History is littered with examples of Silicon Valley investors taking a chance on an unknown business and then hitting it big when the company takes off. And occasionally — when business valuations soar from seven-digit to 11-digit territory — they strike gold.

A recent example is Airbnb (Nasdaq: ABNB), which links travelers with homeowners who have a spare house, apartment or bedroom to rent. In 2012, the up-and-coming company already had an estimated value of $2.5 billion. A few years later, it entered into financing talks that implied a valuation of $10 billion. Today, the company has a market cap in excess of $88 billion.

Needless to say, investors who got on board early were able to cash out life-changing gains.

Of course, this isn’t the only path to riches. Thriving young businesses attract attention. Oftentimes, a larger company looking for an earnings jolt will come knocking. A buyout will happen before they can even reach the market.

That was the case with WhatsApp, a mobile messaging service purchased by Facebook for a staggering $19 billion. One of the biggest winners was Sequoia Capital, whose $8 million investment in 2011 blossomed into $3.5 billion. Incidentally, this same venture capital firm was also an early investor in Apple, Yahoo, and Google.

How To Invest With The Big Boys

I don’t have to tell you what those three companies have done. The point is venture capitalists aim big. Depending on what stage of businesses development they enter, it’s not uncommon for these guys to take out anywhere from three to 10 times what they put in. Of course, not every investment pans out. Some fail spectacularly. But the big boys win far more than they lose.

So how do ordinary investors participate? Well, the truth is many of us simply can’t — not exactly, anyway. Funds managed by the likes of Sequoia Capital or another VC outfit are restricted. Only accredited investors with an annual income above $200,000 (or $300,000 if married) for the last two years or net worth over $1 million can participate.

In other words, this was a secret club with closed doors. But obscure legislation passed in 1980 has opened doors to an extent. And while you may not bank 10-bagger gains, you will find some of the highest yields the market has to offer. In fact, it’s not uncommon to earn dividend yields of 7%, 8%, even 10%.

I’m talking about business development companies (BDCs).

BDCs: What They Are & How They Work…

BDCs are publicly traded entities that invest in privately held companies. They were first established in 1980 to grease the flow of capital into small businesses. There are a couple dozen members of this unusual class, each employing different tactics and assuming varying amounts of risk.

BDCs enjoy some unique perks. One is exemption from federal income taxes. Because of this, the company must distribute at least 90% of its investment profits to shareholders (similar to a real estate investment trust, or REIT). They also pay some of the highest yields around — in this group, 7% is considered stingy.

What’s the catch? Well, because these companies don’t retain any profits, they must borrow or issue new shares to raise funding if they want to keep growing. That’s not always easy to do, particularly in uncertain times. But most have rainy day funds and know how to survive unsettled markets.

BDCs typically provide financial assistance to small and medium-sized businesses. These companies are still developing and expanding and don’t always have access to traditional bank lending. The proceeds are normally used for growth projects and other operating needs, although sometimes the cash is needed for leveraged buyouts or other big transactions.

This financing can take many forms, from simple unsecured loans to collateralized senior debt to hybrid convertible bonds. It’s not uncommon for some loan packages to have an equity component that gives the BDC an ownership stake in the borrowing company — and thus an opportunity to profit handsomely.

Now, we own a few BDCs in our portfolio over at High-Yield Investing, my premium newsletter service. And while I can’t reveal those to you today, I decided to run a little scan and show you what’s out there. Below, you’ll find a list of BDCs with market capitalizations of greater than $1.5 billion (along with their current yields as of this writing)…

Closing Thoughts

Let’s face it: Big, wealthy investors often have opportunities the little guy doesn’t — like investing in private equity or VC-funded startups while they’re still experiencing triple- and quadruple-digit growth.

In that sense, this isn’t too different from what venture capital firms like Sequoia are doing. Of course, BDCs may not necessarily have the next Facebook in their portfolio. But you will find smartly-managed portfolios that throw off some of the best income you’ll find in the market.

And of course, anybody can invest in a BDC, not just accredited investors.

If you find yourself frustrated by the lack of high-yield options in today’s market, I recommend giving BDCs a look. In a yield-starved world, BDCs have proven to be some of the best securities around for income-oriented investors.

In fact, I recently updated a report on my three favorite BDCs to readers of my High-Yield Investing premium advisory.

You can go here to learn how to get it now.