Investing $100 in a Start-Up (how it works)

^{Read time - 4 minutes / Disclosure}

Investing in a start-up means:

- Owning part of a small biz.

- Having massive upside.

- Rooting for it to win.

Unfortunately, most people think you need thousands of dollars to do this.

Private Bets

Start-up investing often means betting on a private company.

A company that's not yet listed on the stock market.

People usually think to do this you need:

- To take lots of risk.

- To be well connected.

- To have lots of money.

I used to think this too.

So investing in an S&P500 fund (the top 500 companies in the U.S.) was my go-to investment.

But as time went on.

I thought more about other ways to invest.

And leaving 9-5 life early.

A common retirement plan:

20s: No plan
30s: No plan
40s: No plan
50s: Panic
60s: Panic
70s: Panic

A better retirement plan:

20s: Save & invest
30s: Save & invest
40s: Save & invest
50s: Enjoy
60s: Enjoy
70s: Enjoy

— JOHN HENRY (@thejohn_henry_) January 16, 2025

So I learned more about:

- Investing in real estate without much money
(I didn't have much starting off).

- Investing in individual stocks.

- Investing in start-ups.

To my surprise.

I learned investing in startups starts at $100.

So, 5 years ago I began an experiment.

An experiment to invest in 10 startups.

And to watch how things turn out.

Some investments were a few hundred bucks.

And some were a few thousands.

I figured—

Investing in a tiny company that becomes a massive one like Apple is unlikely.

But one can hope.

And it would be a great learning experience.

So here's 5 things I learned investing in 10 startups (and what happened to each company).

Let's dive in:

1. The Ease

Many startups find investors online.

Popular websites to look up these investments include:

- Republic

- StartEngine

- Plus many more

I was surprised how easy these sites are to navigate.

It was pretty easy to find a company, invest and send over the money.

Investing in a private company is also called "private equity".

It's usually a few hundred or a few thousand people investing together in a business that's not yet listed on the stock market.

There's many websites that list startup companies looking for investors.

2. The Cost

Startup investments vary.

Many online companies (like the ones above) often have a minimum investment of:

- $100

- $300

- $500

Investor networking groups is another place to find new investments.

But the minimum investment amount is usually in the thousands.

I found looking at the different investments listed online to be easy.

But deciding what to invest in and deciding how much to be hard.

Many startups on Republic allow a minimum investment amount of $100.

3. The Updates

Startups often give investor updates every 3-6 months.

I read most of the updates online.

And watched webinar updates with the CEO and other investors.

The updates cover things like:

- What the company is focused on.

- How many sales they have.

- How they plan to grow.

There's 3 different things that can happen with a startup:

1. The company goes out of business.

2. The company lists on the stock market.

3. The company is bought by another company.

Investors don't usually have access to the money they invested unless the 2nd or the 3rd thing happen.

A company listing on the stock market is often called an IPO.

4 of the 10 companies I invested in listed on the stock market.

Regular company updates help keep investors aware of how their investment is doing.

4. The Product

Startups usually share their product.

Investors may get free products or discounts.

A few of the companies I invested in sent me samples.

And others offered discounts to investors.

Startups sometimes ask investors for feedback on the product they invested in.

5. The Learning

Startup investing can feel like a mini-mba.

- Reading the updates.

- Watching the webinars.

Watching from the sidelines as the company founders work to build the company and brand was a neat experience.

Startup investing can be an educational experience.

The Bottom Line

Following those 10 startups for a few years was an interesting experiment.

Here's what happened with each of them:

Companies 1, 2, 3, and 4:

All went out of business.

Lost my investment.

Dang it.

Company 5:

Listed on the stock market.

The stock crashed 95%

Oh man.

Company 6:

Listed on the stock market.

The stock crashed 90%.

Oh jeez.

Company 7:

Listed on the stock market.

The stock crashed 88%.

Common now!

Company 8:

Listed on the stock market.

The stock went up 1,100%.

Now we're talkin'!

Then it crashed 80%.

Oh jeez.

Luckily, I sold this stock before it crashed so it made back money lost on the first 7 companies.

Company 9:

Still a private company.

Time will tell..

Company 10:

Still a private company.

Time will tell..

Following these companies has been a great learning experience.

But investing in an S&P500 fund (includes the top 500 companies in the U.S.) is still the easiest way to invest in my opinion.

The top 500 companies have grown 10% per year on average the past 30 years.

There's—

No company updates to read.

No webinar calls to follow.

I hope sharing my little startup investing experiment is useful.

That's all for today.

See you next Saturday.