Private Investment Deal Funnel

A detailed breakdown of a private company investment funnel, focusing on buying minority stakes in profitable businesses with the goal of achieving 30% annual returns.

Investment Criteria & Strategy

• Target: 30% annual returns through minority stakes (15-30%) in private companies
• Focus on profitable, cash-flowing businesses rather than startups
• Look for category winners with clear sales models
• Seek businesses with operational advantages that prevent easy replication
• Prefer companies where investor can add value beyond capital

Investment Funnel Metrics (6 Month Period)

• Initial conversations: 24 companies
• Serious discussions/diligence: 9 companies
• LOI stage: 3-4 companies
• Closed deals: 1 company

Types of Companies Reviewed

• Newsletter businesses
• OnlyFans businesses
• Journal apps
• Virtual events companies
• Bookkeeping companies
• Merch companies
• Industrial companies (laser peening)
• Healthcare (autism clinics)

Key Lessons & Red Flags

• Avoid "I can fix him" syndrome with minority stakes

  • Can't force major changes as minority investor
  • Must accept current operation/management

• Watch for scale limitations

  • Some opportunities too small to justify time investment
  • Need meaningful revenue potential to warrant attention

• Look for proven business models

  • Clear customer acquisition strategy
  • Established recurring revenue
  • Category leadership position

Successful Deal Example: Shepherd

• International hiring platform
• Already profitable with existing customer base
• Clear competitive advantage through business model
• Strong operational team on ground in Philippines
• Generates immediate dividends
• Natural alignment with investor's experience
• Clear path to add value through promotion/visibility