The athletes helped others at the club get an assignment to invest in a recent deal with the Space X rocket company, Patricof said. Likewise, early investments in Cholula Hot Sauce, which McCormick & Company acquired for $ 800 million last month, and TopGolf, the entertainment chain now wholly owned by Callaway Golf, were pushed through social media supported by athlete investors.
However, how non-athletes should approach such opportunities is complicated. Reducing the risk by controlling the level of your stake, if you choose to do so, is paramount. Many investors hope for returns that are between two and four times their original expense, while being prepared for them to drop to zero.
Dr. Ribakove said he invested between $ 25,000 and $ 100,000 in each deal. His first stake in Cholula was a big winner and returned four times the original investment, Patricof said.
Andy Nathan, executive director at MCRE Partners, which owns commercial real estate, said he has invested in five deals. For him, the other club members he meets on Zoom are the real bait.
“Understanding how smart people see the future, where they see growth, what economic trends will emerge – that’s invaluable to me,” he said.
Some traditional club deals that don’t involve athletes also depend on access and connections.
For example, Mr. Perkin said he was helping a family shut down a business to buy precious metals used in high-tech manufacturing, like the batteries in electric cars.
“The family has a background and a track record of making this type of investment,” said Perkin. “There is also a high barrier to entry.”