--- title: Invest in Venture Capital With a Self-Directed IRA description: Investing in alternative assets via a self-directed IRA not only potentially adds more diversity to your portfolio, but it also provides tax-free growth over time. image: https://knowledge.ourcrowd.com/hubfs/34_Invest-in-Venture-Capital-With-a-Self-Directed-IRA%20(1).jpg --- [![OurCrowd Logo Knowledge-1](https://knowledge.ourcrowd.com/hs-fs/hubfs/OurCrowd%20Logo%20Knowledge-1.png?width=1323&name=OurCrowd%20Logo%20Knowledge-1.png "OurCrowd Logo Knowledge-1")](https://knowledge.ourcrowd.com/) - Invest - [Opportunities](https://www.ourcrowd.com/opportunities) - [How to Invest](https://www.ourcrowd.com/how-to-invest) - Portfolio - [Funded Portfolio](https://www.ourcrowd.com/funded-portfolio) - [Exits](https://www.ourcrowd.com/exits) - [Startup Application](https://www.ourcrowd.com/company/apply) - Network - [For Corporations](https://www.ourcrowd.com/strategic-collaboration-program) - [OurTalent](https://ourtalent.ourcrowd.com/) - [Success Stories](http://ournetwork.ourcrowd.com/success-stories/) - About Us - [About OurCrowd](https://www.ourcrowd.com/about) - [Team](https://www.ourcrowd.com/our-team) - [News](https://www.ourcrowd.com/ourcrowd-news) - [Blog](http://blog.ourcrowd.com/) - [Careers](http://careers.ourcrowd.com/) - [Contact Us](https://www.ourcrowd.com/offices/israel) - Events - [Global Investor Summit](http://summit.ourcrowd.com/) - [Events Calendar](http://events.ourcrowd.com/) - [Join](https://www.ourcrowd.com/join/register) - [Sign In](https://www.ourcrowd.com/signin) ![main pic](https://knowledge.ourcrowd.com/hs-fs/hubfs/main%20pic.png?width=2000&name=main%20pic.png "main pic") # [Knowledge Center](https://knowledge.ourcrowd.com/) #### [Startup Investing 101](https://knowledge.ourcrowd.com/topic/startup-investing-101) # [Invest in Venture Capital With a Self-Directed IRA](https://knowledge.ourcrowd.com/invest-in-venture-capital-with-a-self-directed-ira) ![close](https://cdn2.hubspot.net/hubfs/2432204/AK-UI%20Builder/close-button.svg) ### Popular Stories [OurCrowd FAQs](https://knowledge.ourcrowd.com/faqs) Nov 18, 2018 [How OurCrowd Chooses Startup Investments](https://knowledge.ourcrowd.com/how-ourcrowd-chooses-startup-investments) Nov 19, 2018 [Invest in Venture Capital With a Self-Directed IRA](https://knowledge.ourcrowd.com/invest-in-venture-capital-with-a-self-directed-ira) Aug 08, 2019 [Investing in Venture Funds with OurCrowd](https://knowledge.ourcrowd.com/investing-in-venture-funds-with-ourcrowd) Nov 28, 2018 [Learn About the Different Ways to Build a Portfolio on OurCrowd](https://knowledge.ourcrowd.com/learn-about-the-different-ways-to-build-a-portfolio-on-ourcrowd) Nov 19, 2018 ### Categories - [Startup Investing 101 (16)](https://knowledge.ourcrowd.com/tag/startup-investing-101) - [About OurCrowd (6)](https://knowledge.ourcrowd.com/tag/about-ourcrowd) - [Get Started (4)](https://knowledge.ourcrowd.com/tag/get-started) - [Tech Sectors (4)](https://knowledge.ourcrowd.com/tag/tech-sectors) - - - Written by OurCrowd ## Increase Diversification & Defer Taxes As all investors know, diversification of investments is essential in any portfolio and serves two primary purposes, mitigating risk and maximizing returns. Simply put, don’t put all your eggs in one basket. There is more to investment diversification than mutual funds, stocks and bonds. Investing in alternative assets via a self-directed IRA not only potentially adds more diversity to your portfolio, but it also provides tax-free growth over time. Investment in alternatives have grown from $2.5 trillion in 2004 to $6.4 trillion in 2012, and is expected to exceed $13 trillion in 2020.[\[1\]](https://www.pwc.com/gx/en/asset-management/publications/pdfs/pwc-asset-management-2020-a-brave-new-world-final.pdf) This increasing number of investors are incorporating alternatives into their retirement portfolios which may include one or a combination of the following alternative asset types:  - ![asset types](https://knowledge.ourcrowd.com/hs-fs/hubfs/Picture1-2.jpg?width=350&name=Picture1-2.jpg)Venture capital - Real estate - Hedge funds - Commodities - Private equity investments - Private corporate debt instruments - Debenture offerings - Real estate notes and trust deeds - Gold and precious metals - Crowdfunding #### The case for diversification in venture capital Venture capital is an increasingly important component of equity investing, given that early stage companies are waiting longer to go public. An influx of abundant capital into private companies has allowed many companies to delay their IPO until much later in their lifecycle – which significantly limits returns once they are public. Investments made in tech giants Apple (1980), Microsoft (1986), Amazon (1997) and Google (2004) at their IPO price generated respective returns of 749x, 1324x, 2025x, and 35x at today’s prices (as of August 2019). Compare these astounding multiples with those of more recent tech unicorns Facebook (2012), Twitter (2013), Spotify (2018), and Uber (2019). These latter four companies generated significantly more modest returns 6.5x, 1.3x, 0.9x, and 0.9x respectively on the public markets, largely because they remained private longer, giving private investors who invested early. ![If you invested in IPO chart (as of August 2019)](https://knowledge.ourcrowd.com/hs-fs/hubfs/image-43.png?width=1280&name=image-43.png) The chart below further serves to highlight this contrast, and reinforces the point that the abundance of venture capital money has enabled companies to remain private longer, at increasingly