Q&A: What is the ROI of an investment in Legion M?
This Q&A is part of an ongoing AMA (“Ask Me Anything”) with the founders of Legion M. Have you got a question? Submit it here, and we’ll consider it for a future update!
Thank you to Kevin M for submitting this question.
QUESTION: What is the ROI of an investment in Legion M?
ANSWER: This is a critically important question, with an answer that may surprise you. That's because it’s still unknown. It’s like asking “who won” when the game is only at halftime. With Legion M, everyone's bet -- from the CEO and celebrity advisors to our smallest $40 investor -- is still on the table.
That’s because when you invest in Legion M you are buying EARLY-STAGE STOCK in the company. It’s like buying stock in Disney or Netflix – not today, but before their IPO. Back when they were small enough nobody knew if they would succeed or fail.
This sort of investment is unfamiliar to a lot of folks, but it’s not new. This is how venture capitalists make their money. What’s new is the ability for everyday people to participate. Up until 2016, only professional investors and high-net wealth individuals were allowed to invest in a company prior to its IPO. Today, thanks to the JOBS Act, everyone has a chance.
As a shareholder of early-stage stock, your ROI comes if/when you sell your shares. However, since the stock isn’t publicly traded, your fortunes are inextricably tied to those of the company. Legion M’s goal is get big enough to have an IPO or other exit that allows you to sell your shares – hopefully at a huge profit because you got in so early. But if the company fails and goes out of business, your stock will be worth nothing more than a tax write-off.
It’s a high risk/reward proposition. Most early stage companies fail (statistically Legion M should have gone out of business years ago), so you should never invest more than you can afford to lose. That said…startups that succeed can go on to change the world. And when that happens it’s the early shareholders who have the most to gain.
Think of it this way: If you'd been an early investor in Quibi (the high flying mobile media startup that raised billions from VC's and then shuttered within a couple years) your stock would be worthless. If you'd been an early investor in Netflix you would have made a mint. There are a LOT more companies like Quibi than there are Netflix (and a wide range that fall somewhere in between), but if you are smart/lucky enough to get in early on a winner…those are the investments from which legends are made.
So, as an investor, the question is: Do you think Legion M has what it takes to survive? Do you think it has a chance to become something special? Is it worth taking a risk to find out?
One nice thing about startup investments is that they are asymmetrical. Your potential loss is limited, but your upside is uncapped. E.g. If you invest $100 and the company fails, you are only out $100. But if the company wins, there’s no limit to what that investment could be worth.
It’s also important to know that at Legion M, all of us are in this together. Our founders are working for salaries less than half what their peers make, and our advisors work for free in exchange for options. Their upside is the same as yours: the value of the stock. We had a Round 9 pre-money valuation of less than $60MM in an industry where successful companies can be valued in billions and market leaders in hundreds of billions. If we can Legion M successful, there is a LOT of potential upside for all of us.
Bottom line – startups are speculative, illiquid, and involve a high degree of risk. You should never invest more than you can afford to lose -- not in Legion M or in any startup. That said, we’re risking our money, reputations and careers because we believe we can make this company a success. If you can bear the risk and want to help make history, we’d love to have you aboard our moon-shot!
Onward and Upward!
Jeff, Paul, and the Legion M Team
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This post may contain forward-looking statements and information relating to, among other things, the company, its business plan and strategy, and its industry. These forward-looking statements are based on the beliefs of, assumptions made by, and information currently available to the company’s management. When used in the post, the words “estimate,” “project,” “believe,” “anticipate,” “intend,” “expect” and similar expressions are intended to identify forward-looking statements. These statements reflect management’s current views with respect to future events and are subject to risks and uncertainties that could cause the company’s actual results to differ materially from those contained in the forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The company does not undertake any obligation to revise or update these forward-looking statements to reflect events or circumstances after such date or to reflect the occurrence of unanticipated events.