Adys's recent activity

  1. Comment on How investors 10x each dollar, before they even invest in ~finance

    Adys
    Link Parent
    I think it’s all context. My goal with this post was to demystify the process and explain what I think is an incredibly important lever to understand in finance. Sometimes when people see...

    I think it’s all context. My goal with this post was to demystify the process and explain what I think is an incredibly important lever to understand in finance.

    Sometimes when people see entrepreneurs at the head of a 100M fund, they associate this with said entrepreneur having that money and putting it to work. Obviously that’s not what it is. But there’s also a LOT of middle class people who have some amount of savings and don’t see the immense leverage that these savings gives them (even as low as 10k as I said), given different risk profiles and goals.

    1 vote

  2. Comment on How investors 10x each dollar, before they even invest in ~finance

    Adys
    Link Parent
    Correct She and two colleagues do. The fund governance structure I didn’t assist with but generally you give the primary investors in the fund (limited partners aka LPs) some good amount of...
    1. Correct
    2. She and two colleagues do. The fund governance structure I didn’t assist with but generally you give the primary investors in the fund (limited partners aka LPs) some good amount of control without the burden of daily management
    3. It’s coming out of the management fee. The management fee is 2% of the fund size per year and covers legal and administrative fees, including operational salaries.

  3. Comment on How investors 10x each dollar, before they even invest in ~finance

    Adys
    Link Parent
    Well it’s simple. You have out there professional private investors. Those are people working for rich individuals or families, or sometimes working for large corporations that are...

    Well it’s simple.

    You have out there professional private investors. Those are people working for rich individuals or families, or sometimes working for large corporations that are diversifying/scouting.

    Those people have a job: manage money. They are paid with a management fee on that money (a percentage of the money managed).

    But they also have a mandate as to how to manage this money. The mandate won’t just say “we will put it in stocks”, otherwise it’s easier for the owner to do this themselves without a management fee. The latter needs to be justified. You with me so far?

    So in many cases the mandate is something like “we will invest in companies/funds at stage A in sectors B and C, tickets from x-y$, up to z% of the raise”

    Ok- so, those same people now have quite a bit of work to do. They get bonuses if the investment is successful and so they want to scout the targets for those investments, talk to them, derisk them, understand them etc …

    If you’re reaching out such people cold, then you’re just doing their job for them. Everybody wins.

    The difficulty:

    • Finding them (there are lists, guides)
    • Differentiating them from people who “look” like they’re investing (but are in fact just roleplaying at it)
    • Structuring your project in a way that is compatible with their investment mandate (this is where most people fail)
    • Pitching your project to them

    Pitching a fund is no different from pitching a startup; you just have a different set of investors to talk to. But you also wouldn’t pitch a startup to a pension fund just because they have money, so it’s just as restricted the other way around.

    1 vote

  4. Comment on How investors 10x each dollar, before they even invest in ~finance

    Adys
    (edited )
    Link Parent
    I’m definitely not failing to understand how it’s structured, since I advised on it, but no this isn’t the structure. For one, the bank invested, it wasn’t a loan. The risk is obviously higher,...

    I’m definitely not failing to understand how it’s structured, since I advised on it, but no this isn’t the structure. For one, the bank invested, it wasn’t a loan. The risk is obviously higher, yes; all investments come with risk profiles. I’ll say I don’t envy the current US pension funds current risk profiles either…

    As for who came in: She did have a couple more people with her profile join in but any fundraising was done cold. Including the sovereign wealth fund (this one is the easiest of the lot - it sounds big but it’s actually essentially the state doubling investments in any funded projects).

    I also want to stress that this lady makes half the salary most senior devs make in the US.

  5. Comment on How investors 10x each dollar, before they even invest in ~finance

    Adys
    Link Parent
    The reason I didn't reply to you yet is I'm not sure what you're asking -- I gave an example elsethread below, is that what you're looking for?

