220: Invest in the Future: Pre-IPO Access & the AI Boom
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Think pre-IPO investments are just for billionaires? Think again.
Welcome back to another episode of The Richer Geek Podcast! Today’s guest is Mike Ivancie, CMO at UpMarket, an alternative investment platform that’s opening the door for accredited investors to access private market opportunities once reserved for the ultra-wealthy.
Since 2019, UpMarket has helped individuals invest over $150 million into assets like pre-IPO shares in SpaceX, Neuralink, Stripe, and OpenAI, as well as hedge funds, private equity, and real estate. Mike’s mission is to break down barriers and grow the platform to over $1 billion in transactions. Before joining UpMarket, he led growth at CNote, an impact investment platform, where he helped raise over $100 million for underserved communities.
In this episode, we’re discussing…
Democratizing Alternative Investments: Upmarket provides accredited investors access to private market opportunities, including pre-IPO companies, private equity, and private debt.
Accessing Pre-IPO Giants: Learn how you can potentially invest in high-growth companies like OpenAI, SpaceX, and Anthropic before they go public.
Understanding the Investment Process: Mike explains the mechanics of investing through UpMarket, from minimum investment amounts to the process of potential liquidity events like IPOs.
Weighing the Pros and Cons: Gain insights into the potential benefits (high growth potential) and risks (illiquidity, higher fees) associated with pre-IPO and alternative investments.
The AI Investment Landscape: Explore the current skepticism and future potential of AI investments, including the significant energy demands and potential industry shifts.
Impact Investing Explained: Understand the definition and real-world utility of impact investing, considering the trade-offs between financial returns and social good.
The Intertwined Future of AI and Energy: Discover the staggering projected energy consumption of AI data centers and the potential role of nuclear energy in meeting these demands.
Getting Started with UpMarket: Learn how to explore investment opportunities and educational resources on the UpMarket website (upmarket.co) and connect with Mike Ivancie directly.
Resources from Mike Ivancie
Resources from Mike and Nichole
Gateway Private Equity Group | Nic's guide | Franchise With Bob
+ Read the transcript
Mike Stohler: Hey everybody. Welcome back to another episode of The Richer Geek Podcast. Today I have Mike Ivancie. Mike is the CMO at UpMarket. It's an alternative investment platform. We've had some very interesting types of people coming on, and we'll talk about what type of alternative investments that UpMarket concentrates on.
But they are democratizing the investing landscape by giving individual investors access to a range of unique opportunities normally reserved for institutional investors in the ultra-wealthy. How are you doing, Mike?
Mike Ivancie: Hey, Mike. I'm doing really well. Thanks for having me today. Excited to chat with you.
Mike Stohler: These are some of the very unique assets because I didn't even think, and we'll get into this a little bit . We could even attempt to invest in some of these things. It's very interesting for us to get into some of this stuff. But give us a little bit of a background of who you are and how you became the CMO of UpMarket.
Mike Ivancie: My background, I'm actually a recovering lawyer. I practiced law for a few years and I started my own practice and I got really into marketing my practice. And it was sort of this light bulb moment for me doing content marketing before I knew what content marketing was. and having leads call me and getting business that way. And I was like, "God, I love this. This is so cool. I want to get into marketing." And so I ended up getting an MBA at Berkeley, and I've always had a lifelong passion for investing. It's something I sort of bonded over with my late grandfather.
I got that MBA and I started working in FinTech and doing marketing there.
UpMarket is my most recent stop, and I absolutely love it because I get to talk about really interesting companies, really interesting hedge funds, private equity funds, and try to educate investors about them. So, it's awesome.
Mike Stohler: For our listeners out there, they're probably saying, " I know UpMarket or maybe not. What is UpMarket? How long have they been around and what do they do?
Mike Ivancie: UpMarket is an alternative investment platform and really what that means is we are focused on helping investors access alternative assets. So traditional, you think of your stocks, your bonds, maybe a rental property or something like that.
