Why The Rich Get Richer: A Glimpse Into How Ultra High Net Worth Families Think About Money

Have you ever heard the term “the rich get richer?” There’s something behind that.

Families that come into wealth and are able to hold onto it have a different attitude about money, one that they make a point to instill in generations to come. Whether you are already an affluent family, in the process of becoming one, or aspiring to do so, the ultra high net worth could teach us all a lesson about how to think about money.


Staying rich isn’t as easy as it seems. There’s the temptation to spend unscrupulously, the pressure of being constantly preyed upon by family members, friends, and every commercial entity known to mankind, tax and legal factors, and the stress of having to manage it all.

Yet somehow the average wealthy person manages to stay wealthy. It doesn’t have everything to do with the advantages that the wealthy have over the less affluent or the inheritances they may receive.


We’ll be elaborating on these ideas further in our conference call, but here are a few examples from Steve Siebold’s book Secrets Self Made Millionnaires Teach Their Kids (as per Glum and Siebold, 2018).

  • Avoid pursuit of instant gratification

  • Use visioning techniques to clarify your future

  • Make the pursuit of success and money something fun to do

  • Use money as a way to create freedom and opportunity

  • Nobody owes you anything – you have to earn it

  • Solve big problems that people will pay you to solve

  • When it comes to growing wealthy, reach your own conclusions and think for yourself

  • Have high expectations


How should you be talking to your kids about money? If you want to hear more, register here for our conference call on February 20th.


Glum, Julia. (2018, March 14). 5 Secrets Self-Made Millionaires Teach Their Kids. Money. Retrieved from http://money.com/money/5197948/5-secrets-self-made-millionaires-teach-their-kids/

Siebold, Steve. (2018, Jan 2nd). 7 Secrets Self-Made Millionaires Teach Their Kids. HuffPost. Retrieved from https://www.huffingtonpost.com/entry/7-secrets-self-made-millionaires-teach-their-kids_us_5a4baf0be4b0d86c803c799f

Is There A Connection Between Presidents And The Markets?

Sanjeev Sardana ,CONTRIBUTOR at Forbes

US President Barack Obama . / AFP / POOL / HOANG DINH NAM

US President Barack Obama . / AFP / POOL / HOANG DINH NAM

As the presidency goes, so goes the stock market—and history appears to prove it. From 1928 through 2015, the S&P 500 returned an average of 10% a year under Democratic presidents, compared with just 1.8% under Republicans, according toFidelity International.

The data may surprise some, since the Republicans are widely touted as the more business-friendly political party. Nonetheless, the message to investors seems clear: If you want higher returns, vote Democrat.

And yet, as a veteran financial advisor, I urge my clients to ignore historical connections between presidents and markets. Why? For the same reason I advise them not to chase hot stocks: Past performance is no promise of future results.

Over the long run, the stock market doesn’t move based on who’s in the oval office. It acts in accordance with the regular cycle of economic growth and contraction. When an economic slowdown nears, the market begins to discount asset prices. When signs of a recovery appear, the market begins rising.

Presidents don’t control the entire government, much less the tidal forces of economic cycles. And, while their comments may spook or thrill the stock market in the short term, presidents don’t control the stock market either. What does move the economy, and thus the market? The answer is macroeconomic factors—from oil prices to interest rates.

Consider that presidents Nixon, Ford, and George W. Bush served during major increases in oil prices, while most Democrats (Carter being a notable exception) presided over stable or falling prices, which tend to spur the economy.

Low interest rates, meanwhile, can spur the economy and the market. And, in theory, presidents have some control over interest rates based on whether they nominate hawkish or dovish Federal Reserve leaders. But it often doesn’t work out that way.

In the 1970s, Carter nominee Paul Volcker jacked rates up sharply in order to break the back of inflation. That helped to crush Carter politically, but set the stage for an expansion under Ronald Reagan. On the other hand, Alan Greenspan and Ben Bernanke, both nominated by Republicans, kept rates low.

There’s also the matter of fortunate timing. President Obama took office at the start of the Great Recession. But the economy, even after the nastiest contractions, is still a cyclical phenomenon. And when the economy began to recover, Obama could claim credit.

