There's more to Nas' Coinbase story
Coinbase, one of the first and largest crypto exchanges, is in the news today because of their upcoming Nasdaq listing, valuing the company at over $100 billion. The iconic rapper, Nas aka Nasir Jones, is also sharing some of that spotlight for being an early adopter in Coinbase via his venture firm, QueensBridge Venture Partners, investing anywhere between $100K and $500K back in 2013 (which happens to be the year I got into crypto as well).
According to Coindesk:
Dividing the firm’s $100,000–$500,000 stake by the share price at the time of Coinbase’s Series B ($1.00676) points to QueensBridge owning around 99,329 shares on the low end or 496,642 on the high end, according to an analysis by CoinDesk.
At the price that Coinbase shares last traded on private secondary markets – $350 per share – Jones’ firm would have a pot of somewhere between $34.76 million and $173.8 million. If Coinbase shares trade at investment bank DA Davidson’s new price target of $440, QueensBridge could see the value of its Coinbase stake rise to $43.7 million and $218.5 million, respectively.
So Nas flipped the money he could have made by doing a few shows into at least around $40 million and possibly well over $100 million, earning at least a 347x return on his investment. That means that the rest of the $10M that QueensBridge invested could have all gone to zero and the fund as a whole would still be relatively successful, but they also invested in Ring, Robinhood, Lyft, and Dropbox, so they are WAYYYYYY up. Well played Mr. Jones, well played.
But wait...there's more to this story. The Coinbase round QueensBridge invested in was announced on December 12, 2013. The BTC price at the end of that month was around $744, but presumably Nas had some BTC before then and probably held on to it even after making the Coinbase investment. If he was holding that same $100K-$500K in BTC, say, at the end of October 2013, it would be worth about $32M-$160M today. There's really no telling how much BTC he had at the time, but I'm willing to bet it wasn't zero. So, in addition to the windfall he's making on the Coinbase direct listing tomorrow, he's also probably sitting on a nice stack of BTC as well, pushing his $100M-$200M crypto bag even higher.
This is why more Black folks need to get into alternative investing. Passively investing your little 401K in stocks and bonds isn't gonna cut it if we want to make meaningful progress reducing the wealth gap within any of our lifetimes. However, most of us don't qualify as accredited investors or have the individual funds to make $5,000 - $50,000 investments at a time, which is what you usually need to get in on early stage deals like this or to invest in VC funds, who will then invest in a bunch of companies on your behalf.
Let me put it another way. If you're going to invest $5,000 in one deal, you better be sitting on a portfolio of at least $100K since it's not a good idea to invest more than 5% of your portfolio in one investment anyway. And startup investing is very risky, so diversification is even more important. Most individuals just don't have that kind of free cash just sitting around to invest in just one asset class, and that's where collective investing and equity crowdfunding come in.
Platforms like Wefunder, Republic, and Startengine allow you to invest in early stage companies with as little as $100, but the more you invest in an individual deal, the more "perks" you get and, unofficially, the more access you get to the founders and even other deals before they hit those crowdfunding platforms as you begin to build a reputation as an investor. Now this is more attainable for more people, but there are two more constraints that prevent most people from making these kinds of investments: knowledge and time.
If you're going to do more than just gamble by investing in random companies you like, and actually take the time to find, research, and evaluate each investment, it takes some basic business and investing knowledge. (side note: my favorite tool for startup investing in particular is the POCD framework.) But again, most of us just don't have the time or capacity to do this, and that's where collective investing comes in, specifically using the investment club model where small groups of friends, organization members, or families pool their money, time, and brain power together to make investments. As individuals, we just don't have the capability to do what needs to be done get out of the permanent depression that Black America has been in since integration.
Imagine what we could accomplish if every Black family, church, professional organization, social club, fraternity/sorority, masonic lodge, etc. all started their own investment clubs and mobilized the vast Black human and financial resources that are currently being mismanaged and underutilized, usually making other people rich. I just don't see a future where we don't do this and make any kind of real economic progress.
I've spent years thinking about and studying economic development specifically related to the African Diaspora and African Americans in particular, and I haven't found a better model that is culturally appropriate (e.g. we are a collective/cooperative people, not individualistic like most "Western" cultures) and practical. That's why I'm helping to build a network of Black investment managers/funds and investment clubs over at blackstarcapital.net. I hope you'll join us in building towards our goal of Black economic self-determination.