Spotting an investment that will not end well

[Chris Seveney]

Here is an email I received this AM. Here are some things that should jump out like a sore thumb:

1. Targeting 50% IRR. This should be a 100% pass and do not even read further.

2. Tout its a proven model - how many proven models do you know that contribute 50%

3. Email had no name in the signature. Only had a website link

4. Website was not complete and did not have any names or photos. If it did, I would go on linkedin and see what experience they had (for example that apple... company in TX had asset managers who were overseas VA's - curious how many of those investors knew that and could have spotted a thirty second search would have created a red flag).

5. FOMO - this is your chance. To me this is my chance to give a donation as I will never see this money again.

Share your thoughts, would any of you consider this? If so why?

[Noah Wright]

If they're looking for $10,000 seed money and you have $10,000,000 sitting around - plus the due diligence checks out (legitimate opportunity) - that's relatively low risk for a good upshot.

If they're looking for $50,000 seed money and you have $75,000 liquid, absolutely not.

Personal financial position, coupled with due diligence, are important. Underwrite the opportunity like a bank, show me receipts, etc... I'd want to meet the person over zoom if not in person. Find character references for them after the meeting. I'm not investing based on an email. Good opportunities, early stage opportunities, may not have the best online presence, but be otherwise legitimate.

Also IRR is a vanity metric, it's the wrong measurement. Cash on cash return is what I'm looking for.