The stock market’s cyclicality, too, can make winners or losers of presidents. Republican President Gerald Ford found himself on the right side of the pendulum in 1974, when he took over for Richard Nixon. The market had plunged under Nixon, setting the stage for a bounce back: under Ford, the S&P climbed 18.6% a year through 1976. (It wasn’t enough to win him re-election, as Americans ultimately sought a clean break with the Nixon era.)

Bill Clinton’s timing was also good. He didn’t create the technology boom, but he did take office as it was beginning, and it helped the economy to grow during his two terms.

So do presidents’ policies really matter to the economy and markets during their terms? They can, and taxes are probably the most meaningful example. For a good synopsis of the leading candidates’ tax proposals, check out this PolitiFact article.

Still, it’s premature to make any portfolio adjustments based on the candidates’ tax plans. Remember that Washington is built on checks and balances, and any legislation faces a tough slog to become law.

Perhaps the wisest course of action is to maintain a diversified portfolio—one that is designed to look far beyond the upcoming election in order to protect and grow your money.

Disclaimer: Information contained here is for information use only and is not a solicitation for services. Neither Sanjeev Sardana nor BluePointe Capital Management provide tax advice. Please consult with your tax advisor for further information.

Two Keys To Investing In Micro VC Funds

Sanjeev Sardana ,CONTRIBUTOR at Forbes

The micro venture capital landscape is getting crowded: According to Samir Kaji, Senior Managing Director at First Republic Bank, over the past five years, the number of micro-VC funds has exploded, from around 25 to over 325 today.

The key factor behind this trend is the cloud, which has made it much less expensive to get startups on their feet. As a consequence, small funds can now build sufficiently diversified portfolios as less capital is required at the earliest stages of a company. And while this is good news for entrepreneurs and those starting small funds, the explosion of funds has made it more challenging for investors to identify funds worth investing in.

According to this Kauffman foundation report, small funds have a better shot at providing returns than do larger funds—so finding the right Micro-VC funds to invest with is a worthwhile endeavor. To evaluate a fund’s chances of success, we have to understand what characteristics a fund needs in order to succeed.

Some of the best perspective on this question comes from later stage investors —the investors who take the baton from Micro-VCs, who in greater proportion tend to invest in early stages due to the size of checks they generally write. From speaking with a few later-stage venture investors, I’ve learned that successful early-stage funds tend to share a particular characteristic: They are comfortable challenging convention and consensus.

A case in point: SoftTech VC’s non-consensus approach to FitBit in 2008. Most investors in 2008 were confused about the product, and hardware investing was viewed as a no-fly zone (particularly for small funds due to capital requirements). Of course, we were also sitting in a market that was in its depth of financial crisis. SofTech’s non-consensus approach at the time was to seek a hardware investment that would play out like a capital-efficient software investment. As investing goes, it doesn’t get better than FitBit, which had a monster IPO this past summer and turned out to be a superb bet for SofTech.

Fitbit CEO James Park, center, is applauded as he rings the New York Stock Exchange opening bell. (AP Photo/Richard Drew)

Fitbit CEO James Park, center, is applauded as he rings the New York Stock Exchange opening bell. (AP Photo/Richard Drew)

Another case in point is Veeva Systems, an enterprise cloud provider for life sciences companies like Pfizer. The company in early stages was neglected because of doubts about a cloud-based platform for a vertically oriented market.Emergence Capital pushed against the consensus to fund Veeva, and benefited tremendously when the company did its massive $3-billion IPO.

Of course, a non-consensus approach is no silver bullet. To understand other ingredients of success, I spoke with Jake Saper, Senior Associate at Emergence Capital. His view was that in order for a fund to be successful, you have to know the space you are investing in intimately, which will enable the non-consensus bets being much more likely to hit.

Jake further surmised that the funds that successfully cut against the consensus don’t chase brands or momentum, but rather immerse themselves in a particular slice of a market. Emergence Capital, for instance, invests exclusively in enterprise software for the cloud. This focus has allowed the fund to build terrific connections and deep expertise.