Alternatives are private market opportunities, private debt or credit private equity. And within that is the subclass that is taken on the moniker of pre-IPO companies. And what that really means is you're investing in secondary shares in companies like OpenAI or SpaceX or Anthropic. Some of the things that are catching a lot of news right now people are interested in.
So we enable that. The idea of UpMarket isn't to be the sole place you invest, it's to be that nice little dessert or add-on to a full meal, a full diversified portfolio where you can say, "God, I really believe in this AI theme. I really want to access Anthropic or OpenAI", or "Gosh, I really think SpaceX is a special company. I want to invest in SpaceX." And the caveat to UpMarket is it's hard to access these products. We're trying to lower barriers, but you have to be an accredited investor. You have to qualify to invest in most all of our products. Then certain products have higher qualifications, but we are trying to lower the access.
Any accredit investor can tap these private markets and get exposure to unique asset classes that they otherwise wouldn't be able to.
Mike Stohler: Now, are we buying shares? Are we buying into a fund? If I say AI is gonna rule the world, and they probably will be and I give you X amount of dollars, what is that minimum? Just outta curiosity. And then what am I buying into?
Mike Ivancie: Minimums vary, but typically around $50,000, maybe $25,000 for some offerings. We do have venture funds and pre-IPO funds, that's where you have a professional manager who's going out and doing all the deal sourcing for you. They're gonna maybe put a little money in Databricks, a little bit of money in OpenAI, a little money in Rippling, we have funds like that. Then we have more direct secondary funds. What that is, our investment team is going out and sourcing secondary opportunities in companies.
You often hear about primary rounds, right? OpenAI just raised a series C at whatever valuation, that's a primary round.
Then there's a secondary market for all these companies as well, where broker dealers like us are buying and selling these shares. What we're doing there is basically finding a partner that wants to sell some of that, creating a fund wrapper around that. You're investing directly in that, you're tied down and connected to those shares within that company.
Anthropic, for example, Mike, if you're a big believer, you say "UpMarket, do you have Anthropic?" If we do and it's available, we say, "Okay, here's the minimum. How much do you want to invest?" Then we're gonna do the online subscription process. That's all online on UpMarket? No wet signatures.
We really try and simplify all the management's online, and you would sign those contracts digitally. Assuming you're an accredited investor, everything checks out. We do KYC, all that. Then you wire the money, and you're an investor in Anthropic and you're getting quarterly updates, and you own X amount of shares based on how much you invested.
Mike Stohler: Is there a typical amount of time that someone would invest with you, or is it just until they go public? Then all of a sudden it becomes converted. Or how does that work with, let's say SpaceX goes public?
Mike Ivancie: Concrete example for you: early on, even before money time, but we offered Airbnb to investors when they were still private. And then, of course, the Airbnb IPO and the company has done quite well. What happens is after the company has that liquidity event, whether that's IPO or M&A activity they're bought out. If it's M&A, you're probably gonna get cash in lieu of shares because it's now rolled up into another company.
But typically with an IPO, you're gonna get the shares transferred to a brokerage account once that transfer process takes place. Sometimes if for some reason you really wanted cash, you could probably get cash in lieu of shares. That would be the process. The company IPOs if there is a lockup, sometimes there is a little nuance there, where depending on the share class and how long it's been held, there may be a lockup period, but then those shares are transferred to your brokerage account, and you're free to trade or transact into them as you like.
Mike Stohler: A lot of people are thinking, is it risky? Is it not? I'll just throw it into an S&P and be conservative. What are some of the pros and cons where you can sit there and say, "Hey, look everyone, this is why you wanna go into a pre-IPO." So give me just a couple of the pros that you've seen, and then some of the cons that maybe is the reason why it's not for everyone.
Mike Ivancie: I'm a big believer in building a comprehensive portfolio, right? If someone comes to me and is like, "I wanna put a hundred percent of my net worth in UpMarket." I'm not a sales person, so they wouldn't come to me, but they'd come to one of my colleagues, we would advise against that there is risk to these investments and really, they're meant to be a compliment to a full portfolio, right? But I can definitely share some of the pitfalls or challenges with alternative investments and kind of the private markets generally, liquidity.
