Banker's Guide to New Small Business Finance: Venture Deals, Crowdfunding, Private Equity, and Technology, + Website

Chapter 5Private Equity In Search of ROI

Investors invest. While large salaries, high commissions, and capital gains are all appealing paths to generating wealth, they can be fleeting events that are more difficult to replicate and repeat. Over time, the compounding results of redeploying accumulated funds have the ability to magnify the earlier acquisition results with true wealth.

While billionaire status is the new (inflated) version of what was once bantered around as the more common aspiration of becoming a millionaire, relatively few people attain the actual accomplishment of accumulating $1 million net worth of real equity. And for clarity, that term should appropriately only be used to refer to actual value, not the kind of wealth heard about on a 24-hour looping infomercial trying to sell books about how to become rich on expected real estate inflation and a steady stream of unsteady rents.

Living in one of the world’s top economies, brimming with opportunities to earn profits and leverage success, literally millions of people have accumulated a legitimate claim to being a genuine millionaire, whether by hard work, vigilant saving, lucky breaks, or inheritance. There is no lack of reverence about anyone’s accomplishments intended, but millionaires aren’t what they used to be.

Many of today’s well-to-do have been accelerated to that status through the lowest income taxes in three generations, aggressive capital markets that created many short-term equity bubbles, and ...