Happy Friday, DVC!

Welcome to the 9 new subscribers this week! ✋ 

A South Korean student visiting the Leeum Museum of Art in Seoul ate banana art supposedly worth $120,000 (👀). His excuse? He skipped breakfast and was hungry. After the feast, however, he carefully taped the peel back onto the wall, preventing a total loss.

The story kind of reminds us of a overhyped startup—one day a startup is declared a masterpiece worth a fortune, the next day it becomes someone's breakfast. 👈️ 

A few important bits of news this week:

• A Big Week for Crypto: It now appears that both Presidential candidates are embracing crypto for donations, signaling the potential for wider acceptance for the industry. This is coming off the heels of the SEC closing its investigation as to whether Ethereum is a security. Overall, a great week for Crypto legitimacy; and

• The Buffett Indicator is going wild: The Buffett Indicator, designed and utilized by Warren Buffett, is a metric that measures the combined market value of all US traded securities against US GDP. Today, the Indicator shows that stocks are valued at 192% of GDP. According to the metric, when the market cap surpasses 153% of GDP, stocks are wildly overvalued. 🫢 

My Venture Portfolio Revealed

By: Gerry Hays, Founder of Doriot

Many of you know that the driving force behind founding Doriot is my firm belief that young professionals with 20-30 year investing time horizons should allocate 5-7% of their net worth into startups. It’s a call option on the future.

However, many struggle to grasp this concept because, as a society, we’ve been conditioned to seek certainty and instant gratification. Startup investing doesn’t provide that, for sure. Yet, with a disciplined “set it and forget it” diversification strategy, uncertainty and fear can be managed, and this is what we teach at Doriot.

But many still can’t grasp how startup investing pays off. There is still a huge “trust gap” to overcome.

So today, for the first time ever, I’m sharing the investments I’ve made over the years up through 2020. (Note: I’m excluding the 50+ “micro” investments made on the RegCF platforms as the results are still too early.)

In many of the deals I've participated in, I was the “first money in” before a product or market was evident. This approach aligns with my personal philosophy of going earlier than everyone else and betting on the jockey(s), not the horse. There were a couple of instances where I got absolutely hosed and paid the “Fool’s Tax”. The first of which was my life savings at the time (early 20s). In both cases, I moved too quickly and didn’t do my due diligence. Lessons that won’t be repeated.

For the blockchain investments, while there is liquidity, I’m committed to being a holder for many years and enduring the short-term volatility because the long-term trajectory of blockchain protocols with underlying value is undeniable.

Lastly, for confidentiality reasons, I’m not disclosing the actual startups or the size of my investments. Instead, I ran calculations based on a hypothetical scenario. If you had tagged along on my investments since I started, making $1,000 bets on each opportunity at the same time and price as me using my disciplined “Set it and Forget It” strategy, here’s what your portfolio would look like today.

Overall, I’ve achieved a 13x multiple on invested capital, with about one-third of this still unrealized, and there’s significant potential for further growth. The key takeaway is that placing “small bets” on multiple credible opportunities not only lowers risk but also drives substantial returns. Even if all remaining active investments were to go to zero, I would still have outperformed public equities (and yes, I also own public equities). Hopefully, this demonstrates the power of diversification and strategically scaling a startup portfolio.

So what makes for a successful retail startup investor? 

This topic has been the subject of many prognostications, and there are plenty of opinions, myths, and misunderstandings out there. In particular, it’s nearly impossible to take the traditional VC model and apply it to the retail investor. So, we’re going to dive into this topic next week, including lessons learned from building the portfolio mentioned above.

If you have friends who are curious about startup investing but don’t know where to begin, next week’s discussion will be especially helpful. We’d appreciate it if you could share our free newsletter with them!

And, if you have questions you’d like for us to answer regarding next week’s discussion, feel free to email them to [email protected] 

Vote for New Deals:

For those of you that are Premium members, help select the next DVC deal to review! Please view the options, upvote your favorites, and suggest your own!

New deal added to the mix:

• Pervista AI (Wefunder)

DVC Portfolio Updates:

It was a quiet week. No material updates 😐️ 

Thank you for reading & participating! Have a great weekend and see you for a new DVC Deal Review next week!

Sincerely, Team Doriot