Can you talk a little bit about alternatives—I know you mentioned you do VC investing, some real estate, a little bit of crypto—about how those fit into your portfolio and why they align with your investing strategy?
I started in alts getting into angel investing. And the reason I did that is that I'm in Dallas, Texas, and there's a decent angel investment group, or deal flow here. So I started showing up at pitch events and pitch days, wherever I could, and just talking to people. I liked the idea of putting your dollars behind a small team that you can get to know. And a lot of times, if it's in a space that you're very familiar with, you can actually help them. You can make connections for them with other people in the industry. You can help them understand how people will use their technology or their service or their platform, and you can put your money behind it.
And then real estate came about. I'm just interested in real estate. I think there's something that's really interesting about owning something that's that tangible, specifically rental properties. Everyone needs a place to live. And I think we can all agree that most people like a clean, nice, safe environment to live in. And so if you can find that, or if you can make something into that—if you can buy a house that is not that, and you can put money and time into it to fix it up to make it safe and attractive and appealing—then you can provide something that's valuable to someone, a place to live.
You can also get really attractive loans for residential real estate. And I love the fact that you have a couple of different exit options. One, you can always rent it. The price point is the variable there, what you can rent it at, but you can always find someone to rent. Then two, you can always sell it if you want to. And so there's always an out if you've got a long-term horizon—again, super illiquid, and it costs a whole lot to get out of a real estate deal, with fees—so you do have to have a really long-term mindset.
At one time, I had a little bit of money that had a very long time horizon. I had a good friend that became a partner in a real estate deal. We split the costs, so it was half the amount of cash that I would have needed to go in by myself. We jointly bought a property and did that, and that was the first one. It was really interesting, and we met some great people with our tenants, and it turned out to be a great deal.
The early-stage investing turned into the VC stage and then the private equity stage, kind of moving down the ladder to more mature companies. For me, that was a natural evolution because I started learning that while the startup world is really fun and exciting, and it's sexy to be in that early-stage company, it's really hard to pick winners in that space. The stats bear that out. So I started exploring with VC companies that were a little more mature, that maybe had a million to $2 million of recurring revenue annually. And those were a little more predictable because you could see the history of growth. You can see where the challenges were a lot of times, you can see where they had pivoted and were they successful or not. So there was just more data to look at to say: Can they keep doing this? It got a little easier to make wise investments.
Then we kept going, and I was like, okay, now go further down the maturity scale, [look at] private equity companies that have been around for 20 years or more, that are very profitable, that do produce regular cash flow. You can look at those and be like, "wow, they made it through the '08-'09 recession. They made it through the last decade or so, and here's how they performed." That data is really powerful. And so when you find these kinds of bellwether companies, that gives you even more comfort in locking money up in an illiquid private equity investment. So then we started looking at more of those and that was kind of my natural evolution of investing down that ladder.