Fifteen years ago, the financing landscape looked completely different. By developing new financing options for startups, entrepreneurs now have more options than ever to get their idea off the ground. The rise in new, non-traditional financing options allows entrepreneurs to bypass traditional VC fundraising and attract an entirely new class of investors, for example through crowdfunding. Yet it does not mean that investing is suitable for everyone. To help you with this, we give you a number of tips!
Invest in the founders
The idea of investing is at the same time exciting and daunting. As an investor, how do you know where to start? How do you make a smart investment that ultimately generates money? It seems like a gamble – and it can be – if you don’t put down your money smartly. Remember that about 90 % of startups end up failing, which means that your investment can have the same trajectory. It is simple to get excited about a cool, innovative new idea. But who are the people who drive the ship? The team behind the startups is an important factor. If strong leadership is at the helm of a good idea, the chances of success are greater.
Don’t be a follower
You should never invest in a startup because everyone invests in it. It is a common misconception that following the crowd will save you from a bad investment. The only guarantee you get is that you lose your money, just like the masses. Do thorough research into the startup you want to invest in and only invest in a company that you fully support. Think of asking advice from other investors or an in-depth conversation with the founders / employees of the company.
Do not invest more than you can handle
As we mentioned earlier, investing in startups is risky. On the other hand, if you choose the right startup, this can also be very successful. Make sure you can afford to lose the amount you invest. If you are financially secure, you will run into problems less quickly. In addition, it is wise to spread your chances. If you put all your chips on black, this can result in a large return or a complete loss. If you spread an investment over different startups, this increases your chances of success.
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