Biggest one: you should always know when you go into investment, how do I get out of it, and what are the cons of getting out of it, right?
With your traditional stock market, it's really easy. The market's open five days a week, typically, you can just go hit a bid, and you're excited. Maybe it's not the exact price you want, but it's liquid, fast.
Private markets aren't like that. You have to find a willing buyer if you're a seller. And certainly, we may try and help facilitate that, but it may not be at the price you like, and you never really want to be a forced seller in any market, real estate, alternatives, anything like that.
I think it's really important for investors to understand there's limited liquidity in alternative assets typically, and there can be high risk. We saw in 2021-2022, a lot of these investments, these pre-IPO type companies, if you were an investor in something like say Open Sea or some of that crypto stuff.
You really took a beating on that. If you want to get out, you're gonna get 70% down, so the risk can be greater. And it's very cycle dependent too. One thing about investing in companies, sort of expecting a liquidity event, which we can never promise a company's gonna IPO, they can stay private forever, but you kind of have to time cycles and post-2021, the IPO window really closed. Then also there was a kind of a crackdown from regulators about M&A. The hyperscalers, Google, Amazons, they're the ones with all the money to buy companies, but regulators weren't really Kosher, who weren't keen on them doing that.
So it closed the IPO window, it closed the M&A window. And then, okay, well how am I gonna exit that? And so I think any pre-IPO investment you go into, you need to think about what are my chances of exit, and how long could it be? Because if the market's hot and the IPO Window's wide open, maybe your exit window is short.
But if we hit a downturn, liquidity's low. Maybe that window all of a sudden is extending out multiple years, or maybe it turns into a decade.
That's why I said, when I first tried to answer this question, definitely not for everyone, it shouldn't be an entire piece of your portfolio.
The way I think about it, let's say I've worked at Merck or Genentech for 25 years. I've got a lot of money in S&P 500 index funds. I've got a lot of Merck or whatever stock, but I really believe in this little thing, or I really want to hedge this risk in my life, okay. Then maybe finding a hedge fund that does energy or a hedge fund that trades at assets that's not correlated to the S&P 500 or, "Oh, I really wanna believe in this AI company.
I wanna invest in them." Having that be a piece of your portfolio, I think that's where we come in and can provide a lot of value because we provide access to that.
There's also more fees with private markets. Just transparently, you know, you're gonna have, typically with a deal like this you're gonna have a subscription or broker fee.
You're gonna have an annual management fee, maybe 1%. And then, a lot of the fund managers that sell these secondary shares are gonna be charging carry that we're just gonna pass on to customers, and that could be 15%, 20%, 25%. I think those are the big things.
Mike Stohler: Yeah. That's a lot like all the different funds that we deal with in the real estate business also.
These are not fix-and-flip types of holds, right? These are businesses, these are IPOs that they're several years, five, seven years sometimes before they maybe have enough money or are able to go public. Let's talk a little bit about the different types of alternative assets.
Particularly one that's really hot right now is the AI. I think there's gonna be a lot of regulation in the future. There's gonna be a lot of competition. OpenAI and Musk and all these guys are fighting and saying, "Hey, don't do this, don't do that." What kind of future do you see with AI?
Is it still worth the investment, or do we wait a little bit, see how it pans out, because there's a lot I don't know if people are scared of it or something.
Mike Ivancie: Well, I think it's a fair question, and I see a lot of skepticism in the marketplace right now around people asking: Well, okay, you're building out all this infrastructure, these tools they make cool looking images, or they can help me write an article or a letter to someone or an email. But how do you monetize this? And I'll give you a concrete example. Just this week, Microsoft published this article Brad Smith, their Vice Chair and President said, "This is the golden opportunity for American AI."
