoadding a little bit about
lifestyle tax et cetera might bequite helpful for people.
Speaker 1 (36:51):
Yeah, absolutely, and so that's a great thing.
If anyone's out there who'sinterested in maybe exploring a
partnership, I'm happy to makeconnections for you to Graham
and Nick.
And I think this is an areathat we'll see kind of an
increase in interest and it's ahigher price of an increase in
interest and it's a.
It's a higher price, higherniche, a higher value part of
the market.
Um, again, it's not like we'regoing for 50 000 customers here.
(37:13):
Um, it's that like very premiumside of the market um which I
think there's.
Speaker 3 (37:18):
There's a lot of room to grow in right now, um, and
that's very attractive, I thinkyeah, yeah, and, and it's true,
and I think I just saw thelatest family office report from
UBS in Switzerland and theywere saying that across all the
family offices they survey,they're putting 22% of their
total assets into private equity.
(37:38):
Now, so when you think how wellinformed they are, I think that
does reinforce how important apart of anyone's.
I think that does reinforce howimportant a part of anyone's
portfolio this should be.
And, yeah, finding the rightopportunities obviously is key,
but also, I think, being part ofthe right community, and I
(38:01):
think a publishing company isvery good at building that kind
of long-term relationship withits subscribers.
It's a relationship of trustand I think, at the end of the
day, any investment decision isbased on trust and I think
because they would already havebuilt that relationship and then
they introduce Inside InvestorClub to that as a further
trusted component I think thatplus meeting together in live
events could create a reallystrong bond between the
(38:22):
subscribers, the publisher andthe club.
Plus meeting together in liveevents could create a really
strong bond between thesubscribers, the publisher and
the club.
Speaker 1 (38:31):
Yeah, I think that's great.
I think the idea of maybeco-hosted events and things like
that makes a lot of sense,especially as an entry point for
people who are interested inexploring it.
So, like I said, I'm happy tomake these connections for
anybody.
There's some people I can thinkof right now that I'd like to
talk to specifically about this,to kind of connect you guys
with um, but I'll put this outthere for everybody to see and
(38:51):
um see what kind of interest wehave coming back, and I really
appreciate you guys coming andtalking about this, because this
is a very interesting part ofthe market to me, um, and I do
think it's one of those, like Isaid, one of those areas in the
market that I think there's alot of room for growth.
So super interesting what youguys are doing.
Speaker 3 (39:06):
Right.
Speaker 1 (39:07):
Well, it's great to have a chance to talk about it.
Speaker 3 (39:09):
Yes, and thanks for the introduction, nick.
Speaker 2 (39:12):
Thank you, john as well.
I think Graham's covered mostof the bases there and, yeah, I
think there's some veryinteresting things we can do.
Just thinking back to your FMSconference in September 2019 and
all the great guys I met therea lot from the States, obviously
(39:33):
you and lots of others as wellI think something like a Lisbon
event or a London event reallycould work well on all sorts of
levels.
Speaker 1 (39:37):
Yeah, well, that was probably one of the hardest
things that COVID did to me wasit killed my London conference
for FMS and it's definitelysomething that I've looked to
bring, thought very hard aboutbringing back in in in either
actually Lisbon or London, sothat's definitely something to
talk about.
But thank you very much, guys.
This has been great.
I will get this out toeverybody and, like I said,
(39:58):
anybody who has any interest inkind of having a conversation
just let me know.
Thank you very much.
Thank you very much.
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