Industry focus not only helps funds to identify promising startups, but also to connect them with experts, employees and resources that can help them to refine their ideas and ultimately take them to market. As Wesley Chan, general partner and managing director at Felicis Ventures put it to me recently, investors should “look for VCs who hustle and help build companies.”

We can’t know which micro-VC funds will be the most successful going forward. But we can identify those with the right profile to be successful, which leads to two big keys: a) They’re thoughtfully contrarian, and b) they have the focused perspective and immersive knowledge to make good calls and help guide their startups to success.

Disclaimer: This material is the solely opinion of the author and does not represent an official statement by BluePointe Capital Management, LLC, nor does it constitute a recommendation for the purchase or sale of securities.  No representation is made on its accuracy or completeness of the information contained herein.  Although the information provided is from sources we believe to be reliable, we do not guarantee the accuracy or timeliness of any information for any particular purpose.

The 5-Step Guide to Launching Your Own Business

Elaine Pofeldt  March 2, 2016

After a post-recession drop-off, startups are on the rise. And a growing number of Americans see promise in launching a business. Here's how to join that crowd.

Leaving a desk job behind—and with it the demands of a boss and the constrictions of the corporate world—is a dream for many Americans. No wonder. Running your own business offers you a chance to call the shots, set your own schedule, and see your vision come to life. “It’s not necessarily about money,” says Sanjeev Sardana, who advises many entrepreneurs as CEO of BluePointe Capital Management. “It’s about saying, ‘I created something.’ ”

That said, taking a leap can pay off financially too, freeing you from a cycle of measly raises and hard-fought promotions. “There are people who do very, very well if they execute right,” adds Sardana.

Today an increasing number of Americans are betting on their own business ideas, driving the percentage of the population involved in startup activity to 12%—up from less than 8% in 2010, according to the Global Entrepreneurship Monitor (GEM), a study by Babson College and other schools. And it’s not just millennial tech whizzes. The average entrepreneur is a mid-career college grad, the GEM reports.

Most of these folks are taking the leap because they have spotted an opportunity, not because they have no other options. They are people like Spencer X. Smith, a 39-year-old father of two in Madison who left a corporate sales job a year ago to start his own agency, where he’s already earning 60% of his former six-figure salary. “My goal is to take something really hard—digital marketing—and explain it in plain English,” he says. Though he works weekends to get the business rolling, he says, “I absolutely love it.”

Entrepreneurs like Smith have finally reversed a troubling recession-era trend in which more small businesses were closing than opening. Business births now exceed the deaths, according to the Bureau of Labor Statistics.

Before you say “See ya!” to your boss, it pays to make sure your idea has legs and your finances can handle the risk. Given what goes into a launch, “sometimes the best money spent is on plans you end up walking away from,” says CPA Paul Gevertzman, a tax partner with the accounting firm Anchin Block & Anchin.

At other times, though, there’s no walking away. You love your idea. You’re willing to work hard. You’re okay with the risk. All you need are the tools. You’ll find them in this five-part guide, which delivers expert advice and insider tips on how to get off the ground and—hopefully—see your business soar.

A Compelling Reason To Use Your Roth IRA To Fund Your Startup

Sanjeev Sardana ,CONTRIBUTOR at Forbes

As many entrepreneurs understand, taxes on gain from investment in a private company are mainly treated as Long Term Capital Gain if shares are held for more than a year. This tends to be the case in most startups as they generally last multiple years. While there are many ways to fund your startup using personal funds, friends and family, VC money, retirement savings etc., according to Hiren Modi, Partner at EisnerAmper LLP in San Francisco, funding your company through Roth could help you potentially avoid taxes on the gain from money used from Roth IRA. You would specifically have to hold the investment in a Self-Directed IRA account through custodians, such as PENSCO, which would allow you to invest in the private company stock. Tax experts put private investments held in retirement accounts in the gray area of the law. There are many restrictions such as self-dealing which would make this a disqualified transaction so working with your tax adviser to structure it right would be the key. This type of investment could potentially work well in a scenario where there are multiple founders, each owning less than 50% of the company and where each founder uses part of their Roth IRA to contribute to the startup.