And in that article, he said, " In fiscal year '25, Microsoft is gonna invest $80 billion to build out AI-enabled data centers, train AI models, and bolster their cloud. Assuming I think these people are a lot smarter than I am, they're investing so heavily in this technology. But you have this skepticism, they're investing so much, but what is the ROI gonna be?
I've used these tools, and I'm generally really impressed every time I use them. I can't make a recommendation. It's hard for me to predict the future. I'm sort of a believer in AI
generally, and I think we're in an early cycle, especially for some of these model companies. Anthropic is a company I personally believe in a lot.
They're a competitor to OpenAI. If you pull the kind of power users, super users, a lot of them prefer Claude, which is Anthropic's tool to ChatGPT. And so I think there's opportunities in this marketplace. A company we help facilitate investment in, it's called Core Weave. They're a AI data center play.
And just facts: we sold that, I think a year and a half ago at $ 7 billion and most recently, I think they did a tender offer for employees in the '20s. And then Bloomberg published an article talking about them IPOing potentially in 2025 at $30 billion +. There's still opportunity there, but I see the skepticism.
How do we convert these AI flows and ideas into profits for companies? And the big theme right now seems to be AI agents. And like employees, and I hate to say this, but maybe this $80 billion investment in CapEx by Microsoft is to help build out these agents which maybe end up replacing jobs for people like me, or not you because you're a content creator, you got the podcast and you got the real estate stuff. But I think we're in this kind of rough period, and sometimes that can be an opportunity to invest too, where there's a little skepticism.
Mike Stohler: Yeah. I agree with that and you never know. If you look at AWS, you look at Microsoft, Google spending hundreds of billions of dollars in these centers, and then they're saying, "Hey, but everyone, you have to return to work." I wonder if there's like a return to the office. I'm wondering if they're saying like let's see how many people we can keep or not keep, because we need the money for AI.
Mike Ivancie: I think you're onto something there. There was a CEO, I wanna say it was Klarna's CEO, but it could be someone else I could be misspeaking, but he basically said they stopped hiring and they're using AI. Basically keep your best employees, your best and brightest, most efficient folks.
Augment them with AI and let them generate the performance of 10 regular employees. I think that's a scary thing for me. It makes me wonder what the future of work looks like, and all of that and universal basic income. But that's beyond the scope of this conversation. But it's definitely a possibility if AI really delivers on its promise.
Mike Stohler: Unless you're front facing, I don't need editors anymore. I don't need my assistants doing show notes. You just have AI do it. But ladies and gentlemen with this AI and what Mike was talking about, when Tesla first came out, it's pre-IPO, and there's a lot of skepticism.
"Ah, electric cars are never gonna work." No one wants any of this stuff. But look at them now. The evaluation of, I know it keeps going up and down, but he's the richest guy in the world for a reason. And I was one of those skeptics. I was like going, "Ah, who wants an electric car?" And now I've got two of them, so.
Mike Ivancie: Nice.
Mike Stohler: It's changed a little bit. I wish I would've gotten in back then. Talk to me a little bit about what impact investing. And is it a luxury? Is it only the people way up here who can do it? So talk to me about your definition of impact investing, and your perspective on the real world utility of it.
Mike Ivancie: So shifting gears, my, I worked at a company previously called CNote, and their focus was impact investing. And like I said, I love all things investing. It was really interesting to be a part of that world. The way I would define impact investing, Mike, is: investing, something not just for a financial gain, but for some sort of social benefit as well. And concrete example: at my old firm we would work with these community lenders, and they would help underserved folks.
Start businesses, provide them capital, they would help them write business plans and give them coaching and guidance. And I've even volunteered for a few of these to provide marketing education to these folks. But this idea of impact investing is: how do I invest and then make the world a better place? Hopefully at the same time.
So, a mix of investment in philanthropy and one going through that process. I think impact investing is tough because we gotta be realistic even just traditional investing is a luxury for a lot of people. I forget the exact statistic, but there's a large majority of Americans that don't have $800 extra in their checking account if they get a flat tire or their window gets punched out or whatever it is.
