I saw another ad this week selling everyday investors "exclusive access" to invest in Starlink, and I just shook my head because I know what they're really selling and it ain't what you think.
I get the appeal. These are the companies everyone's talking about, OpenAI, SpaceX, and others that are printing money and changing the world. After watching people get rich off Google and Tesla while you were locked out, who wouldn't want a piece of the next one?
But what nobody's telling you is that the thing you're buying isn't what they're selling you.
We're in scary times for stock market investors, and it's about to get worse. Not because the market is volatile, volatility is part of the game, always has been. The real problem is that investing is getting more complicated on purpose.
According to the Wall Street Journal, the hottest companies now wait more than twice as long to go public, and the average is 14 years. That means all the explosive growth that used to happen in public markets where regular people could participate is now happening behind closed doors where you can't touch it.
And in a massive money grab, equity in these companies is increasingly being sold through something called an SPV; a Special Purpose Vehicle. Think of an SPV like a box that holds shares in a company, which sounds simple enough, right? NOT…
Increasingly, especially for these very high profile companies, that box gets put inside another box, and that box gets put inside another box, and sometimes there's even one more box. Only the first box actually owns the real shares.
So what you own is a piece of a box that owns a piece of another box that owns a piece of another box that finally; maybe owns actual equity in the company you think you're investing in. And here's the worst part: at every box level, someone takes a fee.
By the time you invest, you're so far removed from real ownership that your potential returns have been watered down and carved up by all of the middlemen in the chain. Most everyday investors have no idea because they're too busy getting hit with slick ads and smooth-talking “pro investors” and investment platforms screaming "Get in on OpenAI before it's too late!" or "Invest in SpaceX now!"
Buyer beware. They're not selling you ownership, they're selling you a piece of a box that's two or three layers removed from actual equity.
This is the difference between owning something and owning a claim on something. One layer of SPV is fine because that's the most practical way most angel investors can get into deals. You pool money with other investors, the SPV owns the shares directly, and you own a piece of that SPV. Clean, simple and only one degree of separation.
But when you buy into these multi-layered structures where you own a piece of something that owns a piece of something else that owns a piece of something else that finally owns the actual equity? Now you've got a problem. You paid more to get in, you get less on the way out, and you watch a parade of middlemen skim off the top at every single level. Same company but completely different returns based on how many boxes sit between you and the actual equity.
This is why investing can feel impossibly complicated these days, and why fake access without understanding what you actually own is so dangerous.
Unfortunately, complexity in investing isn't by accident, it's intentional, and it exists because it's profitable. Every layer, every structure, every box within a box creates another chance for someone to extract money from you before you ever see a return.
The platforms know this, the structurers know this, the fund managers definitely know this. The people who tend not to know this are the small non professional investors.
I'm definitely not saying don't invest in private companies, I'm advocating for more people to do just that AND do it more. What I am saying is don't let FOMO override common sense, and don't confuse marketing hype with actual opportunity. Knowledge is your best defense.
Before you put money into anything, ask yourself: How many layers exist between me and the real equity? Who's collecting fees at each level? What do I actually own if this company succeeds? And most importantly is this real ownership, or am I just paying rent on someone else's access?
One layer, a single SPV that directly owns the shares is fine and makes sense for most angel investors, especially newer investors. But anything beyond that should raise red flags. So the question is whether you understand what you're buying well enough to benefit, or whether you're just another mark in somebody else's game.
This is increasingly important in this new world of "democratized" private market access. Don't be the person who buys a piece of a box of a box of a box and wonders why the returns never showed up. Be the person who seeks real ownership, or be smart enough to walk away.
Cheers,
~Abdul
About Our Chairman
Hey Hey… I’m Abdul I’m the chaiman of Ajo Angels and Shujaa Capital and I’m on a mission to introduce angel investing to 25,000 black folks over the next five years. I’m doing this with the goal of narrowing the racial wealth gap as well as trying to close the billion dollar funding gap for black founders.