As an example, startup capital is $75K and each cofounder contributed a 1/3rd of the capital. Founder A chooses to fund 50% of his $25K contribution through Taxable account and 50% through his Roth IRA. Founders B & C do not use a Roth for their initial contributions of $25K each. Assuming at exit, each founder nets $5 million in gain, here is the difference between using part of the investment from ROTH versus fully funding through your taxable account:

Assumption: Private Stock subject to Long Term Capital Gain Treatment and combined Fed and CA Tax Rate of 37%

Assumption: Private Stock subject to Long Term Capital Gain Treatment and combined Fed and CA Tax Rate of 37%

As you can see from the above example, the entire gain for stock held in Roth IRA could be tax free and can result in significant tax savings if structured properly. If the idea is really big and the founding team is really strong with history of successful and repeated execution, it may be worthwhile for the founders to work with their tax advisor and structure the investment correctly as the benefit of doing this right could be huge.  For those who don’t have a Roth IRA should consult their tax advisor for converting their traditional IRA into a Roth IRA. Tax paid on conversion to Roth, would be a lot less compared to the potential upside from tax savings. One big caution is given the high risk of investing in a private company, one needs to be extra careful in using retirement savings to fund your startup. For more information regarding tax on prohibited transactions, readers can refer to IRS code 4975.

Disclaimer: Information contained here is for informational use only and is not a solicitation for services. Neither Sanjeev Sardana nor BluePointe Capital Management provide tax advice. Please consult with your tax advisor for further information.

Startup Success: When's The Best Time To Contact A Lawyer?

Sanjeev Sardana ,CONTRIBUTOR at Forbes

If you’re a startup, a relationship with a lawyer is one of the most important you can have. But when and why should you contact a lawyer if you’re thinking about starting a company? We asked two attorneys who specialize in technology transactions for their advice.

How much does an attorney cost?

When we tell an entrepreneur to contact a lawyer, red flags go up because of the view that an attorney’s fees are expensive. However, according to Brad Gersich, a partner at DLA Piper, it can cost hundreds of dollars, not thousands. And most of the fees are deferred until you have financing.

“Up front, all I ask people to pay for is the out-of-pocket costs for filing and courier fees,” he said.

The professional services fees that are paid later include all of the documents that cover your legal bases. Later, when the company starts to make money, Gersich bills for the fees that have accrued. “We try to be a business partner with you, to help you start to build your product,” he said.

Pillsbury Law will also defer the fees until the company has money in the bank, according to counsel Minal Hasan. “I would say most startup lawyers in Silicon Valley worth their salt do fee deferrals for a certain percentage of their clients,” she said. You have to weigh the costs against the potential problems of not getting an attorney, Hasan said, and a successful founder will understand the importance of an attorney. “The upside far outweighs the downside. It’s worth it to protect your company,” she said. “If they don’t have the sophistication to understand how important legal issues are and the protection of their intellectual property, they’re going to have problems further down the road.”

When should you contact an attorney?

When you start developing technology, have cofounders, and are discussing equity distribution, it’s time to contact an attorney. The biggest issue Hasan sees is founder break-ups. When people haven’t worked together, have different views, or one of them wants to go back to a regular job, a split can happen. If you don’t contact an attorney early, you risk having a co-founder you’re no longer on good terms with holding a lot of equity in the company. Then you have to go back to them for approval of anything the company does, which creates a bad situation. “When the person leaves is when you have the issues. They say, ‘You had promised me X.’ There’s a dispute, and you end up giving them more than you would have if you’d just gotten everything on paper with a lawyer,” she said. Intellectual property is another potential pitfall. You want to create an entity as soon as you start to develop an idea. If you haven’t formed an entity, and someone walks away, they own any IP they develop. Once you create an entity, any IP anyone develops stays with the company. “I’ve seen it happen where someone walks away, there was no entity in place, they own that IP, and they go off and start a competitive company. It can create an uphill battle in terms of asserting your ownership of that IP,” Hasan said.