So, they don't have the opportunity to really invest in general, and they don't. Typically, with impact investing, there's a trade off: you're gonna invest for some social good; you're gonna get a financial return. It's probably gonna be a bit lower than market and you're gonna make up for that by feeling good about what you're investing in.
And so, if you're someone that's just getting started investing, impact investing I think is a tough sell because your assets aren't gonna grow as fast. And unless you're really getting a lot of personal benefit from that impact, that feeling good about what you're doing, you're probably gonna set yourself behind a little bit.
Investing, not always there can certainly be great impact investments, but I think it's just a trade off that not a lot of people have the ability to make. We gotta put food on the table for our kids, we gotta take care of our friends and family. And so I think, to some extent, impact investing, sadly, is a luxury for folks.
If you have millions of dollars and you're like, "Oh, this is a cool project and it helps this community and it helps these folks out." Great. God bless you. I think you should do it. But I think for people that are really trying to build that initial nest egg of capital to then really grow, it's a hard sell when you really break down the economics of it. Not to say it's not valuable, it's tougher.
Mike Stohler: It seems if you have excess cash flow, some sitting around, why not do good for it? And it's kinda like charity work also, you get to the point where you can give back and you find some charities that you like, and it is just another way of, " Wow, I can actually impact invest with the charity or a company that I'd like and actually get money back instead of it all going out."
Mike Ivancie: Yeah.
Mike Stohler: I'll take it both ways.
Mike Ivancie: Yeah. I think there's some great firms doing really good things and even delivering compelling returns to folks and generating real impact.
I think there's a lot of value in it. It's one of those things where the industry is gonna grow and mature and evolve. I think a few years ago, ESG and all these types of, which was in this impact investing umbrella, was really in vogue. And then people moved away from that for various reasons.
And so, I think there's gonna be some maturation and evolution that's gonna have to occur. And realistically, not to get too in the weeds, but with impact investing, one of the biggest challenges is measurement: how do you truly measure the impact of what you're doing? How do you attribute X number of entrepreneurs we're able to do X, Y, Z because of X number of dollars?
So, that means for every dollar I invested X, Y, Z that's a really tough challenge that I spent a lot of time thinking about. And I know a lot of people much smarter than I am working on still today. But I think the industry is gonna continue to mature and grow, and hopefully, they'll get better at that.
Mike Stohler: Everyone loves AI. And then you have the people that are climate change and energy, and the focal point of not using a lot of energy. And all of a sudden, AI is just not this computer program and it's using an extraordinary amount of energy. In order to do these here in Arizona people are building these, my god, millions, square foot centers to power this stuff. What do you think is going to be the compromise?
Mike Ivancie: Yeah, that's a great question, Mike. And it's funny, I was pulling some research up on this recently. McKinsey did this study. They projected, right now data centers in the United States use 147 terawatt hours, or that's what they did in 2023.
That is projected to grow to 606 terawatt hours by 2030. So, more than tripling in about, what five years? That's McKinsey's projections, but that's a tremendous amount of power just for these data centers. And then you turn around and you look at where does the US get the bulk of its energy?
Right now, it's natural gas. Natural gas and coal are something like 60%. So, right now, how we generate injury, 60% fossil fuels. I think realistically we need to dive into nuclear. That's my personal opinion. I think nuclear power is really gonna be the future. These small nuclear modular reactors and these tech companies are really pushing that agenda.
And I think there's a lot of hope people have with the new administration, maybe less regulation, getting some of these nuclear projects moving fast. But I think the problem with nuclear is like moving fast probably means these reactors are up in 5, 10, or 15 years. Right. But that is such a big theme, and that's actually UpMarket has sourced some hedge funds that trade energy futures, just because we think a high-level hypothesis is if you have tripling of power demand from data centers and cloud providers. Right now, our energy is powered by fossil fuels, it's gonna put a demand on those fossil fuels, and it may lead to, if anything, at least volatility in pricing, which hedge funds, in theory, can take advantage of, if not just outright price raises and those fossil fuel costs.
