The athletes helped others in the club receive an allocation to invest in a recent deal involving the rocket company Space X, Mr. Patricof said. Likewise, he said, early investments in Cholula Hot Sauce, which McCormick & Company acquired last month for $800 million, and TopGolf, the chain of entertainment facilities now fully owned by Callaway Golf, were aided by the social media push of athlete investors.
But how nonathletes should approach such opportunities is complicated. Reducing risk by controlling the size of their stake, if they decide to make one, is paramount. Many investors hope for returns that range from two to four times the amount of their initial outlay, while being prepared for it to go to zero.
Dr. Ribakove said he invested between $25,000 and $100,000 in each deal. His first holding, in Cholula, was a big winner, returning four times the initial investment, Mr. Patricof said.
Andy Nathan, a managing principal at MCRE Partners, which owns commercial real estate, said he had invested in five deals. For him, the real lure is the other club members, with whom he meets on Zoom.
“Understanding how smart people see the future, where they see growth, what economic trends are going to be — that is 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 put together a deal to buy precious metals used for high-tech manufacturing, like the batteries in electric cars.
“The family has a background and track record for this kind of investment,” Mr. Perkin said. “There’s also a high barrier to entry.”
Source: | This article originally belongs to Nytimes.com
