RTExploring Jeff Brown’s latest investment teaser, this time he’s focused on a small private AI company that has caught his attention…
Jeff Brown’s latest promotional message makes some bold claims:
This is a common approach for promoting “private deals.” The advertisements often warn about the high risks involved, advising that you shouldn’t invest more than you can afford to lose. However, many readers tend to overlook these disclaimers. It’s important to note that with private investments, there’s a significant chance you could lose all your money. Moreover, you may not even have the opportunity to sell your investment or influence its outcome, as your funds are typically tied up in the venture. This is not an arena where you can expect a clear exit strategy, as there are no options for stop-losses or changing your mind about withdrawing your cash.
I don’t mean to dampen your enthusiasm before revealing which company Brown is discussing. Still, I’m frustrated by commentators promoting private investments, especially after hearing about readers suffering significant losses from such ventures. While not every private investment is a scam—unlike some dubious promotions from a few years ago involving bribery to mislead investors—these opportunities are inherently high-risk. Most startups consume capital rapidly and often fail to establish themselves as viable businesses, regardless of how compellingly they are presented by enthusiastic promoters.
First off, let’s clarify some points. What exactly is Jeff Brown promoting?
To provide some context, Jeff Brown previously worked at Marketwise, writing newsletters and managing his own venture, Brownstone Research, as part of the Legacy Research Group. This group also published work from notable figures, such as Teeka Tiwari (Palm Beach Research), Bill Bonner, Doug Casey, and Nomi Prins. He left about a year ago due to disagreements with the publisher. Colin Tedards then took over his newsletters for a short time. However, Porter Stansberry and the Marketwise management shut down the entire Legacy Research Group earlier this year. This decision was mainly due to issues surrounding Palm Beach, which had been recommending private investments fraudulently. It was discovered that at least one analyst had accepted kickbacks to direct investors toward those deals, and the other managers within Legacy Research failed to act appropriately when this misconduct came to light.
While many Legacy Research websites still operate, including Brownstone Research and Palm Beach, several original contributors have moved to other publishers or vanished entirely. Many people were upset about how the Legacy Research situation unfolded, particularly regarding Teeka Tiwari’s operations.
Porter Stansberry recently announced that Jeff Brown would return to launch a new tech research newsletter. Brown has resumed his free Bleeding Edge newsletter, but it remains uncertain whether he will restart his previous Brownstone Research letters or create entirely new ones. Last year, he established a new publishing imprint called Brownridge Research, from which this current advertisement originates. The service he’s marketing, Day One Investor, shares its name with an earlier premium newsletter from Brownstone. Still, it’s noted in small print that this is Jeff Brown selling research independently, separate from Brownstone Research. The subscription price is also reminiscent of his past high-end titles, initially priced at $5,000 per year but currently promoted at a “discounted” rate of $2,000 per year.
Thus, for the time being, it’s not Brownstone but rather Brownridge that is offering the Day One Investor subscription. After this lengthy introduction, let’s dive into what he’s actually teasing…
Previously, it was uncommon for a startup to achieve a billion-dollar valuation while remaining private. This is how the term “unicorn” came about among some venture capitalists a couple of decades ago. However, that’s far from the case, as unicorns have become increasingly common. Over the last 20 years, there has been an overwhelming influx of venture capital funding, allowing promising companies to remain private for much longer. For instance, Facebook went public with a valuation exceeding $50 billion about twelve years ago. Palantir debuted at a $15 billion valuation after being the most scrutinized private investment, often trading at higher valuations before its IPO. This illustrates that going public is optional for a company to grow significantly.
However, IPOs often create many millionaires. This is primarily due to employees who accumulate substantial stock rather than small investors.
We are currently witnessing another frenzy in venture investing, sparked by the launch of ChatGPT in late 2022. This has led to a surge in funding, with venture capital firms eager to jump on board with the latest AI startup, even if it’s just a small team of former Google employees working on an unnamed project.
He typically provides some examples of quick wealth accumulation:
Of course, those early investments weren’t made by anything other than everyday people like us using crowdfunding platforms. They were typically made by friends and family of the startup founders. Many who acquired shares of Facebook when it became available as a private entity likely ended up losing money by the time of the IPO, as the private valuations were extraordinarily high. Facebook struggled during its first year as a public company. It wasn’t until it became evident that Google and Facebook could achieve significant profitability and rapid growth—years before they went public—that the idea of turning “$1,000 into $1.2 million” faded away. The early investors were in at a time when Sergey and Larry Page were still figuring out how to rent a garage for their fledgling company, then called Backrub, or when Mark Zuckerberg was looking for ways to connect with girls at Harvard—long before either company had a solid business plan or was recognized as a legitimate venture.
