C. < 3 min read
This month’s bulletin is on something that’s come up with entertainment clients more than any other…
It’s about investing in small, often early-stage businesses.
We’re not talking hedge funds or listed companies. It’s anything from venture capital to the café a friend’s opening. A stake in a sports brand. A tech start-up someone they know from school. A drinks business. A label.
Entertainment clients get swarms of offers in this space, and the question isn’t “should my client be doing this?” as they probably already are.
The question a lot of agents and managers are asking is: is this a good idea?
Because on the surface, these things feel exciting. There’s real-world involvement. Sometimes a seat at the table. They get to use their name, network, or following. In the best cases, there’s genuine value creation, and they’re part of it.
And when it works, it really works:
- Roger Federer × On Running — IPO valued On at ≈ $11.35bn (Federer’s ~3% stake worth around $340m at IPO)
- George Clooney × Casamigos — sold to Diageo for up to $1bn
- Rihanna × Fenty Beauty — valued at $2.8bn in 2021, her 50% stake ≈ $1.4bn
The reality for most deals though:
- 75% of VC-backed startups never return capital; 30–40% lose everything (Harvard Business School study)
- Global venture capital exits in 2023 were about $225bn — the weakest since 2017 (PitchBook)
- Private investments are often illiquid — only 1–2% of private equity stakes find a buyer each year, and even then, selling usually requires permissions, delays, and heavy discounts.
In other words: for every Federer, there are dozens of deals that drift, stall, or quietly burn through cash.
And it's worth remembering: a lot of athletes and entertainers already have high-risk careers. Form drops off. Injuries happen. The public moves on.
Income is unpredictable, careers are condensed — and the last thing you want is to load up their future pot with even more risk.
We’re not saying don’t do it. These investments can be fun, interesting, and lead to real opportunities after the career slows down.
But good questions to ask are:
- What’s the exit plan? When will they realistically get their money back?
- Are they expecting dividends? If so, when is the business planning to be profitable and pay them?
- Is their name or brand being used publicly — and if so, are they being compensated properly for that?
- What’s the founder’s or venture fund’s track record? Have previous investors got their money back?
- And crucially, how much of their wealth are they truly comfortable tying up in something that might never come back?
For some, the right answer might be 2–3% of their net worth. For others, it might be closer to 15–20%. The point is: it needs to be a conscious decision, based on what they can genuinely afford to lose.
Because as we all know, high-risk careers and high-risk investing are a combination that’s landed plenty of headlines over the years, but with the right plan, it’s avoidable.
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The value of investments and the income from them, can go down as well as up, so you may get back less than you invest
Investment advice and investment advisory services offered and provided through Blacktower Financial Management US, LLC. This communication is for informational purposes only based on our understanding of current legislation and practices which are subject to change and are not intended to constitute, and should not be construed as, investment advice, tax advice, tax recommendations, investment recommendations or investment research. You should seek advice from a professional before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.
