- This new investment vehicle is only the beginning…
- The company supporting deliveries in two hours or less…
- A “mammoth” deal in the biotech space…
Dear Reader,
Today, I’m going to share with you another interesting day one investment that I have made in a sector that I doubt you’d think I would invest in.
Life insurance.
It is a perfect example of why day one investments don’t need to always have some spectacular mission that sounds incredible like curing cancer, the world’s first nuclear fusion reactor, or an artificial general intelligence “machine.”
Often, extraordinary returns come from companies that develop products or services that simply solve some major pain point that exists in a legacy industry. In that way, it becomes a disruption to the way things have normally been done.
And when I see the potential for massive disruption, I know that there is an opportunity for incredible investment returns.
And that was exactly the case with Bestow…
I invested in Bestow in its very first funding round – its seed round – back in July of 2017. My entry point was at a $9 million pre-money valuation. That is a true day one investment.
Bestow’s mission was simple – to simplify the way that consumers can get life insurance. The goal was to have an easy-to-use online portal where consumers could sign up for life insurance and get coverage in minutes.
The pain point that Bestow was solving was the often painful process of having to go through an agent and get a medical checkup to get coverage. It was, and still is, a hassle.
Bestow wanted to solve that problem with technology. By using data-driven algorithms for the underwriting process, it could issue life insurance in minutes.
And I saw how the company was putting all of the pieces in place to offer coverage across the U.S. in all states. The company was moving quickly. And by doing so, it would build a moat for its business.
Fast forward to today… Bestow raised a $70 million Series C round at a $490 million valuation. That puts me up around 54X compared to my entry point at a $9 million valuation.
I don’t know what the value of Bestow is today, as it hasn’t had a funding round since then. But if I had to guess, it is now worth more than $1 billion – a unicorn.
At a $1 billion valuation, I’ll be up 111X (11,000%), and if Bestow remains independent and reaches a $10 billion valuation – which is entirely possible given the size of the life insurance industry – I’ll be up 1,111X (111,000%).
That kind of return is enough to turn a very modest $1,000 investment into $1.1 million. A single investment in an unexciting, tech-enabled life insurance company can fund an entire retirement.
That is the power of day one investing.
I’ll share another interesting example tomorrow in a more exciting space – e-commerce/fintech.
For now, I have a small favor to ask… Please sign up for my Day One Summit scheduled for tomorrow night, Wednesday, November 17, at 8 P.M. ET.
This is not only the most important event of the year for me, but also of the last seven years in my role as an investment analyst. It is my opportunity to share with my subscribers the importance of having day one investments in their portfolios.
The difference that it makes in investment returns is simply night and day.
I hope to see you there tomorrow night.
The tokenization trend is ramping up…
There’s been a big development in the digitization of a unique asset class that very few know about. The very first initial litigation offering (ILO) just launched.
This is an interesting vehicle. It has been structured just like a Regulation Crowdfunding (Reg CF) deal. That means the ILO is open to all investors. There are no accreditation requirements. And it can raise up to $5 million.
What’s unique here is that the ILO is designed to raise money for a lawsuit. In this case, it’s Apothio, LLC v. Kern County, California.
Apothio claims that Kern County unlawfully destroyed its hemp crop. And it is suing for $1 billion in damages.
That’s what this ILO is for. It’s raising up to $5 million to fund Apothio’s lawsuit.
This, of course, raises the question… What’s in it for investors?
Well, if Apothio wins the lawsuit, it will pay investors a return between 2X and 3.5X their original investment. So there’s significant upside.
On the downside, ILO investors will lose 20% of their investment if the judge dismisses the case early in the proceedings. So losses are capped in this scenario.
However, if the case drags on and Apothio ends up losing, ILO investors will lose 100% of their money. That’s the big risk.
Investing in litigation like this is not new. But it has almost exclusively been available only to institutional investors and high-net-worth individuals up to this point.
It has been a way for sophisticated investors to build a portfolio of alternative investments that are uncorrelated with the public stock markets.
What’s great about this ILO is that it opens the door to all investors. Even better, the ILO structure will create a liquid market. That’s where tokenization comes into play…
As regular readers know, tokenization is the process of creating cryptocurrency-like tokens to represent a real-world asset. These tokens can then trade on digital asset exchanges 24/7, just like other cryptocurrencies.
In this case, Apothio’s ILO tokens will trade on the Avalanche blockchain. And investors will be instructed to open a wallet on Avalanche. That’s where their tokens will be distributed. This process works just like creating a wallet on Coinbase.
From there, the tokens will have a market value based on trading activity. If it looks like Apothio is going to win the case, that may attract new investors to buy tokens at a higher valuation, thus driving the price up. That’s a fascinating dynamic.
And if Apothio does in fact win the case, the company will pay investors a dividend directly into their digital wallets. For investors, it doesn’t get any more seamless than that.
