Investment options

We primarily offer investors the opportunity to participate in the growth stages. We also sometimes invest during the early stages even though the risks are higher.

Common qualities of late-stage companies

Here are some factors to keep in mind:

Common qualities of early-stage companies

Stable business
Highly likely to already be generating income
Less risk (though risks still exist)
Shorter investment exit horizon (approximately 2 years) and higher liquidity compared to early stages
Potentially sizeable returns, though often not as high as in the early stages
Large investment often required

May create a new market and become new leaders
Small investment can often enable entry
Much higher return on investment if the company is successful compared to later stages
Opportunity to support brand-new ideas
High risk that the company won’t pass through all the development stages
Long investment exit horizon (approximately 5-7 years) and lower liquidity compared to late stages
No income or revenue if the company is still developing their product or solution

Investment stage

Highest value growth

Startup growth cycle

Company valuation

To choose appropriate deals, investors should consider their investment horizon, risk and failure tolerance, and other factors.

Why we don’t invest in IPOs

Why? Since investment banks are not subject to lockups, they can earn 2-3x per week by manipulating the offer price. Their strategy is simple: It doesn’t matter what the offer price is, so long as it reaches the level expected by investors by the end of the lockup.

In return for this opportunity to make money, the banks enable venture investors to sell a part of their shares ahead of schedule, since a loophole allows them to partially exit the lockup when the price rises 25% above the IPO price.

And don’t forget that the annual bonuses of top managers are tied to the growth of shares. Thus, investing in IPOs statistically provides little chance of making money.

Recent IPO statistics show that the share price drops significantly right after a company goes public. Indeed, the vast majority of IPOs in 2021 were unprofitable.

Accordingly, at Mindrock Capital, we consider an IPO as one of the crucial points in our investment strategy, but not the target or the final one.

An IPO certainly increases liquidity. But we exit the investment not when the company goes public but when all the elements of the growth strategy we invested in have worked out.