Imagine being one of the earliest investors in a high-flying tech company like Meta Platforms Inc (NASDAQ: META). Obviously, given its explosive growth, anyone who got in on the floor of that made a mint. But a lot of those people were well-funded venture capitalists – people with an extra $10 million, $25 million, or $50 million to invest early in a company’s history.
For everyone else, the opportunity to take advantage of the profit potential in these groundbreaking companies has been limited – until now, that is.
Today, I want to introduce you to a simple but relatively unknown investment that lets you ride alongside venture capital firms while at the same time receiving inflation-beating cash distributions.
I’m talking about Business Development Companies, also known as BDCs for short.
A business development company is an organization that invests in small- and medium-sized companies in the initial stages of their development.
BDCs allow smaller, nonaccredited investors to invest in them (the BDC), and by extension, in small growth companies.
And, because BDCs are regulated investment companies (RICs), they must distribute over 90% of their profits to shareholders. That RIC status means they don’t pay corporate income tax on profits before distributing them to shareholders.
That makes BDCs a great way for individuals to get paid healthy dividends as early investors, especially when the BDC uses floating rate loans that produce more money when rates rise.Let me tell you about my favorite one…