So this is a very interesting project and a great example of the utility of tokenizing an asset. In this case, the asset is a share in the potential payout from a lawsuit. There will be many more creative offerings from here. And they won’t be limited to lawsuits.
Indeed, we will see movies, TV shows, and songs tokenized and made available for investment. That will allow investors to earn royalties based on their success.
We will also see commercial real estate, luxury cars, and fine art tokenized. In fact, any asset or collectible for which there is a market will be subject to tokenization. This is going to be a hot trend in the coming years.
That’s why I’ve worked hard to ensure that my readers remain on the bleeding edge in this space.
If you haven’t already checked out my research in this area, I highly recommend you do so now by going right here.
The tokenization and blockchain technology trends will continue to provide incredible returns for investors in the coming years… You are definitely not too late.
This early stage company has a solution for the ongoing labor shortage…
A new unicorn has been minted. It’s an early stage company called Fabric. And this company has a novel solution to the labor shortage.
Fabric has only been around for about five years now. It got its start by developing robotics and automation technology for “micro-fulfillment centers” (MFCs) that were originally focused on the grocery business.
MFCs are small distribution warehouses where goods are stored until a customer orders them online. They are similar to Amazon’s fulfillment centers, except they are much smaller.
And they tend to be located closer to major population centers. That makes it possible for goods to be delivered quickly to customers.
Micro-fulfillment centers became necessary with the advent of companies like Instacart. Instacart promises customers extremely fast delivery – often two hours or less.
For its part, Fabric provides the automation technology that makes these fulfillment centers incredibly efficient. This involves highly functional robots who can pick, sort, and scan goods to prepare them for delivery.
And as we would expect, demand for Fabric’s tech exploded when the COVID-19 pandemic hit. Suddenly, online grocery orders skyrocketed, and Fabric found even more demand for its technology in other areas of e-commerce.
Prior to the pandemic, Fabric was valued at $37 million. However, the company just raised $200 million last month at a $1 billion valuation. That made it a unicorn overnight.
And Fabric is only going to grow from here.
Most places in the U.S. have now eliminated COVID-19-related restrictions. That’s paved the way for things to get back to “normal”… except many people haven’t gone back to work.
In fact, people are quitting their jobs rather than going back to their old workplaces. It’s a fascinating dynamic. And this has created a labor shortage that has impacted all areas of the supply chain.
Fabric’s answer to this is robotics and automation. This technology can eliminate the need for human laborers when it comes to the fulfillment of online orders. And that’s why companies like Instacart and Walmart are flocking to Fabric right now.
So this is absolutely a company to watch going forward. Let’s add Fabric to our early stage watchlist.
A massive deal around CRISPR genetic editing technology…
Early stage company Mammoth Biosciences just inked a $691 billion deal with Vertex Pharmaceuticals. This is a massive deal for the biotech startup. And it demonstrates just how valuable CRISPR genetic editing technology is within the industry.
As a reminder, Mammoth Biosciences was cofounded by Jennifer Doudna. She is one of the original inventors of CRISPR technology. And the company is pioneering in vivo CRISPR therapies for hard-to-treat diseases.
For context, in vivo therapies are administered directly inside the patient. This is compared to an ex vivo therapy, where the patient’s cells are removed from the body, treated, and then returned to the patient’s body.
To tackle these difficult diseases, Mammoth uses very small enzymes that are capable of delivering the therapy to a specific tissue within the human body. The nuance here is that larger enzymes, such as the original CRISPR Cas-9 enzyme, are too big to reach these particular targets.
And that’s exactly what Vertex is interested in with this deal.
Vertex wants to develop therapies for two genetic diseases using Mammoth’s delivery enzymes. It is paying Mammoth $41 million upfront to get access. And Vertex has agreed to pay up to $650 million more if these two therapies hit certain milestones.
What’s more, Vertex will also pay Mammoth royalties on sales if these therapies are ultimately approved by the Food and Drug Administration (FDA). So this could amount to a $1 billion-plus deal for Mammoth Biosciences – even though Vertex will develop these therapies itself.
So this shows us how valuable CRISPR genetic editing technology is within the biotech industry. And we have fantastic investment exposure to this space in our Exponential Tech Investor model portfolio.
Needless to say, the Mammoth deal is very bullish for the best players in genetic editing. I expect a handful of acquisitions to happen within the next 12–18 months in this space.
Regards,
Jeff Brown
Editor, The Bleeding Edge
P.S. Like I mentioned above, my Day One Summit is happening tomorrow night. Please don’t miss out on the chance to learn how to become an early stage private investor. If you’ve ever wondered how private deals work… or what it takes to get started in this space… then please, go right here to RSVP.
Like what you’re reading? Send your thoughts to [email protected].