Introducing my microcap “Incubator”

Introducing my microcap “Incubator”

Have you heard of a tech “incubator”?

Imagine investing in Microsoft before it was a fully-formed company. Back when Bill Gates was tinkering with electronics in his garage...

Sounds impossible. But that’s exactly what Venture Capitalists (VCs) do.

And VCs often use incubators to access investment opportunities in their very earliest stages.

I’m talking companies so small, gains of 100-1, 1,000-1, or even 10,000-1 are on the table.

You see, tech hotbeds like Silicon Valley, CA and Austin, TX are full of talented, young entrepreneurs with billion-dollar ideas...

But they often lack the money and know-how to execute these ideas.

“Incubators” are the answer. They provide seed money, office space, mentorship, and sometimes even a place to live, usually in exchange for an ownership stake in the young company.

By supporting companies in their very earliest stages, VCs can bank astronomical returns—sometimes as high as 100,000%.

Many great companies like AirBnB and DropBox got their starts in incubators.

  • I’m telling you this because, as far as I know, I’m the only analyst who takes an incubator approach to recommending microcap stocks.

This approach has led to many of my readers’ biggest wins. Like 422% on Magnite (MGNI), 251% on Personalis (PSNL)... and 201% on Atomera (ATOM).

I call my incubator “breakthrough disruptors.” Every month in my Project 5X advisory, I introduce a few extremely early-stage companies that are developing breakthrough technologies.

Then I keep tabs on these young companies for months... or years.

In that time, I’ll look to establish a relationship with the CEO. I’ll contact the company’s suppliers to verify important details.

And I’ll simply watch and wait for the company to prove itself.

The truth is, 90% of the early-stage stocks that enter my incubator never go anywhere.

But the few that “graduate” to become official recommendations have been some of our best picks.

I “incubated” Magnite for six months before recommending it. Personalis for two months before recommending it. And Atomera a full year before finally putting it in our Project 5X portfolio.

All of these recommendations at least tripled. Magnite more than quintupled.

Today, I’ll share three of my newer incubator stocks with you.

***Please note: I’m NOT suggesting you buy these stocks today. They’re too early in the game. But they all have exciting stories you should know about…

Kraig Biocraft Laboratories, Inc. (KBLB)

In one of the comic book versions of Spider-Man, Peter Parker builds a gadget that shoots spider webs from his wrists.

Believe it or not... Kraig Biocraft Laboratories has developed something similar in real life.

The company is tackling one of the “holy grails” in materials science. It’s working to genetically engineer spider silk in large quantities. And it looks like it’s closing in on that goal...

Spider silk is highly coveted because it’s very strong, but also very light. It can be up to 10 times stronger than steel at just one-sixth the weight. A pencil-thick strand of spider silk could stop a 747 jet in mid-air.

Genetically engineered spider silk has obvious military applications. Soldiers could wear it for protection. Just like Kevlar, but stronger and lighter.

Stronger and lighter fiber glass-type material for boats, cars, and planes is one potential commercial use. And doctors could use it for super-strong sutures, among other things.

Kraig Biocraft Laboratories engineered this super material by taking a specific sequence of DNA from a spider and incorporating it into silkworms.

The result: Monster Silk and Dragon Silk.

Monster Silk is the world’s first potentially economically viable recombinant spider silk for textile use. The company says it’s “ramping up commercial scale production” of the lightweight, high-strength fiber.

As for Dragon Silk, the company says it’s even stronger and more elastic than certain spider silks.

Kraig Biocraft Laboratories is an interesting company. But I’d like to see actual sales start to come in and the stock’s liquidity to improve before seriously considering it as an investment.

Know Labs Inc (KNWN)

Spectroscopy may be the most important science on the planet.

It’s the study of the interaction between matter and electromagnetic radiation. It converts all physics into numbers.

Spectroscopy was a key component in the discovery of quantum mechanics, black holes, and now non-invasive glucose monitoring.

As you probably know, people who live with diabetes must constantly prick themselves to draw blood and test their blood glucose levels.

Know Labs is using radio frequency spectroscopy to create the world’s first non-invasive blood glucose monitor for the 460 million diabetics around the world.

The device is called UBAND. It’s a low-cost wearable wrist band based on Know Labs’ propriety Bio-RFID technology platform. It will allow people with diabetes to take glucose measurements as often as they like with no finger sticks or other invasive processes.

If UBAND eventually receives FDA approval, it would completely disrupt the $21 billion glucose monitoring market.

Know Labs is currently testing its hardware prototype on people, and the results have been impressive.

What’s more, UBAND can measure more than just blood glucose. It can measure pretty much anything going on inside your body… like white blood cell levels.

White blood cells are immune system cells that protect you from illness and disease. When your white blood cell levels are too high or too low, it’s a sign of disease. So UBAND could become an early warning detection system for cancer and other diseases.

Know Labs has a good team running things. Its CEO has won the prestigious Edison Innovation Award. The Edison Innovation Awards are like the Oscars of innovation. And the chief medical officer is the former medical leader in diabetes and endocrinology at the massive $154 billion drug company Eli Lilly.

This is an exciting young company that may have huge growth ahead of it. I’ve been watching Know Labs for more than two years now, and it’s made good progress in that time. But the stock is too small and illiquid to invest in right now.

Rainmaker Worldwide, Inc (RAKR)

Some call it “blue gold.”

And many recognize it as “the world’s most precious commodity.”

Still, we don’t often think of water as an investment opportunity because most of us have access to as much of it as we want on the cheap.

Nevertheless, there are factors at play that could make water one of the best investment opportunities of the next 20 to 50 years.

Water covers more than 70% of the earth’s surface. But most of that is undrinkable sea water, and most of the rest is inaccessible. The World Water Council estimates that just 0.1% of earth’s water is readily available for our use.

Meanwhile, demand for water is on the rise due to population growth and more meat-centric diets. And the supply situation is tenuous. Depleting aquifers, droughts, crumbling infrastructure, pollution, and low water recycle rates are just some of the problems we face.

Rainmaker Worldwide is a tiny company trying to solve the water problem.

The company’s Air-to-Water technology can produce drinking water using nothing but air. It’s basically a wind turbine that uses friction to generate heat. The machine then forces the air through a heat exchanger, which cools and condenses the air and produces water droplets from the moisture in the process.

Rainmaker’s Air-to-Water units are available in three sizes, producing up to 5,000, 10,000 or 20,000 liters of drinking water per day.

The company’s Water-to-Water technology produces clean water from seawater, brackish water, or contaminated water. It looks just like the Air-to-Water device. Except the wind turbine connects to a membrane distillation system, rather than a heat exchanger, to produce the clean water.

Rainmaker claims its Water-to-Water units, which come in three sizes, can produce up to 37,500, 75,000, or 150,000 liters of drinking water per day, per machine.

This sounds like a no-brainer investment on the surface. The issue is that if the tech works as well as claimed, why hasn’t it caught on?

The company expected revenue of $4.9 million in 2017, with a compound annual growth rate of 120% through 2021. But here we are in 2021, and from what I can tell, Rainmaker has yet to generate any revenue at all.

Last year, the company was awarded a $2.5 million grant from the EU to set up a Water-to-Water solution in the Canary Islands. So there is major potential here. But we need to see some real sales before considering an investment.


Chris Wood
Editor, Project 5X

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