When considering a new investment, the strategy you want is to identify the next big opportunity before it becomes apparent to everyone. This means you’re staking your bet on your ability to evaluate a founder’s potential and a private company’s future, often one that needs a transparent business model or revenue stream. At times, you might find yourself funding a research project that exists only in a PowerPoint presentation. While this approach can be exhilarating, it’s akin to trying to catch mosquitoes with a rifle—you’ll need to be exceptionally skilled or incredibly lucky to find a winner. Diversifying and investing in 50 startups instead of just one can improve your chances, but the unpredictability of startup success is a constant reminder of the risk involved. Caution is key in such investments.
Alright, we’re finally getting into the details. So, what is this AI startup?
And there’s an endorsement from another source…
If you think that calling something “one of the most lucrative opportunities of my entire career” sounds like a line from just about any teaser ad, then you’re on the right track. I’m unsure if RiskHedge even has a CEO, though Stephen McBride is typically the primary name associated with that publisher. That quote actually comes from Justin Spittler, another individual at RiskHedge, and it’s pretty general, merely referencing “AI in healthcare” without pointing to any specific company.
This does narrow down our focus a bit, but we’ll need more clues… let’s return to the ad for a bit of fear of missing out (FOMO):
Do you know what tends to happen during a frenzy? People often lose their ability to critically assess potential investments and end up buying subpar options—even seasoned venture capitalists can fall into this trap. But I digress. Here’s more from Brown:
When a startup founder is in search of venture capital or if a project is poised to attract significant venture capital firms that can inject tens or even hundreds of millions of dollars, along with offering industry expertise and placing seasoned professionals on the board, it’s unlikely that they’re interested in raising small amounts like $100 from regular investors.
Alright, so that covers most of the hints—but there’s one more crucial piece of information we receive:
We know it’s an AI healthcare company focused on modeling potential drug interactions with the human body. It aims to sell this software, likely to pharmaceutical companies. Additionally, it is seeking to raise $5 million at a $20 million valuation. If Brown believes this funding round will close soon, it suggests the offering started relatively recently.
So, what is this “Next AI Unicorn?”
Syntensor is currently raising $5 million at a $20 million valuation through the Republic private investing platform. They report raising $3.5 million, indicating they are nearing their target. The deal launched and began accepting investments since August 1, they are likely to reach total funding soon if they maintain their current momentum.
Regarding their business status, Syntensor claims to have completed one validation project and is now entering a pilot phase with several firms that collectively manage approximately $50 billion in assets under management (AUM).
Here’s where I may sound repetitive: If you’re considering investing in a private company, it’s essential to scrutinize the details. You likely won’t have to wait to change your mind and withdraw your investment next week or next year. It may take years to determine whether the company will successfully continue its development, receive a buyout offer, or pursue an IPO. Therefore, you must be very comfortable with the investment plan—or enjoy the thrill of gambling, fully aware of the risk of losing that money. There’s also the possibility that the company could dissolve within six months, though, in most cases, even failures tend to take longer.
Since they are soliciting public funds, they must file with the SEC, much like a public company. They’ve submitted a Form C, similar to a public company prospectus but shorter and less complex. It’s wise to rely more on this filing than their promotional materials or lofty aspirations.
I noted a few points while skimming through the filing: Shareholders do not possess any voting rights; the company has approximately $1 million in debt and no revenue. This situation implies that if things deteriorate rapidly, only the debtholders, preferred shareholders, and other seed investors will likely recoup any funds (and realistically, they might not). The project began in 2019, but only one person was only one person was involved until 2021. The founder, Clayton Rabideau, holds 85% of the voting power. Before this funding round, the company needed more money, having spent all previously raised capital. They have raised about $4 million in earlier seed rounds, all of which have been utilized, and they have yet to report any revenue.
Additionally, they have filed a couple of provisional patents. Since the SEC filing date, they may have raised additional funds through SAFE agreements, which allow for future equity purchases, often at a discount. These agreements can sometimes be considered part of a “Series A” funding round, although specific benchmarks for venture investing can vary.
With that said, the choice is yours—whether to invest in this AI healthcare stock, which represents an early-stage opportunity with a startup that could potentially develop a product that businesses may find helpful (or may not). I do not have enough insight into the market for AI-driven modeling of the human body and immune system to determine whether they have a groundbreaking concept or if they are just one of many competing ideas. Therefore, I leave it to you and Jeff Brown to decide. While the likelihood of success is low, even if the product is well-received, it will need to raise significant capital to advance, and there’s no guarantee it will secure funding at higher valuations in the future. However, the chance of success is not zero; everyone has different levels of comfort regarding these investments.
Do you love the concept? Have you had positive or negative experiences with private investing that you want to share with everyone? Are you feeling excited or frustrated about Jeff Brown pitching ideas again? We’d love to hear your thoughts in the comments below. Thank you for reading!
