Startup Investment
A startup is generally a company that looks to make an innovative product or extend service in order to make a dent in the status quo and thus solve a major problem in the process.
What are the external sources of financial gain for a startup?
- Personal capital
- Investment money received from people & firms external to the business
Investment options across the lifecycle of a startup
Direct Investment
In this case, the investor directly invests in the startup in question without any third-party involvement, like a VC/debt/private equity firm. Angel investment is generally a direct form of investment.
Indirect Investment
In this case, the investor invests in a VC/debt/private equity firm, and then the PE firms, in turn, invest in different startups using the money they have raised from investors like yourself.
Factors to consider before investing
- Idea: Understanding the idea and the business before putting your money in
- Founders: They are the most important people, the helm of affairs in a business
- Market Size: Remember, startups operate on a massive scale to achieve dominant status
- Competitors: It becomes very important to know what other players already exist in the market
Why invest in a startup?
- High Reward Potential: Generally, a startup investment is made when the company is small and has a lot of growth potential to become the next big thing.
- Change Maker: As a startup investor, you invest in ideas and companies that you might end up changing the world for good.
- Side Hustle: Many people making angel investments see startup investing as a side hustle from which they can generate an additional income stream.