    The reason I didn't reply to you yet is I'm not sure what you're asking -- I gave an example elsethread below, is that what you're looking for?

    1 vote

  6. Comment on How investors 10x each dollar, before they even invest in ~finance

    Adys
    Link Parent
    €40k - this was not in the US (which also answers your "tax credit" question; works differently where I live) And yes. Here's the case: She earns ~€100k EUR / yr. Average tax rate is 55% in BE, so...
    • Exemplary

    Can you expand on this specific use case a bit? So she invests $40k over 7 years = $280k, and then you approached other other and pooled enough to end up with $10m? Am I understanding your point?

    €40k - this was not in the US (which also answers your "tax credit" question; works differently where I live)

    And yes. Here's the case: She earns ~€100k EUR / yr. Average tax rate is 55% in BE, so that ends up being a "usable" ~3750 eur/mo. At this range of earning for solopreneurs, a lot of expenses become professional expenses (anything work related such as travels, hardware, a portion of rent and charges dedicated to home office etc), which bypasses taxes. What's left after that is roughly €40k/yr which would normally end up in a savings account, which creates a small tax deduction. However, in Belgium, this is indexed to a maximum of 8.17% of your employee revenue from three years prior -> In her case, this meant a maximum of ~4k / yr. What to do with the remaining 90%?

    So, she took the full 36k / year remaining as a commitment and proposed a 7-year fund of €9M, to which she would contribute a total of €180k EUR over the first five years. This fund actively invests in climate projects, and because it's a philanthropic fund, it doesn't operate VC style and doesn't chase massive multiples. With this, she was since able to find two other partners (each bringing similar contributions), then raise €3M from a private bank, €1M from various family offices, and that amount was all doubled by the Belgian sovereign wealth fund, bringing the total to 9M.

    The difference in commitment of course is that she's actively participating in the fund and dedicating some time to it every week.

    But the difference is clear: Instead of donating some amount every year and losing the rest to taxes, she gets to be very active on a topic she cares a lot about, which helps continue to build her career, she has a MUCH more significant impact, and she gets to see returns on the money as it's actively invested. (Furthermore, she takes some small salary on the active management, which she … donates to the organizations she was going to donate to in the first place).

    7 votes

  7. Comment on How investors 10x each dollar, before they even invest in ~finance

    Adys
    Link Parent
    Yeah, I mean, I've seen plenty of "matching fundraisers" but I never properly considered the "why" behind them, and how it goes beyond charity itself. Having stepped back and now understanding the...

    Yeah, I mean, I've seen plenty of "matching fundraisers" but I never properly considered the "why" behind them, and how it goes beyond charity itself. Having stepped back and now understanding the system end-to-end, I really wish I had better understood this aspect of the game.

    1 vote

  8. Comment on How investors 10x each dollar, before they even invest in ~finance

    Adys
    Link Parent
    It's different for every country but the questions are always the same: Is the structure tax-efficient? Does it allow for the desired control schema? How are the funds distributed, and how much of...

    It's different for every country but the questions are always the same:

    • Is the structure tax-efficient?
    • Does it allow for the desired control schema?
    • How are the funds distributed, and how much of it is reserved for management?

    Feel free to AMA but "how to do it" is too broad a question because it depends on how much money is invested and for what purpose.

    3 votes

  9. Comment on How investors 10x each dollar, before they even invest in ~finance

    Adys
    Link Parent
    I'll also add one more thing to this: There is nothing you have to do yourself. Of course, the more you are able to do yourself, the quicker and more efficiently you can execute. But every bullet...

    I'll also add one more thing to this: There is nothing you have to do yourself. Of course, the more you are able to do yourself, the quicker and more efficiently you can execute. But every bullet point in that list is a job you can hire for.

    2 votes

  10. Comment on How investors 10x each dollar, before they even invest in ~finance

    Adys
    Link Parent
    This advice is valid for both donation-type fundraises as well as investment-type fundraises, which is why I gave both examples. The numbers aren't exactly the same, but they're similar (I'm less...

