📡 Why billionaires avoid public markets (the math will shock you)

Happy Tuesday.

Here's Alberto from Founderscrowd with the

playbook wealthy investors use to build generational wealth, and why most people never see it.

📋 Today's Topics:

⏱️ Read time: 5 minutes

The difference between being rich and being wealthy isn't income.

It's access.

While retail investors argue about which S&P 500 index fund has lower fees, the 1% are investing in companies years before they hit public markets. By the time you can buy shares on Robinhood, they've already made 50x-100x returns.

This isn't a conspiracy theory. It's math.

And today, I'm breaking down exactly how they do it.

Most people think investing is about picking winners.

The 1% know it's about getting invited to the game before everyone else shows up.

Here's how they operate:

They don't wait for CNBC to cover a hot startup. They're in the room when the founder first pitches. They don't read about funding rounds in TechCrunch. They get the term sheet emailed to them directly.

Access isn't about being smarter. It's about being connected.

Wealthy investors build relationships with:

When SpaceX raised at a $10B valuation in 2015, retail investors couldn't access it. When it raised at $127B in 2022, retail investors still couldn't access it. When it goes public at $350B+ in 2026, retail investors will finally get their shot.

The 1% got in at $10B. Retail gets in at $350B.

That's a 35x difference in entry point.

You know what the 1% don't do? Buy Tesla stock after it's already trading at a $600B valuation.

They bought Tesla shares from employees and early investors in 2012 when the company was worth $3B. They made 200x before retail investors made 10x.

Here's why private beats public:

1. Information asymmetry still exists
In public markets, everyone has the same information at the same time. Efficient markets mean you can't get an edge.

In private markets, you can meet the founder, tour the facility, review detailed financials that aren't public, and assess the team up close. You know things other investors don't.

2. Valuations are negotiable
Public market price: $156.43 per share. Take it or leave it.

Private market price: "We're raising at a $50M valuation, but if you commit $500K within 48 hours, we'll give you the previous round's $40M valuation."

The 1% negotiate. Retail accepts the price on the screen.

3. Less competition drives better terms
Public markets: 100 million investors competing for the same stock.

Private markets: Maybe 50 qualified investors even know this deal exists.

Scarcity creates leverage. The 1% use leverage to get better terms: pro-rata rights, board seats, information rights, discounted valuations.

4. You can actually influence outcomes
Buy 100 shares of Apple: You own 0.0000006% and have zero influence.

Invest $100K in a $10M seed round: You own 1%, the founder knows your name, and you can open doors for them. If they succeed, you 100x. If they struggle, you can help fix it.

The 1% don't just invest—they participate.

Here's what retail investors do:

They read that "Stripe is considering an IPO." They get excited. They wait for the S-1 filing. They buy on IPO day at a $70B valuation.

Here's what the 1% did:

They invested in Stripe's Series B in 2012 at a $100M valuation. They're up 700x before retail even gets access.

The timing advantage is everything.

Let's look at real numbers:

Airbnb:

Uber:

Facebook:

See the pattern?

The 1% don't invest based on headlines. They invest based on stage.

They're buying when the company has 10 employees and $2M revenue. Retail is buying when the company has 10,000 employees and $2B revenue.

Early-stage risk is real. Most startups fail. But the ones that work deliver returns that are literally impossible to replicate in public markets.

This is the part that changes everything once you understand it.

The median IPO pop is about 20%.

That means if you buy at IPO, you might make 20% on day one. Not bad.

But here's what happened BEFORE the IPO:

Take Snowflake:

The wealth was created in the eight years BEFORE going public. The IPO was the exit, not the opportunity.

Or look at Databricks:

If Databricks goes public in 2026 at $80B, early investors make another 1.3x. Late-stage investors (who got in at $62B) make 1.3x.

But the early investors? They're already up 4,428x.

That's why the 1% invest pre-IPO.

Not because they're smarter. Because they have access to companies when the real wealth multiplication happens.

So how do wealthy investors actually deploy capital?

The portfolio approach:

They don't bet everything on one startup. They invest in 20-50 companies knowing:

That 5% pays for everything and generates life-changing wealth.

Example portfolio math:

Invest $100K across 20 startups ($5K each):

Result: $100K becomes $530K (5.3x return)

One winner made up for 10 failures and still delivered a 430% gain.

This is how venture capital math works. This is how the 1% invest in private markets.

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For decades, this playbook was locked behind accredited investor rules, $1M+ minimums, and insider networks.

You couldn't invest in SpaceX at $10B because you didn't have Sequoia Capital's phone number. You couldn't get into Stripe's Series B because you weren't friends with the founders. You couldn't access Databricks because you weren't an LP in a top-tier VC fund.

The gates were closed.

Now they're opening.

Platforms like Founderscrowd exist specifically to bring you the same deals the 1% see—with minimums starting at $1,000 instead of $1,000,000.

We partner with 50+ venture capital firms to access their deal flow. When they invest in the next SpaceX or Stripe at a $50M valuation, our premium members can invest alongside them.

Same companies. Same terms. Same timing.

The only difference? You don't need to be a billionaire to participate.

This is how the 1% actually invests. Now you can too.

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