This AI theme goes hand in hand with the energy needed to power it. And we haven't really answered the question with that. I mean, I know a lot of these firms build power data centers up near like dams for hydroelectric and things like that, but they're gonna run outta spaces like that and nuclear is really gonna have to fill the gap, I think.
Mike Stohler: Yeah. Because there's not enough solar panels in the world to power all these things. Elon was saying, I think he said in 10 years if all this stuff happens, you'd have to put solar panels on every farm field in the United States.
I think nuclear is the best. I completely agree with you because you just, the wind can't do it, the sun can't do it. It's good at powering homes, maybe a hotel, but those terawatts and just that type of a power, you just can't, you need something big.
Mike Ivancie: Yeah.
Mike Stohler: If we go to UpMarket, go to the website, if someone's interested and say, "You know what, I just wanna learn." What happens when they go to the website?"
Mike Ivancie: Yeah, so visit us upmarket.co. That's our website. Or Google us, you'll find us. But you can browse some of our existing offerings and see what's open, and you can also see what we've had and what's been closed.
We also have a blog with some educational resources. We only can work with accredited investors. So, if you are an accredited investor, I encourage you to sign up. Then what happens is, you'll get all of our emails. If we have a new opportunity, say we're gonna sell Databricks in a week, we'll send out an email saying, "Hey, we have this new opportunity."
Here's the pricing, here are the expected terms, here's the closing window. If you're interested, invest. And there's never an obligation to invest in anything, really. I'd say if you're accredited, come sign up. You don't have to interact with us, but if you see something you like, then feel free. And so, sign up, get our newsletter.
And then I also do a quarterly update. Every quarter, I'll share a macro update about what we're seeing and trends like this AI energy trend was part of, I think, my last macro update. But we'll also talk about the deals we've closed, the pipeline we have just really trying to provide resources and education. That's my biggest thing is I love talking about this stuff. I love hopefully educating people. Like it's not intended to be a sales pitch. What can we learn about this product? Let's teach you as much as we can about it, and then you decide if it's a good fit for you or not.
Mike Stohler: Yeah, absolutely. Ladies and gentlemen again, upmarket.co and Mike, how can people get a hold of you outside of the website, if they have any questions?
Mike Ivancie: Yeah, welcome to email me at mike.ivancie@upmarket.co. You can find our UpMarket social accounts and reach out to me through those as well, if you like. I am always happy to engage with investors and try to share educational resources I have or create new ones if I see a really good need for it.
Mike Stohler: Mike, thank you so much for coming on The Richer Geek Podcast. It's very interesting, I love alternative investments, of course that's the space I'm in. But to learn that we can actually get into some pre-IPO stuff that I thought was untouchable, for the normal people, but ladies and gentlemen, Mike Ivancie, UpMarket. Thank you very much for coming on.
Mike Ivancie: Thank you so much, Mike, for having me on. I really enjoyed talking with you. I feel like we could probably keep going a lot longer if we wanted, but pleasure and you have a great day today.
The information, statements, comments, views, and opinions (collectively, “Information”) provided in this podcast are not intended to be and should not be construed as financial, economic, legal, accounting, tax or other advice. For our full disclosure, click here.
ABOUT MIKE IVANCIE
Mike is the CMO at UpMarket, an alternative investment platform that’s democratizing the investing landscape by giving individual investors access to a range of unique opportunities normally reserved for institutional investors and the ultra-wealthy.
Since 2019, UpMarket has helped individuals invest over $150 million into private markets.
What sets them apart is their ability to curate unique assets, including shares in pre-IPO giants like SpaceX, Neuralink, Stripe, and OpenAI, as well as hedge funds, private equity, venture funds, and real estate.
By breaking down barriers, Mike aims to empower accredited investors and grow the platform to over $1 billion in transactions. Before UpMarket, he worked his magic at CNote, an impact investment platform focused on underserved communities, where he took the company from $0 to over $100 million in invested assets.