What else can an attorney do for you?

Besides getting founder and IP agreements on paper early, an attorney will also help you with stock option plans and equity agreements. Don’t worry about getting it perfect right away, Gersich said. You can establish reasonable vesting schedules with appropriate protections for terminations without cause. Agreements are often changed later in the process as new contributors and investors join the enterprise. When you’re allocating equity between founders, a good starting point is the real or perceived value each person brings to the company. “You’re probably great friends now and looking forward to a long and healthy relationship, but there may be a situation where one of you decides for personal or performance reasons that it’s better for one person to continue and the other person not to,” Gersich said. An attorney will also help you create your entity and assign IP to it. They will also explain the differences between types of entities, such as an LLC versus a C-corporation. Gersich starts by asking what kind of business you’re building and where you expect your funding to come from. “You want the best type of entity that’s going to give you the liability protection that’s fundamental to incorporation. Beyond that, are you setting yourself up for long-term business objectives,” he said.

An attorney also helps you set up salary accrual. If a company has been operating for a few months and hasn’t made any revenue yet, you want to assign everything a founder or employee has done to the company. This way, if one founder leaves the company, or another company buys you out, all founders will get something out of their months of sweat equity. Salaries must be paid in cash, not equity. Another common mistake is to misclassify employees as consultants. Calling your full-time CEO a consultant and just giving them equity won’t satisfy the IRS. “The IRS audits a lot of tech startups. If they find out that your full-time CEO is classified as a consultant and you’re giving them equity so you can avoid paying cash wages, not only will the company have to pay back wages and withholding on the salary, you’re also going to be hit with tax penalties,” Hasan said.

A good attorney can help you minimize headaches and hassles from the potential legal pitfalls and disagreements a startup could run into. Since the costs aren’t as much as you might think, it’s a wise investment to start your company off in a good legal position.

Disclaimer: This material is the solely opinion of the author and does not represent an official statement by BluePointe Capital Management, LLC, nor does it constitute a recommendation for the purchase or sale of securities.  No representation is made on its accuracy or completeness of the information contained herein.  Although the information provided is from sources we believe to be reliable, we do not guarantee the accuracy or timeliness of any information for any particular purpose.

Three Rules Every Angel Investor Should Remember Before Investing In Start-ups

Sanjeev Sardana ,CONTRIBUTOR at Forbes

Given the success of so many technology companies it is no surprise that many investors want to find the next Alibaba, Whatsapp or Uber at an early stage. We only hear about the success stories from angel investors at cocktail parties but most angel investors will tell you from experience that investing in start-ups is a lot like buying a lottery ticket. While many factors such as the idea, the speed of execution, and the team are important to evaluate deals, three simple rules have proven time and again to help increase odds of success when investing in young companies:

  • Process: Most angel investors who are new to investing commonly only ask who else is investing. While it is important to ensure there are credible dollars backing the investment, it is probably even more important to make sure that you have someone who can size up the market, the team, and the product. Make sure to have someone who can perform this due-diligence on your behalf and can bring in relevant experts in the sector you’re investing in.
  • Control: Hot markets bring more hot deals which in turn bring so much money to deals that they end up becoming oversubscribed. Make sure you keep a lid on the number of angel investments you make in a period and find a way to control the amount you invest. It is easy to get drawn-in to meet the minimums from each hot deal and before you know it, you are over-allocated.
  • Diversification: Experienced angel investors who invest actively in early stage companies will tell you that only a handful of deals have a shot of doing well. This means that a lot of the investments made by angels fail. One way to mitigate this risk of failures is to make smaller investments in more firms (rather than more size-able investments in fewer firms) and reserving extra capital for your winners. When it comes to seed investing, there is strength in having numbers to ride out the ebb and flow of the markets.

Disclaimer: This material is the solely opinion of the author and does not represent an official statement by BluePointe Capital Management, LLC, nor does it constitute a recommendation for the purchase or sale of securities.  No representation is made on its accuracy or completeness of the information contained herein.  Although the information provided is from sources we believe to be reliable, we do not guarantee the accuracy or timeliness of any information for any particular purpose.