    This advice is valid for both donation-type fundraises as well as investment-type fundraises, which is why I gave both examples. The numbers aren't exactly the same, but they're similar (I'm less familiar with the donation side now).

    And yeah, I didn't go in the details of how to do it because that's a whole load of admin etc that is kind of out of scope for a basic "I wish people had told me exactly this three years ago", and I could only really speak about one country which isn't the US :)

    1 vote

  11. Comment on How investors 10x each dollar, before they even invest in ~finance

    Adys
    Link Parent
    You fundraise them. Having the 10% skin in the game makes doing so significantly easier, as @chocobean said. There's no free money, but this gets very close to it. When you're operating at this...

    You fundraise them. Having the 10% skin in the game makes doing so significantly easier, as @chocobean said.

    There's no free money, but this gets very close to it. When you're operating at this level, money is a resource and having /something/ means you can grow it into more, with not much effort.

    Think of it the other way. Let's say you have an idea for a project that requires $100k. Where is that money coming from? If some of it is not coming from you, then you have a problem.

    4 votes

  12. How investors 10x each dollar, before they even invest

    ~finance Ask
    For the past several years I’ve been knee deep involved in Ukraine and as several people on Tildes know, a lot of my earliest days were spent donating, tens of thousands. All in all I’ve donated...

    For the past several years I’ve been knee deep involved in Ukraine and as several people on Tildes know, a lot of my earliest days were spent donating, tens of thousands. All in all I’ve donated enough to nearly bankrupt myself when my situation changed.

    As I got more involved (and now I’m an active investor in the sector), I want to share something I’ve learned since that I wish someone had told me when I started:

    Every dollar you have that you want to put to work can, on average, be 10x’d by the time you put it in.

    That means if you want to donate 10k, you may well be able to end up putting 100k to work towards your goal.

    You may have seen this take the form of donation matching — some fame seekers sometimes do it (I’ll donate 10 dollars for every dollar you donate), but this isn’t necessarily what I mean.

    Speaking on an investment side: on average, 10% “skin in the game” makes it very easy to get the remaining 90% as long as there is a net positive outcome possible. So by positioning your donation as your skin in the game to a larger fundraise, you set yourself up for multiplying your impact by ten.

    What’s more: let’s say you don’t want to donate 10k in bulk but you have a good job that allows you to set aside 1k usd per month. You want to donate half of that (500 usd). This means per year you can donate 6k usd.
    Are you able to take a two year engagement? Congratulations, that means you are donating 12k and can now raise for 120k with 10% skin in the game (as long as the money isn’t needed faster than at the rate it can be committed).

    I had this discussion with an acquaintance who has been in finance for a long time and got a very good job. She was trying to figure out how to “invest” 40k per year, that would otherwise be lost to taxes. On a 7 year engagement she has now setup a 10M climate fund (around 2% SITG which is standard for funds).

    I was floored she didn’t know this. I figured the reason I didn’t was because I didn’t study economics, but it seems so fundamental that I want more people to be aware that this is a thing.

    17 votes

  13. Comment on McDonald’s is losing its low-income customers in ~food

    Adys
    Link Parent
    My response was poorly worded, I fixed it with an extra word :)

    My response was poorly worded, I fixed it with an extra word :)

    1 vote

  14. Comment on McDonald’s is losing its low-income customers in ~food

    Adys
    (edited )
    Link Parent
    Investors don’t simply care about “money now”, that’s wildly incorrect. First, a point of note: investors don’t invest their own money, they invest someone else’s money. This is money they manage....

    Investors don’t simply care about “money now”, that’s wildly incorrect.

    First, a point of note: investors don’t invest their own money, they invest someone else’s money. This is money they manage. They receive a management fee from that money generally unconditionally, this is their salary.

