Extended investment model
More than 5-8% annual return
The extended investment model description and features:
-
Investments in real estate itself can be considered as conservative methods of investment. - Not all investors are satisfied with 5-8% of annual profitability, but not all are ready for risks of capital loss.
- Within average investment in commercial real estate investors can expect about 5-8% annual return, depending on country, city, location, type of facility and other factors.
- This extended investment model provides a mix of conservative investments with high-profitable investments and avoids capital loss risks.
The investment model description looks following:
Total investment = 100%.
Investment in commercial real estate property - office space / building:
Share in total investment = 88%.
Share of the property for rental business = 70%.
Share of the property for the business incubator = 30%.
The format of rental business: coworking.
Investments in projects within a business incubator = 12% (which is approximately 2-years rental income from a real estate property).
The number of residents of a business incubator = 30 to 50.
Total investment = 100%.
Investment in commercial real estate property - office space / building:
Share in total investment = 88%.
Share of the property for rental business = 70%.
Share of the property for the business incubator = 30%.
The format of rental business: coworking.
Investments in projects within a business incubator = 12% (which is approximately 2-years rental income from a real estate property).
The number of residents of a business incubator = 30 to 50.
The scopes of resided business:
Surviving rate of resided businesses = 50%.
5-years ROI for 80% of residents / invested companies = 60%.
5-years ROI for 20% of residents / invested companies = high multiplication of invested capital.
Management & expertise fees and time spending: partnership with existing accelerator.
First selection to the business incubator: owners of the real estate property plus partnership with existing accelerator.
- Software development,
- Games,
- Neural networks,
- Crypto industry,
- Art & Design products.
Surviving rate of resided businesses = 50%.
5-years ROI for 80% of residents / invested companies = 60%.
5-years ROI for 20% of residents / invested companies = high multiplication of invested capital.
Management & expertise fees and time spending: partnership with existing accelerator.
First selection to the business incubator: owners of the real estate property plus partnership with existing accelerator.
- 88%Share of investment in real estate
- 12%Share of investment in biz incubator projects
- 30%Share of business incubator in spaces
- 87%Surviving of resided businesses
Comparison: regular investment model VS extended investment model:
Regular investment model:
- Investing in a business incubator, co-workshop and co-manufacturing for fashion & design entrepreneurs: real estate; manufacturing equipment
- Investing in retail spaces for placing multi brand shops of new brands, rising in our business incubator: real estate spaces, manufacturing equipment
Extended investment model:
- Classical real estate invested, added with investment in shares of startups, resided in business incubator, plus circulating capital (investment in current trade operations)
- Investing in circulating capital for new names in art industry and new brands in fashion and design
- Resources investing: raw materials and components, simple equipment
- Investing of resources of AD and promotion
- Additionally it is possible to invest having actual digital products, licenses and IT product development works in new businesses.
Expected targeted financial results:
- 61.6% of investments (70% of 88% of invested funds) give to investors rental income, ~ 5-8%. annually.
- As we told above, the share of the business incubator is 10% in stock capital of each resided business.
Surviving rate of resided businesses = 50-70%.
5-years ROI for 80% of residents / invested companies = 60%.
5-years ROI for 20% of residents / invested companies = high multiplication of invested capital. - 26,4% of investments (30% of 88% of invested funds) are in the business incubator office spaces.
These investments are secured by shares in startup companies - residents in the business incubator.
This investment model expects capital gain profit. - Please note, that we can calculate exact figures after obtaining from an investor the detail requirement about:
- Budget,
- Country and location,
- Parameters of required business model.
- 12% of investments are expected for financing current operations of startup companies - residents in the business incubator.
Statistics of business incubators about financial results of invested companies:
Which share of projects gave a very high returns (projects - superstars),
Which share of projects gave an ordinary return (not superstars),
Which share of projects was failed.
Which share of projects gave an ordinary return (not superstars),
Which share of projects was failed.
Studies indicate that businesses nurtured in incubators have higher survival rates compared to those that are not. For instance, a 2010 study by the National Business Incubation Association (we have no more modern data) found that incubated companies had an 87% success rate, about double that of non-incubated businesses.
Conversely, this suggests that approximately 13% of incubated businesses do not succeed.
While specific percentages of incubated companies achieving exceptional returns are not well-documented, the overall higher success rates imply a favorable environment for business growth.
A small percentage of VC-backed companies yield substantial returns. It's estimated that about 5% of funded startups generate nearly all the profits for VC firms.
A small percentage of VC-backed companies yield substantial returns. It's estimated that about 5% of funded startups generate nearly all the profits for VC firms.
Business incubators have been instrumental in nurturing startups that have achieved remarkable returns on investment (ROI). While specific ROI figures are often proprietary and vary across industries, several notable companies have emerged from incubators, demonstrating significant success:
These examples illustrate the potential for substantial returns from startups nurtured in incubator programs. However, it's important to recognize that such high-performing companies are exceptional cases.
The majority of startups may achieve moderate success or face challenges leading to failure. Therefore, while aiming for high ROI is a goal, it's essential to maintain a diversified investment approach to mitigate risks inherent in startup ventures.
- Airbnb: Graduated from Y Combinator in 2009, Airbnb transformed the hospitality industry by enabling individuals to rent out their homes or rooms. The company has since achieved a valuation exceeding $100 billion.
- Dropbox: Also a Y Combinator alum, Dropbox provides cloud storage solutions and has reached a valuation of over $8 billion.
- Twitch: Originally known as Justin.tv, Twitch emerged from Y Combinator in 2007. It evolved into a leading video game streaming platform and was acquired by Amazon in 2014 for nearly $1 billion.
- Redbox: Incubated within McDonald's, Redbox revolutionized movie rentals through automated kiosks and became a prominent player in the rental industry.
- Coinbase: A Y Combinator graduate, Coinbase has become a leading cryptocurrency exchange, with valuations soaring into the tens of billions.
These examples illustrate the potential for substantial returns from startups nurtured in incubator programs. However, it's important to recognize that such high-performing companies are exceptional cases.
The majority of startups may achieve moderate success or face challenges leading to failure. Therefore, while aiming for high ROI is a goal, it's essential to maintain a diversified investment approach to mitigate risks inherent in startup ventures.
Why this model works:
- Real estate market growth in expected markets is confirmed by statistics for a 15-years period of time.
- Software market annual growth is an obvious category.
And this fact is confirmed by the paradigm of current development of economy and technologies. - Annual prices growth on purchasing real estate as well is confirmed by statistics for a 15-years period of time.
- New sectors of IT are appearing every year considering the growth of such sectors, like AI, crypto industry and DeFi, virtual reality and augmented reality technologies, self-driving vehicles, quantum computing, targeted medicine technologies, etc.
Possible investment models within an extended
investment model:
investment model:
- Variant 1
Land plot + prefabricated office building development = coworking and business incubator for software development.
Plus 12% of total investment goes in projects - startup businesses within a business incubator.
- Variant 2
Office building purchasing = coworking and business incubator for software development and A&D business.
Plus 12% of total investment goes in projects - startup businesses within a business incubator.
- Variant 3
Office building purchasing = coworking and business incubator for software development and A&D business + data center & hosting services.
Plus 12% of total investment goes in projects - startup businesses within a business incubator.
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