- 16 January 2017
- Posted by: Vinh Van Lam
- Category: Blog, Business Tips, investor
If you have a sizeable income sitting around doing relatively little to nothing, then you may want to consider investing in start-up businesses. But how would you even go about doing the deed, and generate money favourably?
The operative word in the whole scenario of investing is ‘if’. If you had invested $10,000 in the likes Amazon, Dell and Apple at the time of their IPOs, then you would be comfortably sitting on millions.
Nevertheless, that’s the exception to the norm, so how would you go about investing in other start-ups? As a general rule, remember the value of your investment can go up as well as down, so tread carefully before you commit.
There’s obviously no Midas touch to start-up success, but instead of going it alone, you can utilise a leveraged investment such as 1000 Angels that offers highly vetted direct investment opportunities. It means a lot of heavy research is taken out of your venture investing.
For some, start-up investing has worked really well and is an ongoing source of great returns. So what are the four top tips to get your foot on the ladder for early success?
The potential to generate massive returns through portfolio diversification;
Seemingly on trend when start-ups become trending investments;
Looking ahead, and generating returns for retirement;
Bringing positive solutions in life
Why start-up your investing
Investing in start-ups is not for the uber rich or those that are savvy to the financial world. Investing money in new businesses is within reach for all accredited investors. And those that have thrown themselves into the investing game have realised pretty useful results.
The bottom line is not to get ahead of yourself and expect to make millions – but a sound, feet-on-the-ground attitude will help you out in the long-term.
How can I invest then?
Investing in start-ups has become easier in recent years and the complicated nature of the process is continuing to be simplified. Here are some examples of ways to invest:
Invest via venture investing platforms for direct investment;
Through personal connections and relationships with entrepreneurs;
Attending pitch events;
Join a syndicate on Angel List if you prefer to follow other investors;
Or make the investment personally or via an online platform, and receive preferred stock, or convertible notes which convert your interest to stock at the next major milestone
This can be achieved through:
The start-up being sold on to another company;
The start-up goes IPO;
It starts paying dividends or the investor sells their shares to other investors
Investing safely and smartly
Where there’s risk, there’s a need to be cautious. So only invest what you can afford to lose in any investment.
You can build other elements into that advice from only investing in pre-vetted start-ups, diversify your investments, reserve a portion of capital for follow-on rounds, invest in what you understand and in start-ups you may be able to add value.
How to invest
Rather than waste time and energy, utilise your time efficiently. Platforms, such as 1000Angels, enable investors to attend exclusive events to connect with start-ups for an annual membership fee, rather than giving up a percentage of the upside like you would get in traditional venture funds or syndicates. This may increase exposure to start-up fundraising rounds and offer efficiency through curated investment opportunities.
The art of investing is having a balanced portfolio. So focus on diversifying, spreading the risk, but doing so wisely.
If you don’t do the research, then you fall into a hole of constant losses. So consider heavily investing in a select handful of companies and across industries that you believe in. Look at a business with promise and you’ll make a far more positive impact on the success of that venture.