    Then if they beat certain expectations, those same investors receive bonuses. In VC for example this means investors only make a lot of money if they get a very high return on initial investment (which is why VC seeks unicorns etc). And for investors in public companies, this is fairly abstracted away but generally comes through a mix of public confidence in the company pared with quarterly results.

    With that out of the way, it’s important to see how “investors” don’t care about “money now”. And for a company as big as MacDonald’s, neither does management. They will to some extent care that quarterly results look good but long term prospects are at one point or another on their minds otherwise either public confidence goes down, or the possibility of bonuses disappears.

    If they raised prices it’s likely part of a larger strategy, testing the market, whatever. They may or may not walk it back, it could be a failed experiment, but it’s not just a get rich quick scheme.

    5 votes

  15. Comment on Supermarket rewards card- yes or no? in ~finance

    Adys
    Link Parent
    You are forgetting a lot of factors. First, if someone is willing to spend more on one item but the data shows they are likely to be saving up elsewhere for it, this is pressure for prices to come...

    You are forgetting a lot of factors.

    First, if someone is willing to spend more on one item but the data shows they are likely to be saving up elsewhere for it, this is pressure for prices to come down.

    If data shows a lot of people are interested in the item should it be a lower price, this is pressure for prices to come down.

    I could go on quite a bit but in general, supermarkets are not in the business of selling luxury items. They are in the volume business. More reach means more volume means more opportunities to buy more products.

  16. Comment on Supermarket rewards card- yes or no? in ~finance

    Adys
    Link Parent
    It’s not always the case that “people buy more therefore increase prices”. Especially when those things are in the “luxury spending” category which, vegan food definitely still is in. It only...

    It’s not always the case that “people buy more therefore increase prices”. Especially when those things are in the “luxury spending” category which, vegan food definitely still is in. It only applies to commodities.

    Before something becomes a commodity, increase in popularity creates increase in investments which decreases the price (by decreasing the cost) in favour of further increased volumes, and sometimes increased margins too.

    Insights into direct individual shopping habits can incidentally accelerate this loop. It’s not needed, but it can make the investment loop more efficient and thus get to commodity faster.

    1 vote

  17. Comment on CS2 skin update ‘rug pulls’ collectors as $1 billion wiped from market cap in ~games

    Adys
    Link Parent
    CSGO digital knives aren't any more of an asset than currency is.

    CSGO digital knives aren't any more of an asset than currency is.

    1 vote

  18. Comment on CS2 skin update ‘rug pulls’ collectors as $1 billion wiped from market cap in ~games

    Adys
    Link Parent
    Not that I disagree with you but this also applies to the US Dollar if you replace Valve by the fed 😅

    It's an arbitrary asset priced based on its availability with no guarantee that Valve doesn't just say "meh fuck it, you all get one" tomorrow.

    Not that I disagree with you but this also applies to the US Dollar if you replace Valve by the fed 😅

    3 votes

  19. Comment on US President Donald Trump and EU impose new sanctions on Russia: ‘Now is the time to stop the killing’ in ~society

    Adys
    Link Parent
    If you want Trump to sanction Israel, just be the last person to have talked to him and he’ll do it.

    If you want Trump to sanction Israel, just be the last person to have talked to him and he’ll do it.

    10 votes

  20. Comment on Amazon Web Services crash causes $2,000 Smart Beds to overheat and get stuck upright in ~tech

    Adys
    Link Parent
    It’s also not recommended by the manufacturer companies usually, deemed unsafe due to various safety features not guaranteed to function. What @shrike is referring to is often called “fail open”:...

    It’s also not recommended by the manufacturer companies usually, deemed unsafe due to various safety features not guaranteed to function.

    What @shrike is referring to is often called “fail open”: fail in a way that allows usage (vs fail closed). Magnetic doors are often referred to as “fail safe” (power outage: magnet release) vs “fail secure” (power outage: door remains locked)

    11 votes