higher valuations, which serve to benefit private investors at the expense of opportunities for investors in the public markets. The IPO valuations of Apple ($1.2B), Microsoft ($0.8B), Amazon ($0.4B) are dwarfed by those of Google ($23B), Facebook ($81.8B), Twitter ($24.5B), Spotify ($29.5B), and Uber ($75.5B). ![Value at IPO ($B) chart (as of August 2019)](https://knowledge.ourcrowd.com/hs-fs/hubfs/image%20(1)-6.png?width=1280&name=image%20(1)-6.png) #### Investing with a self-directed IRA By investing in alternatives like venture capital, via a self-directed IRA, investors can access the full spectrum of the investment universe inside their own retirement account, and returns will be tax deferred. Additionally, alternatives have a low correlation with other asset classes (stocks and bonds among them) and may serve as a counterbalance during market volatility and can help offset any downside, and, when held in a tax-deferred IRA account, it can also provide opportunities for outsized tax-deferred growth.   Maintaining the right mix of traditional and alternative assets can reduce undue risk and help to lock in attractive total returns. For more information about what alternatives can be included in a self-directed IRAs, see [IRS Publication 590A](https://www.irs.gov/publications/p590a).  If you want to learn more about investing in private companies and how the numbers stack up, check out [What Babe Ruth Could Teach About Maximizing Returns on Your Startup Investments.  ](https://knowledge.ourcrowd.com/what-babe-ruth-could-teach-about-maximizing-returns-on-your-startup-investments) **Next Step:** [![Create Free Account](https://no-cache.hubspot.com/cta/default/353882/d4391561-66c6-4b7b-b968-ff0802c55648.png)](https://cta-redirect.hubspot.com/cta/redirect/353882/d4391561-66c6-4b7b-b968-ff0802c55648) ![Subscribe](https://cdn2.hubspot.net/hubfs/2432204/99%20Template%20Pack/Background%20Images/message.svg "Subscribe") ### Weekly startup news, in your inbox. ### You may also like: [Startup Investing 101](https://knowledge.ourcrowd.com/topic/startup-investing-101) ## [Take These 8 Steps to Become an All-Star Startup Investor](https://knowledge.ourcrowd.com/take-these-8-steps-to-become-an-all-star-startup-investor) Show of hands: Who here doesn’t want to invest in the next Facebook or Google? [Startup Investing 101](https://knowledge.ourcrowd.com/topic/startup-investing-101) ## [See Better Returns in Your Portfolio by Diversifying – with Private Investment](https://knowledge.ourcrowd.com/why-invest-in-startups) Most of us tend to associate the term “investments” with public equity. Many tend to consider a typical investment portf... [Startup Investing 101](https://knowledge.ourcrowd.com/topic/startup-investing-101) ## [The Million-Dollar Question: What Kind of Angel Investor Are You?](https://knowledge.ourcrowd.com/the-million-dollar-question-what-kind-of-angel-investor-are-you) As an angel investor, you already likely know (or soon will) that there is a long list of young technology companies and... ![main pic](https://knowledge.ourcrowd.com/hs-fs/hubfs/main%20pic.png?width=2000&name=main%20pic.png "main pic") ## Weekly startup news, in your inbox Subscribe to receive a weekly curated roundup of top tech news from the desk of OurCrowd CEO Jon Medved. ![logo_TM](https://knowledge.ourcrowd.com/hs-fs/hubfs/Company_logos/logo_TM.png?width=292&name=logo_TM.png "logo_TM") OurCrowd is a global investment platform, bringing venture capital opportunities to accredited investors worldwide. A leader in equity crowdfunding, OurCrowd is managed by a team of seasoned investment professionals. OurCrowd vets and selects companies, invests its own capital, and invites its accredited membership of investors and institutional partners to invest alongside in these opportunities. OurCrowd provides support to its portfolio companies, assigns industry experts as mentors, and creates growth opportunities through its network of strategic multinational partnerships. ##### Explore [Opportunities](https://www.ourcrowd.com/funding-now) [Funded Portfolio](https://www.ourcrowd.com/funded-portfolio) [For Corporations](https://www.ourcrowd.com/strategic-collaboration-program) [Labs/02](http://www.labs02.com/) ##### Discover [How to Invest](https://www.ourcrowd.com/how-to-invest) [About OurCrowd](https://www.ourcrowd.com/about) [FAQ](https://www.ourcrowd.com/faq) [News](https://www.ourcrowd.com/ourcrowd-news) [Portfolio Insights](http://insights.ourcrowd.com/) [Blog](http://blog.ourcrowd.com/) ##### Connect [Contact Us](https://www.ourcrowd.com/offices/israel) [Startup Application](https://www.ourcrowd.com/company/apply) [Events Calendar](http://events.ourcrowd.com/) [Global Investor Summit](http://summit.ourcrowd.com/) Copyright © 2012-2019. All rights reserved.    **[Privacy Policy |](https://www.ourcrowd.com/privacy) [Terms Of Use |](https://www.ourcrowd.com/terms) [Disclaimer |](https://www.ourcrowd.com/disclaimer) [Internet Security](https://www.ourcrowd.com/internet-security)** Nothing on this website should be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security by ourcrowd or any third party. You are solely responsible for determining whether any investment, investment strategy, security or related transaction is appropriate for you based on your personal investment objectives, financial circumstances and risk tolerance. Investors and users should consult with licensed legal professionals and investment advisors for any legal, tax, insurance, or investment advice. Please [click here](https://www.ourcrowd.com/disclaimer) for additional details.