"IPO Aftershock"

By Wayne Mulligan, on Thursday, December 18, 2014

A 66% profit in just 6 days...

Imagine that.

Well, if you’d gotten in on LendingClub’s (NYSE: LC) IPO last week, you’d be sitting on gains like that right now.

LendingClub was the largest U.S. tech IPO of the year.

It was a huge “win” for the company, its early employees, and its investors.

But, surprisingly, there were some less obvious winners, too...

Halo Effect

It’s common wisdom on Wall Street that successful IPOs can have a “halo effect.”

Many investors believe that if a company in a certain sector has a big IPO, then other companies in the sector are worth investing in as well.

“A rising tide lifts all ships” is the common refrain.

And this logic applies to the public markets and the private markets.

For example, within a year of Google’s 2004 IPO, venture investments into early-stage technology companies nearly doubled...

That one IPO essentially revived the market for early-stage tech investing after the dot-com bust.

But there’s another “halo effect” that occurs after a successful IPO...

And if you know what to look for, it could mean getting in on the next big IPO...

And getting in before most folks know the company even exists.

Successful IPO, Successful Investor?

After Facebook’s record-breaking IPO, their early backers received a cash windfall.

But they received something else of immense value, too:

A tremendous boost to their reputation as savvy, well-connected investors.

Entrepreneurs with the hottest ideas started knocking down the doors of Facebook investors like Greylock and Accel...

Entrepreneurs knew they’d have a better chance at success if they had “A-List” investors on board...

And having an “in” with Facebook, the biggest social network in the world, could help them with everything from mentoring to recruiting to future fundraising.

The Lending Club Halo Effect

We predict the same thing will happen with early LendingClub investors.

Take Canaan Partners as an example...

Canaan was one of LendingClub’s first institutional investors.

They made an estimated 87 times their initial investment when LendingClub went public.

And based on this success, some of the most promising financial technology companies on the globe are seeking out Canaan as a potential investor.

If they could receive an investment from the venture firm that just made an 8,700% return on a company in the same sector as them...

That would be a powerful signal to the market, and to other investors.


So what does this mean for you?

How, exactly, could Canaan’s improved deal flow help you and your portfolio?

Well, there’s a young company that’s currently being backed by Canaan...

It’s in the same sector as LendingClub...

And it’s already generating millions of dollars in sales.

But the best part is, you can invest in this company too… right alongside Canaan and other top-tier financial technology investors.

The name of the company is Borro.

Borro provides asset-backed loans to individuals. Individuals pledge a luxury asset as collateral (e.g., a painting, a car, etc.) and Borro provides them with financing.

The company is only a few years old, but it’s already on track to generate millions of dollars in sales next year.

It was recently named as one of the top 50 global financial technology companies by KPMG. Borro ranked 8th… directly behind LendingClub which placed 6th.

And, Borro is currently raising money on OurCrowd, one of the top-tier equity crowdfunding platforms we cover at Crowdability.

The Midas Touch

If you’ve read our 10 Crowd Commandments, then you know we like to “follow” the smart money into early-stage investments.

And this is just another reason why...

Some investors have the “Midas Touch” when investing in certain sectors...

Which in turn gives them early access to the most promising investments in that space.

So your goal should be to spot where “Midas” is placing his bets, and invest alongside him.

If you choose to follow Canaan into Borro, please note that Crowdability has no financial relationship with Canaan or Borro. Crowdability is an independent provider of research and education on the early-stage investing market.

Happy investing.

Best Regards,
Wayne Mulligan
Wayne Mulligan


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Tags: Equity Crowdfunding Crowdfunding Ourcrowd IPO Lending Club Lendingclub

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